<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 1998
REGISTRATION NO. 333-46975
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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L-3 COMMUNICATIONS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 3812, 3663, 3679 13-3937434
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
600 THIRD AVENUE
NEW YORK, NEW YORK 10016
(212) 697-1111
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
CHRISTOPHER C. CAMBRIA
L-3 COMMUNICATIONS HOLDINGS, INC.
600 THIRD AVENUE
NEW YORK, NEW YORK 10016
(212) 697-1111
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
---------------
COPIES TO:
Vincent Pagano Jr. Kirk A. Davenport
Simpson Thacher & Bartlett Latham & Watkins
425 Lexington Avenue 885 Third Avenue
New York, New York 10017 New York, New York 10022
(212) 455-2000 (212) 906-1200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
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If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE(1) FEE(2)
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<S> <C> <C> <C> <C>
COMMON STOCK, $.01 PAR VALUE 6,325,000 SHARES $20 $126,500,000 $37,317.50
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) A fee of $29,500 was paid on February 27, 1998, and the remaining fee of
$7,817.50 is being paid herewith.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH JURISDICTION.
SUBJECT TO COMPLETION, DATED APRIL 27, 1998
PROSPECTUS
5,500,000 SHARES
[L3 LOGO]
L-3 COMMUNICATIONS HOLDINGS, INC.
COMMON STOCK
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All of the shares of Common Stock, par value $.01 per share (the "Common
Stock"), of L-3 Communications Holdings, Inc. ("Holdings") offered hereby are
being sold by Holdings. Of the 5,500,000 shares of Common Stock offered
hereby, 4,400,000 shares are initially being offered in the United States and
Canada by the U.S. Underwriters (the "U.S. Offering") and 1,100,000 shares
are initially being offered outside the United States and Canada by the
International Managers (the "International Offering" and, together with the
U.S. Offering, the "Common Stock Offering"). See "Underwriting". The initial
public offering price and underwriting discounts and commissions are
identical for both the U.S. Offering and the International Offering. The
closing of the International Offering is a condition to the closing of the
U.S. Offering.
Prior to the Common Stock Offering, there has been no public market for
the Common Stock of Holdings. It is currently estimated that the initial
public offering price will be between $18.00 and $20.00 per share. See
"Underwriting" for a discussion of factors to be considered in determining
the initial public offering price. The Common Stock has been approved for
listing, subject to notice of issuance, on the New York Stock Exchange (the
"NYSE") under the symbol .
Concurrently with the Common Stock Offering, L-3 Communications
Corporation, a wholly-owned subsidiary of Holdings, is publicly offering (the
"Notes Offering" and, together with the Common Stock Offering, the
"Offerings") $150.0 million aggregate principal amount of its % Senior
Subordinated Notes due 2008 (the "Notes"). Prior to the consummation of the
Common Stock Offering, affiliates of Lehman Brothers Inc. own 49.0% of the
outstanding Common Stock of Holdings. See "Ownership of Capital Stock".
---------------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
- -----------------------------------------------------------------------------
Per Share ..... $ $ $
- -----------------------------------------------------------------------------
Total(3) ...... $ $ $
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(1) Holdings has agreed to indemnify the U.S. Underwriters and the
International Managers (together, the "Underwriters") against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(2) Before deducting expenses payable by Holdings estimated at $ .
(3) Holdings has granted to the U.S. Underwriters a 30-day option to
purchase up to an additional 825,000 shares of Common Stock, solely to
cover over-allotments, if any. If the U.S. Underwriters exercise the
option in full, the Price to Public will total $ , the
Underwriting Discounts and Commissions will total $ and the
Proceeds to Company will total $ . See "Underwriting".
The shares of Common Stock offered by this Prospectus are offered by the
U.S. Underwriters named herein subject to prior sale, to withdrawal,
cancellation or modification of the offer without notice, to delivery to and
acceptance by the U.S. Underwriters and to certain other conditions. It is
expected that delivery of the certificates for the shares of Common Stock
will be made at the offices of Lehman Brothers Inc., New York, New York on or
about , 1998.
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
C.E. UNTERBERG, TOWBIN
, 1998
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Photographs of L-3's products, including the aviation recorder, cockpit
display, Narda catalog, dipping sonar, secure terminal equipment, telemetry
system, satellite transmission systems, explosive detection systems, human
patient simulator and fixed wireless loop equipment.
L-3 Communications
L-3 is well positioned for the future
Experienced management team Strong performance record
Favorable business mix Solid financial structure
Positive industry dynamics Emerging commercial technologies
Leading market positions
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE COMMON STOCK OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
COMMON STOCK, INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS OR
THE IMPOSITION OF PENALTY BIDS. FOR A DISCUSSION OF THESE ACTIVITIES, SEE
"UNDERWRITING".
AVAILABLE INFORMATION
Holdings has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments, exhibits, schedules and supplements
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Common Stock
being offered hereby. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the
Registration Statement. For further information with respect to Holdings and
the Common Stock, reference is made to the Registration Statement. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and, where such contract or other
document is an exhibit to the Registration Statement, each such statement is
qualified by the provisions in such exhibit, to which reference is hereby
made. As a result of the offering of the Common Stock, Holdings will become
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, in accordance therewith, will
file reports and other information with the Securities and Exchange
Commission (the "Commission"). The Registration Statement, such reports and
other information can be inspected and copied at the Public Reference Section
of the Commission located at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington D.C. 20549 and at regional public reference facilities
maintained by the Commission located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material, including
copies of all or any portion of the Registration Statement, can be obtained
from the Public Reference Section of the Commission at prescribed rates. Such
material may also be accessed electronically by means of the Commission's
home page on the Internet (http://www.sec.gov). Following the Common Stock
Offering, Holdings' future public filings are expected to be available for
inspection at the office of the NYSE, 20 Broad Street, New York, New York
10005.
i
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
As used in this Prospectus, unless the context requires otherwise: (i)
"Holdings" means L-3 Communications Holdings, Inc., (ii) "L-3" or the
"Company" means Holdings, its wholly-owned operating subsidiary, L-3
Communications Corporation, their predecessors, and the businesses acquired
in the 1998 Acquisitions, (iii) "L-3 Communications" means L-3 Communications
Corporation, (iv) "L-3 Acquisition" means the purchase of the Company from
Lockheed Martin Corporation in April 1997 described under "--History", (v)
"1998 Acquisitions" means the recently completed acquisitions of STS, ILEX
and Ocean Systems described under "--Recent Developments" and (vi) unless
otherwise indicated, "pro forma" financial data reflect the L-3 Acquisition,
the 1998 Acquisitions and the Offerings as if such transactions had occurred
in the beginning of the period indicated.
THE COMPANY
L-3 is a leading merchant supplier of sophisticated secure communication
systems and specialized communication products including secure, high data
rate communication systems, microwave components, avionics and ocean systems,
and telemetry, instrumentation and space products. These systems and products
are critical elements of virtually all major communication, command and
control, intelligence gathering and space systems. The Company's systems and
specialized products are used to connect a variety of airborne, space,
ground-and sea-based communication systems and are incorporated into the
transmission, processing, recording, monitoring and dissemination functions
of these communication systems. The Company's customers include the U.S.
Department of Defense (the "DoD"), selected U.S. government (the
"Government") intelligence agencies, major aerospace/defense prime
contractors, foreign governments and commercial customers. In 1997, L-3 had
pro forma sales of $894.0 million and pro forma EBITDA (as defined in
footnote 5 under "Selected Financial Information") of $95.1 million. The
Company's pro forma funded backlog as of December 31, 1997 was $638.1
million. These results reflect internal growth as well as the execution of
the Company's strategy of acquiring businesses that complement or extend
L-3's product lines.
The Company's business areas enjoy proprietary technologies and
capabilities and have leading positions in their respective primary markets.
Management has organized the Company's operations into two primary business
areas: Secure Communication Systems and Specialized Communication Products.
In 1997, the Secure Communication Systems and Specialized Communication
Products business areas generated approximately $456.0 million and $438.0
million of pro forma sales, respectively, and $52.3 million and $42.8 million
of pro forma EBITDA, respectively. In addition, the Company is seeking to
expand its products and technologies in commercial markets. See "--Emerging
Commercial Products" below.
SECURE COMMUNICATION SYSTEMS. L-3 is the established leader in secure,
high data rate communications in support of military and other national
agency reconnaissance and surveillance applications. The Company's Secure
Communication Systems operations are located in Salt Lake City, Utah, Camden,
New Jersey and Shrewsbury, New Jersey. These operations are predominantly
cost plus, sole source contractors supporting long-term programs for the U.S.
Armed Forces and classified customers. The Company's major secure
communication programs and systems include: secure data links for airborne,
satellite, ground-and sea-based information collection and transmission;
strategic and tactical signal intelligence systems that detect, collect,
identify, analyze and disseminate information and related support contracts
for military and national agency intelligence efforts; as well as secure
telephone and network equipment. The Company believes that it has developed
virtually every high bandwidth data link used by the military for
surveillance and reconnaissance in operation today. L-3 is also a leading
supplier of communication software support services to military and related
government intelligence markets. In addition to these core Government
programs, L-3 is leveraging its technology base by
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expanding into related commercial communication equipment markets, including
applying its high data rate communications and archiving technology to the
medical image archiving market and its wireless communication expertise to
develop local wireless loop telecommunications equipment.
SPECIALIZED COMMUNICATION PRODUCTS. This business area includes (i)
Microwave Components, (ii) Avionics and Ocean Systems and (iii) Telemetry,
Instrumentation and Space Products operations of the Company.
Microwave Components. L-3 is the preeminent worldwide supplier of
commercial off-the-shelf, high performance microwave components and frequency
monitoring equipment. L-3's microwave products are sold under the
industry-recognized Narda brand name through a standard catalog to wireless,
industrial and military communication markets. L-3 also provides
state-of-the-art communication components including channel amplifiers and
frequency filters for the commercial communications satellite market.
Approximately 76% of Microwave Components sales is made to commercial
customers, including Loral Space & Communications, Ltd., Motorola, Inc.
("Motorola"), Lucent Technologies Inc. ("Lucent"), AT&T Corp. ("AT&T") and
Lockheed Martin Corporation ("Lockheed Martin").
Avionics and Ocean Systems. Avionics and Ocean Systems include the
Company's Aviation Recorders, Display Systems, Antenna Systems and Acoustic
Undersea Warfare Systems operations. L-3 is the world's leading manufacturer
of commercial cockpit voice and flight data recorders ("black boxes"). These
recorders are sold under the Fairchild brand name both on an original
equipment manufacturer ("OEM") basis to aircraft manufacturers as well as
directly to the world's major airlines for their existing fleets of aircraft.
L-3's aviation recorders are also installed on military transport aircraft
throughout the world. L-3 provides military and high-end commercial displays
for use on a number of DoD programs including the F-14, V-22, F-117 and E-2C.
Further, L-3 manufactures high performance surveillance antennas and related
equipment for U.S. Air Force, U.S. Army and U.S. Navy aircraft including the
F-15, F-16, AWACS, E-2C and B-2, as well as the U.K.'s maritime patrol
aircraft. L-3 is also one of the world's leading product suppliers of
acoustic undersea warfare systems and airborne dipping sonar systems to the
U.S. and over 20 foreign navies.
Telemetry, Instrumentation and Space Products. The Company's Telemetry,
Instrumentation and Space Products operations develop and manufacture
commercial off-the-shelf, real-time data collection and transmission products
and components for missile, aircraft and space-based electronic systems.
These products are used to gather flight parameter data and other critical
information and transmit it from air or space to the ground. Telemetry
products are also used for range safety and training applications to simulate
battlefield situations. L-3 is also a leading global satellite communications
systems and services provider offering systems and services used in satellite
transmission of voice, video and data.
EMERGING COMMERCIAL PRODUCTS. Building upon its core technical expertise
and capabilities, the Company is seeking to expand into several closely
aligned commercial business areas and applications. Emerging Commercial
Products currently include the following three niche markets: (i) medical
archiving and simulation systems; (ii) local wireless loop telecommunications
equipment; and (iii) airport security equipment. These commercial products
were developed based on technology used in the Company's military businesses
with relatively small incremental financial investments. The Company is
applying its technical capabilities in high data rate communications and
archiving technology developed in its Secure Communication Systems business
area to the medical image archiving market jointly with the General Electric
Company's ("GE") medical systems business ("GE Medical Systems"). Based on
secure, high data rate communication technology also developed in its Secure
Communication Systems business area, the Company has developed local wireless
loop telecommunications equipment that is primarily designed for emerging
market countries and rural areas where voice and data communication
infrastructure is inadequate or non-existent. L-3 has completed the
development phase for the local wireless loop telecommunications equipment
and made its initial shipment in January 1998. In addition, the Federal
Aviation Administration (the "FAA") has awarded the Company a development
contract for next
2
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generation airport security equipment for explosive detection. L-3 has
shipped two prototype test units and FAA certification testing commenced in
the first quarter of 1998. To date, revenues generated from L-3's Emerging
Commercial Products have not been, in the aggregate, material to the Company.
INDUSTRY OVERVIEW
The defense industry has recently undergone significant changes
precipitated by ongoing federal budget pressures and new roles and missions
to reflect changing strategic and tactical threats. Since the mid-1980's, the
overall U.S. defense budget has declined in real dollars. In response, the
DoD has focused its resources on enhancing its military readiness, joint
operations and digital command and control communications by incorporating
advanced electronics to improve the performance, reduce operating cost and
extend the life expectancy of its existing and future platforms. The emphasis
on system interoperability, force multipliers and providing battlefield
commanders with real-time data is increasing the electronics content of
nearly all of the major military procurement and research programs. As a
result, the DoD's budget for communications and defense electronics is
expected to grow. According to Federal Sources, an independent private
consulting group, the defense budget for command, control, communications and
intelligence ("C(3)I") is expected to increase from $31.0 billion in the
fiscal year ended September 30, 1997 to $42.0 billion in the fiscal year
ended September 30, 2002, a compound annual growth rate of 6.3%.
The industry has also undergone dramatic consolidation resulting in the
emergence of three dominant prime system contractors (The Boeing Company
("Boeing"), Lockheed Martin and Raytheon Company ("Raytheon")). One outgrowth
of this consolidation among the remaining major prime contractors is their
desire to limit purchases of products and sub-systems from one another.
However, there are numerous essential products, components and systems that
are not economical for the major prime contractors to design, develop or
manufacture for their own internal use which creates opportunities for
merchant suppliers such as L-3. As the prime contractors continue to evaluate
their core competencies and competitive position, focusing their resources on
larger programs and platforms, the Company expects the prime contractors to
continue to exit non-strategic business areas and procure these needed
elements on more favorable terms from independent, commercially oriented
merchant suppliers. Recent examples of this trend include divestitures of
certain non-core businesses by AlliedSignal Inc. ("AlliedSignal"), Ceridian
Corporation ("Ceridian"), Lockheed Martin and Raytheon.
The prime contractors' focus on cost control is also driving increased use
of commercial off-the-shelf products for upgrades of existing systems and in
new systems. The Company believes the prime contractors will continue to be
under pressure to reduce their costs and will increasingly seek to focus
their resources and capabilities on major systems, turning to commercially
oriented merchant suppliers to produce sub-systems, components and products.
Going forward, successful merchant suppliers will use their resources to
complement and support, rather than compete with the prime contractors. L-3
anticipates the relationship between the major prime contractors and their
primary suppliers will, as in the automotive and commercial aircraft
industry, develop into critical partnerships encompassing increasingly
greater outsourcing of non-core products and systems by the prime contractors
to their key merchant suppliers and increasing supplier participation in the
development of future programs. Early involvement in the upgrading of
existing systems and the design and engineering of new systems incorporating
these outsourced products will provide merchant suppliers, including the
Company, with a competitive advantage in securing new business and provide
the prime contractors with significant cost reduction opportunities through
coordination of the design, development and manufacturing processes.
BUSINESS STRATEGY
In 1997, management successfully integrated the business units of Lockheed
Martin it acquired in the L-3 Acquisition and enhanced the Company's
operating efficiency through reduced overhead expenses and facility
rationalization. These efforts resulted in improvements in sales,
profitability and competitive contract award win rates. Going forward, L-3
intends to leverage its market position, diverse program
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<PAGE>
base and favorable mix of cost plus to fixed price contracts to enhance its
profitability and to establish itself as the premier merchant supplier of
communication systems and products to the major prime contractors in the
aerospace/defense industry as well as the Government. The Company's strategy
to continue to achieve its objectives includes:
o EXPAND MERCHANT SUPPLIER RELATIONSHIPS. Management has developed
strong relationships with virtually all of the prime contractors, the DoD
and other major government agencies, enabling L-3 to identify business
opportunities and anticipate customer needs. As an independent merchant
supplier, the Company anticipates its growth will be driven by expanding
its share of existing programs and by participating in new programs.
Management identifies opportunities where it believes it will be able to
use its strong relationships to increase its business presence and allow
its customers to reduce their costs. The Company also expects to benefit
from increased outsourcing by prime contractors who in the past may have
limited their purchases to captive suppliers and who are now expected to
view L-3's capabilities on a more favorable basis given its status as an
independent company. L-3's independent status positions it to be the
desired merchant supplier to multiple bidders on prime contract bids. As
an example of the Company's merchant supplier strategy, L-3 equipment is
included in all three prime contractor bids for the Airborne Standoff
Radar ("ASTOR") program in the United Kingdom and both prime contractor
bids for the DoD's Joint Air Surface Standoff Missile ("JASSM") program.
o SUPPORT CUSTOMER REQUIREMENTS. A significant portion of L-3's sales
are derived from high-priority, long-term programs and from programs for
which the Company has been the incumbent supplier, and in many cases acted
as the sole provider, over many years. Approximately 65% of the Company's
total pro forma 1997 sales were generated from sole source contracts.
L-3's customer satisfaction and excellent performance record are evidenced
by its performance-based award fees exceeding 90% on average over the past
two years. Management believes prime contractors will increasingly award
long-term, sole source, outsourcing contracts to the merchant supplier
they believe is most capable on the basis of quality, responsiveness,
design, engineering and program management support as well as cost.
Reflecting L-3's strong competitive position, the Company (excluding the
1998 Acquisitions) has experienced a contract award win rate in 1997 in
excess of 60% on new competitive contracts for which it competes and in
excess of 90% on contracts for which it is the incumbent. The Company
intends to continue to align its research and development, manufacturing
and new business efforts to complement its customers' requirements and
provide state-of-the-art products.
o ENHANCE OPERATING MARGINS. Since the L-3 Acquisition in April 1997,
management has reduced corporate administrative and facilities expenses,
increased sales and improved competitive contract award win rates.
Enhancement of operating margins was primarily due to efficient management
and elimination of significant corporate expense allocations which existed
prior to the L-3 Acquisition. Pro forma EBITDA (excluding the 1998
Acquisitions) as a percentage of sales improved from 12.5% in 1996 to
13.4% in 1997. Management intends to continue to enhance its operating
performance by reducing overhead expenses, continuing consolidation and
increasing productivity.
o LEVERAGE TECHNICAL AND MARKET LEADERSHIP POSITIONS. L-3 has developed
strong, proprietary technical capabilities that have enabled it to capture
a number one or two market position in most of its key business areas,
including secure, high data rate communications systems, solid state
aviation recorders, telemetry, instrumentation and space products,
advanced antenna systems and high performance microwave components. Over
the past three years, the Company, on a pro forma basis, has invested over
$150.0 million in Company-sponsored independent research and development,
including bid and proposal costs, in addition to making substantial
investments in its technical and manufacturing resources. Further, the
Company has a highly skilled workforce including approximately 2,000
engineers. Management is applying the Company's technical expertise and
capabilities into several closely aligned commercial business areas and
applications, such as medical imaging archive management, wireless
telephony and airport security equipment and will continue to explore
other similar commercial opportunities.
4
<PAGE>
o MAINTAIN DIVERSIFIED BUSINESS MIX. The Company enjoys a diverse
business mix with a limited program exposure, a favorable balance of cost
plus and fixed price contracts, a significant sole source follow-on
business and an attractive customer profile. The Company's largest
program, representing 13% of 1997 pro forma sales, is a long-term, sole
source, cost plus contract for the U-2 Program. No other program
represented more than 7% of pro forma 1997 sales. Further, the Company's
pro forma sales mix of contracts in 1997 was 36% cost plus and 64% fixed
price, providing the Company with a favorable mix of predictable
profitability (cost plus) and higher margin (fixed price) business. L-3
also enjoys an attractive customer mix of defense and commercial business,
with DoD related sales accounting for 62% and commercial and federal
(non-DoD) sales accounting for 38% of 1997 pro forma sales. The Company
intends to leverage this favorable business profile to expand its merchant
supplier business base.
o CAPITALIZE ON STRATEGIC ACQUISITION OPPORTUNITIES. Recent industry
consolidation has essentially eliminated traditional middle-tier
aerospace/defense companies. This level of consolidation is now beginning
to draw the concern of the DoD and federal anti-trust regulators. In 1997,
a number of mezzanine companies were sold: Computing Devices International
division of Ceridian to General Dynamics Corp. ("General Dynamics"), Kaman
Sciences Corp. ("Kaman Sciences") to ITT Industries, Inc. ("ITT"), BDM
International, Inc. ("BDM") to TRW Inc. ("TRW") and TASC Inc., a
subsidiary of Primark Corporation, to Litton Industries, Inc. ("Litton").
As a result, the Company anticipates that the consolidation of the smaller
participants in the defense industry will create attractive complementary
acquisition candidates for L-3 in the future as these companies continue
to evaluate their core competencies and competitive position. L-3 intends
to enhance its existing product base through internal research and
development efforts as well as selective acquisitions and add new products
to its product base through acquisitions in areas synergistic with L-3's
present technology. The Company seeks to acquire potential targets with
the following criteria: (i) significant market position in its business
area, (ii) product offerings which complement and/or extend those of L-3
and (iii) positive future growth and earnings prospects.
RECENT DEVELOPMENTS
Since the formation of the Company in April 1997, the Company has actively
pursued its acquisition strategy. The Company recently purchased the assets
and liabilities of three businesses described below which collectively
comprise the "1998 Acquisitions". The combined purchase price for the 1998
Acquisitions was $146.4 million of cash, subject to certain post-closing
adjustments, and in one case certain additional consideration based on
post-closing performance. The Company has financed these acquisitions through
the use of its existing cash balances as well as through borrowings under the
$375.0 million Senior Credit Facilities (as defined). See "Description of
Certain Indebtedness -- Senior Credit Facilities." These three businesses
complement and extend L-3's product offerings.
Ocean Systems
On March 30, 1998, L-3 Communications purchased the assets of the Ocean
Systems business ("Ocean Systems") of AlliedSignal for $67.5 million in cash.
In 1997, Ocean Systems had sales of $73.0 million. Ocean Systems is one of
the world's leading products suppliers of acoustic undersea warfare systems,
having designed, manufactured and supported a broad range of compact,
lightweight, high performance acoustic systems for navies around the world
for over 40 years. Ocean Systems is the leading products supplier of airborne
dipping sonar systems in the world with substantial market share of the
sector and systems in service with the U.S. and 20 foreign navies. Ocean
Systems also produces several sea systems products including towed array
sonar, integrated side-looking sonar, acoustic jammers, mine detection and
torpedo defense systems and supplies commercial navigation and hydrographic
survey systems worldwide. Ocean Systems is further supported by its ELAC
Nautik GmbH ("ELAC") operations located in Kiel, Germany. ELAC manufactures a
broad range of naval defense products including submarine, torpedo and
navigation sonars as well as survey and navigation systems for the
5
<PAGE>
commercial nautical products industry. Ocean Systems expands L-3's leading
products and capabilities into the undersea and anti-submarine warfare market
place.
ILEX Systems
On March 4, 1998, L-3 Communications purchased the assets of ILEX Systems
("ILEX") for $51.9 million in cash, subject to adjustment based on closing
net assets, plus additional consideration based on post-closing performance
of ILEX, which could include the issuance of up to 540,000 shares of Common
Stock over the next three years. In 1997, ILEX had sales of $63.5 million.
ILEX is a leading supplier of communication software support services to
military and related government intelligence markets. ILEX also provides
environmental consulting, software and systems engineering services and
complementary products to several commercial markets. ILEX complements L-3's
Secure Communication Systems business area by adding software expertise in
critical C(3)I programs and increasing the number of the Company's skilled
workforce by adding approximately 500 software system engineers and
scientists.
Satellite Transmission Systems
On February 5, 1998, L-3 Communications purchased the assets of the
Satellite Transmission Systems division ("STS") of California Microwave, Inc.
for $27.0 million, subject to adjustment based on closing net assets. For the
fiscal year ended June 30, 1997, STS had sales of $68.0 million. STS is a
leading global satellite communications systems and services provider. Its
customers include foreign post, telephone and telegraph administrations,
domestic and international prime communications infrastructure contractors,
telecommunications and satellite service providers, broadcasters and
media-related companies, government agencies and large corporations. STS
expands L-3's ability to apply its products and provides networking
capability to L-3's wireless communications products business. STS also opens
new opportunities in broader, international markets.
The Company considers and executes strategic acquisitions on an ongoing
basis and may be evaluating acquisitions or engaged in acquisition
negotiations at any given time. As of the date hereof, the Company has
completed, has reached agreement on or is in discussions regarding certain
acquisitions, in addition to the 1998 Acquisitions, that are either
individually or in the aggregate not material to the financial condition or
results of operations of the Company.
HISTORY
Holdings and L-3 Communications were formed in April 1997 by Mr. Frank C.
Lanza, the former President and Chief Operating Officer of Loral Corporation
("Loral"), Mr. Robert V. LaPenta, the former Senior Vice President and
Controller of Loral (collectively, "Senior Management"), Lehman Brothers
Capital Partners III, L.P. and its affiliates (the "Lehman Partnership") and
Lockheed Martin to acquire (the "L-3 Acquisition") substantially all of the
assets and certain liabilities of (i) nine business units previously
purchased by Lockheed Martin as part of its acquisition of Loral in April
1996 (the "Loral Acquired Businesses") and (ii) one business unit,
Communication Systems -- East (formerly known as Communication Systems --
Camden), purchased by Lockheed Martin as part of its acquisition of the
aerospace business of GE ("GE Aerospace") in April 1993 (collectively, the
"Businesses"). L-3 Communications is a wholly-owned subsidiary of Holdings.
Prior to the consummation of the Common Stock Offering, Messrs. Lanza and
LaPenta and certain other members of management collectively own 17.8%; the
Lehman Partnership owns 49.0%; and Lockheed Martin owns 33.2% of the
outstanding capital stock of Holdings.
6
<PAGE>
THE COMMON STOCK OFFERING
Common Stock offered
U.S. Offering.............................. 4,400,000 shares
International Offering..................... 1,100,000 shares
Total................................... 5,500,000 shares
Common Stock outstanding after the Common
Stock Offering............................... 25,957,142 shares(1)
Use of proceeds ............................. The Company intends to use the
net proceeds from the Common
Stock Offering, together with
the net proceeds from the Notes
Offering, to repay a
substantial portion of its
existing indebtedness under the
Senior Credit Facilities and
for general corporate purposes,
including potential
acquisitions. See "Use of
Proceeds".
Proposed NYSE symbol ........................
Risk factors ................................ Prospective purchasers of the
Common Stock offered hereby
should carefully consider the
information set forth under the
caption "Risk Factors" and all
other information set forth in
this Prospectus before making
any investment in the Common
Stock.
- ------------
(1) Assumes no exercise of the over-allotment option by the Underwriters
and excludes an aggregate of 3,798,673 shares of Common Stock reserved
for issuance under the 1997 Stock Option Plan. See
"Management--Executive Compensation" and "--Stock Option Plan".
CONCURRENT NOTES OFFERING
Notes Offering.............................. L-3 Communications is
concurrently offering to the
public $150.0 million aggregate
principal amount of its %
Senior Subordinated Notes due
2008.
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<PAGE>
SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA AND HISTORICAL FINANCIAL DATA
The summary unaudited pro forma data as of March 31, 1998 and for the
three months ended March 31, 1998 and 1997 and for the year ended December
31, 1997 have been derived from, and should be read in conjunction with, the
unaudited pro forma condensed consolidated financial statements included
elsewhere herein. The unaudited pro forma statement of operations and other
data reflect the L-3 Acquisition, the 1998 Acquisitions and the Offerings as
if such transactions had occurred on January 1, 1997 for the statement of
operations and other data. The unaudited pro forma balance sheet data reflect
the Offerings as if they had occurred on March 31, 1998.
The summary historical consolidated (combined) financial data as of and
for the nine months ended December 31, 1997 and the years ended December 31,
1996, 1995 and 1994 and the three months ended March 31, 1997 have been
derived from the audited financial statements for the respective periods. The
summary consolidated (combined) financial data as of and for the three months
ended March 31, 1998 have been derived from the unaudited condensed
consolidated financial statements of the Company. In the opinion of the
Company's management, such unaudited financial statements reflect all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation of the results for the interim periods presented. The
results of operations for the three months ended March 31, 1998 are not
necessarily indicative of results for the full year.
The summary financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated (Combined) Financial Statements of the
Company (Predecessor Company) and the Combined Financial Statements of the
Loral Acquired Businesses included elsewhere herein. Prior to April 1, 1996,
the Predecessor Company was only comprised of Communication Systems -- East.
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
---------------------------------------------- --------------------------------------
NINE THREE
THREE MONTHS ENDED YEAR ENDED MONTHS MONTHS
MARCH 31, 1998 DECEMBER 31, ENDED ENDED YEAR ENDED DECEMBER 31,
-------------------- 1997 DEC. 31,(1) MARCH 31, ---------------------------
PRO FORMA HISTORICAL PRO FORMA 1997 1997 1996(2) 1995(3) 1994(3)
--------- ---------- --------- ----------- --------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales ................................... $207.3 $ 186.6 $894.0 $ 546.5 $158.9 $ 543.1 $166.8 $218.9
Operating income ........................ 11.1 14.1 58.4 55.9 7.9 43.7 4.7 8.4
Interest expense, net(4) ................ 10.6 9.8 42.4 28.5 8.4 24.2 4.5 5.5
Provision (benefit) for income taxes(4).. 0.6 1.7 4.7 10.7 (0.2) 7.8 1.2 2.3
Net income (loss)........................ (0.1) 2.6 11.2 16.7 (0.3) 11.7 (1.0) 0.6
Net income (loss) per share
Basic................................... $(0.00) $ 0.13 $ 0.44 $ 0.84
Diluted................................. (0.00) 0.13 0.43 0.84
Weighted average number of shares
outstanding
Basic................................... 26.7 20.2 25.5 20.0
Diluted................................. 26.8 20.8 26.3 20.0
BALANCE SHEET DATA:
Working capital ......................... $137.5 $ 92.6 $ 131.8 $ 98.8 $ 21.1 $ 19.3
Total assets ............................ 926.8 880.4 703.4 593.3 228.5 233.3
Long-term debt........................... 415.2 459.6 392.0
Invested equity ......................... 473.6 194.7 199.5
Shareholders' equity..................... 235.2 124.1 118.1
OTHER DATA:
EBITDA(5) ............................... $ 20.0 $ 21.6 $ 95.1 $ 78.1 $ 15.7 $ 71.8 $ 16.3 $ 19.9
Net cash from (used in) operating
activities.............................. 11.1 73.9 (16.3) 30.7 9.3 21.8
Net cash (used in) investing activities.. (148.7) (457.8) (4.3) (298.0) (5.5) (3.7)
Net cash from (used in) financing
activities.............................. 69.2 461.4 20.6 267.3 (3.8) (18.1)
Depreciation expense .................... 5.3 4.6 22.0 13.3 4.5 14.9 5.5 5.4
Amortization expense .................... 3.6 2.9 14.7 8.9 3.3 13.2 6.1 6.1
Capital expenditures .................... 2.9 2.3 19.9 11.9 4.3 13.5 5.5 3.7
Ratios of:
Earnings to fixed charges(6)............ 1.0x 1.4x 1.3x 1.8x --(7) 1.7x 1.0x 1.4x
EBITDA to cash interest expense(8)(9) .. 2.7x 2.5x 2.4x
Net debt to EBITDA(9)(10)............... 3.4x 4.6x 4.0x
</TABLE>
(Footnotes on the following page)
8
<PAGE>
- ------------
(1) Reflects the L-3 Acquisition effective April 1, 1997.
(2) Reflects ownership of Loral's Communication Systems -- West and
Specialized Communication Products businesses commencing April 1, 1996.
(3) Reflects ownership of Communication Systems -- East by Lockheed Martin
effective April 1, 1993.
(4) For periods prior to April 1, 1997, interest expense and income tax
(benefit) provision were allocated from Lockheed Martin.
(5) EBITDA is defined as operating income plus depreciation expense and
amortization expense (excluding the amortization of deferred debt
issuance costs). EBITDA is not a substitute for operating income, net
income and cash flow from operating activities as determined in
accordance with generally accepted accounting principles as a measure
of profitability or liquidity. EBITDA is presented as additional
information because management believes it to be a useful indicator of
the Company's ability to meet debt service and capital expenditure
requirements.
(6) For purposes of this computation, earnings consist of income before
income taxes plus fixed charges. Fixed charges consist of interest on
indebtedness plus that portion of lease rental expense representative
of the interest element.
(7) Earnings were insufficient to cover fixed charges by $0.5 million for
the three months ended March 31, 1997.
(8) For purposes of this computation, cash interest expense consists of pro
forma interest expense excluding amortization of deferred debt issuance
costs.
(9) These ratios as of and for the three months ended March 31, 1998 are
based on the results of operations for the twelve month period ended
March 31, 1998. The pro forma ratios have been calculated by adding the
pro forma EBITDA and cash interest expense for the year ended December
31, 1997 and the three months ended March 31, 1998 and deducting the
pro forma EBITDA and cash interest expense for the three months ended
March 31, 1997. For purposes of computing pro forma EBITDA for the
three months ended March 31, 1997, depreciation expense and
amortization expense were $6.0 million and $2.7 million, respectively.
The historical ratios have been calculated by adding historical EBITDA
and cash interest expense for the nine months ended December 31, 1997
and the three months ended March 31, 1998.
(10) Net debt is defined as long-term debt plus current portion of long-term
debt less cash and cash equivalents.
9
<PAGE>
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the following factors before
deciding to invest in the Common Stock.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged as a result of substantial indebtedness
incurred in connection with the L-3 Acquisition and the 1998 Acquisitions.
After giving pro forma effect to the L-3 Acquisition, the 1998 Acquisitions
and the Offerings, the Company would have had $415.2 million of indebtedness
outstanding, of which $36.9 million would have been Senior Debt (excluding
letters of credit), and the Company's ratio of earnings to fixed charges
would have been 1.0x for the three months ended March 31, 1998. The Company
may incur additional indebtedness in the future, subject to limitations
imposed by its debt instruments, including the Senior Credit Facilities and
the Indentures.
Based upon the current level of operations and anticipated improvements,
management believes that the Company's cash flow from operations, together
with proceeds from the Offerings and available borrowings under the Revolving
Credit Facility, will be adequate to meet its anticipated requirements for
working capital, capital expenditures, research and development expenditures,
program and other discretionary investments, interest payments and scheduled
principal payments for the foreseeable future, at least for the next three
years. There can be no assurance, however, that the Company's business will
continue to generate cash flow at or above current levels or that currently
anticipated improvements will be achieved. If the Company is unable to
generate sufficient cash flow from operations in the future to service its
debt, it may be required to sell assets, reduce capital expenditures,
refinance all or a portion of its existing debt or obtain additional
financing. The Company's ability to make scheduled principal payments of, to
pay interest on or to refinance its indebtedness depends on its future
performance and financial results, which, to a certain extent, are subject to
general conditions in or affecting the defense industry and to general
economic, political, financial, competitive, legislative and regulatory
factors beyond its control. There can be no assurance that sufficient funds
will be available to enable the Company to service its indebtedness or make
necessary capital expenditures and program and other discretionary
investments. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations".
The degree to which the Company is leveraged could have important
consequences, including, but not limited to, the following: (i) a substantial
portion of the Company's cash flow from operations will be required to be
dedicated to debt service and will not be available for other purposes
including capital expenditures, research and development expenditures, and
program and other discretionary investments; (ii) the Company's ability to
obtain additional financing in the future could be limited; (iii) certain of
the Company's borrowings are at variable rates of interest, which could
result in higher interest expense in the event of increases in interest
rates; (iv) the Company may be more vulnerable to downturns in its business
or in the general economy and may be restricted from making acquisitions,
introducing new technologies and products or exploiting business
opportunities; and (v) the Senior Credit Facilities and the Indentures
contain financial and restrictive covenants that limit, among other things,
the ability of the Company to borrow additional funds, dispose of assets or
pay cash dividends. Failure by the Company to comply with such covenants
could result in an event of default which, if not cured or waived, could have
a material adverse effect on the Company. See "Description of Certain
Indebtedness".
ACQUISITION STRATEGY
The Company's strategy includes pursuing additional acquisitions that will
complement its business. There can be no assurance, however, that the Company
will be able to identify additional acquisition candidates on commercially
reasonable terms or at all or that, if consummated, any anticipated benefits
will be realized from such future acquisitions. In addition, the availability
of additional acquisition financing cannot be assured and, depending on the
terms of such additional acquisitions, could be restricted by the terms of
the Senior Credit Facilities and/or the Indentures.
The process of integrating acquired operations, including the 1998
Acquisitions, into the Company's existing operations may result in unforeseen
operating difficulties and may require significant financial
10
<PAGE>
and managerial resources that would otherwise be available for the ongoing
development or expansion of the Company's existing operations. Possible
future acquisitions by the Company could result in the incurrence of
additional debt, contingent liabilities and amortization expenses related to
goodwill and other intangible assets, all of which could materially adversely
affect the Company's financial condition and operating results.
SIGNIFICANT CUSTOMERS
The Company's sales are predominantly derived from contracts with agencies
of, and prime contractors to, the Government. Although DoD procurement
spending has declined from the mid-1980s resulting in delays for some new
program starts, program stretch-outs and program cancellations, the U.S.
defense budget began to stabilize in fiscal 1996. In 1997, the Company
performed under approximately 150 contracts with value exceeding $1.0 million
for the Government. Pro forma sales in 1997 to the Government, including pro
forma sales to the Government through prime contractors, were $651.1 million,
representing approximately 73% of the Company's corresponding sales. The
Company's largest Government program, a cost plus, sole source contract for
support of the U-2 Program of the DoD, contributed 13% of pro forma sales for
1997. No other program represented more than 7% of the Company's pro forma
sales in 1997. The loss of all or a substantial portion of sales to the
Government would have a material adverse effect on the Company's income and
cash flow. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business -- Government Contracts".
Pro forma sales by the Company to Lockheed Martin were $81.6 million in
1997 or 9.1% of the Company's total pro forma sales. The loss of all or a
substantial portion of such sales to Lockheed Martin would have a material
adverse effect on the Company's income and cash flow.
RISKS INHERENT IN GOVERNMENT CONTRACTS
The reduction in the U.S. defense budget in the early 1990s has caused
most defense-related government contractors to experience declining revenues,
increased pressure on operating margins and, in certain cases, net losses.
The Company's businesses taken as a whole have experienced a substantial
decline in sales during such period. A significant decline in U.S. military
expenditures in the future could materially adversely affect the Company's
sales and earnings. The loss or significant curtailment of a material program
in which the Company participates could also materially adversely affect the
Company's future sales and earnings and thus the Company's ability to meet
its financial obligations.
Companies engaged primarily in supplying defense-related equipment and
services to government agencies are subject to certain business risks
peculiar to the defense industry. These risks include, among other things,
the ability of the Government to: (i) suspend unilaterally the Company from
receiving new contracts pending resolution of alleged violations of
procurement laws or regulations, (ii) terminate existing contracts, (iii)
audit the Company's contract-related costs and fees, including allocated
indirect costs, and (iv) control and potentially prohibit the export of the
Company's products.
All of the Company's Government contracts are, by their terms, subject to
termination by the Government either for its convenience or for default of
the contractor. Termination for convenience provisions provide only for the
recovery by the Company of costs incurred or committed, settlement expenses
and profit on work completed prior to termination. Termination for default
provisions provide for the contractor to be liable for excess costs incurred
by the Government in procuring undelivered items from another source. In
addition to the right of the Government to terminate, Government contracts
are conditioned upon the continuing availability of Congressional
appropriations. Congress usually appropriates funds for a given program on a
fiscal-year basis even though contract performance may take more than one
year. Consequently, at the outset of a major program, the contract is usually
partially funded, and additional monies are normally committed to the
contract by the procuring agency only if, as and when appropriations are made
by Congress for future fiscal years. Foreign defense contracts generally
contain comparable provisions relating to termination at the convenience of
the government.
The Company is subject to audit and review by the Government of its costs
and performance on, and accounting and general business practices relating
to, Government contracts. The Company's contract
11
<PAGE>
related costs and fees, including allocated indirect costs, are subject to
adjustment based on the results of such audits. In addition, under Government
purchasing regulations, certain of the Company's costs, including certain
financing costs, goodwill, portions of research and development costs, and
certain marketing expenses may not be reimbursable under Government
contracts. Further, as a government contractor, the Company is also subject
to investigation, legal action and/or liability that would not apply to a
commercial company.
The Company is subject to risks associated with the frequent need to bid
on programs in advance of design completion (which may result in unforeseen
technological difficulties and/or cost overruns), the substantial time and
effort required for relatively unproductive design and development, design
complexity and rapid obsolescence, and the constant necessity for design
improvement. The Company obtains many of its Government contracts through a
process of competitive bidding. There can be no assurance that the Company
will continue to be successful in winning competitively awarded contracts or
that awarded contracts will generate sufficient sales to result in
profitability for the Company. See "Business -- Major Customers" and
"--Government Contracts".
In addition to these Government contract risks, many of the Company's
products and systems require licenses from Government agencies for export
from the United States, and certain of the Company's products currently are
not permitted to be exported. There can be no assurance that the Company will
be able to gain any and all licenses required to export its products, and
failure to receive the required licenses could materially reduce the
Company's ability to sell its products outside the United States.
RISKS ASSOCIATED WITH FIXED PRICE CONTRACTS
The Company's products and services are provided primarily through fixed
price or cost plus contracts. Approximately 64% of the Company's pro forma
sales in 1997 were attributable to fixed price contracts. The financial
results of long-term fixed price contracts are recognized using the
cost-to-cost percentage-of-completion method. As a result, revisions in
revenues and profit estimates are reflected in the period in which the
conditions that require such revisions become known and are estimable. The
risks inherent in long-term fixed price contracts include the difficulty of
forecasting costs and schedules, contract revenues that are related to
performance in accordance with contract specifications and potential for
component obsolescence in connection with long-term procurements. Failure to
anticipate technical problems, estimate costs accurately or control costs
during performance of a fixed price contract may reduce the Company's
profitability or cause a loss. Although the Company believes that adequate
provisions for losses for its fixed price contracts are reflected in its
financial statements, no assurance can be given that these provisions are
adequate or that losses on fixed price and time-and-material contracts will
not occur in the future.
TECHNOLOGICAL CHANGE; NEW PRODUCT DEVELOPMENT
The communication equipment industry for defense applications and in
general is characterized by changing technology. The Company's ability to
compete successfully in this market will depend on its ability to design,
develop, manufacture, assemble, test, market and support new products and
enhancements on a timely and cost-effective basis. The Company has
historically obtained technology from substantial customer-sponsored research
and development as well as from internally funded research and development;
however, there can be no assurance that the Company will continue to maintain
comparable levels of customer-sponsored research and development in the
future. See "Business -- Research and Development". Substantial funds have
been allocated to capital expenditures and programs and other discretionary
investments in the past and will continue to be required in the future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations". There can be no assurance that the Company will successfully
identify new opportunities and continue to have financial resources to
develop new products in a timely or cost-effective manner, or that products
and technologies developed by others will not render the Company's products
and systems obsolete or non-competitive.
12
<PAGE>
ENTRY INTO COMMERCIAL BUSINESS
The Company's revenues historically have been derived principally from
business with the DoD and other government agencies. In addition to
continuing to pursue this major market area, the Company intends to pursue a
strategy that leverages its technical capabilities and expertise into related
commercial markets. Certain of the Company's commercial products, such as
local wireless loop telecommunications equipment, medical image archiving
equipment and airport security equipment, have only been recently introduced
or are in the early stages of development. As such, these new products are
subject to certain risks, including the need to develop and maintain
marketing, sales and customer support capabilities, to secure third-party
manufacturing and distribution arrangements, to obtain certification, to
respond to rapid technological advances and, ultimately, to customer
acceptance of these products and product performance. The Company's efforts
to expand its presence in the commercial market will require significant
resources including capital and management time. There can be no assurance
that the Company will be successful in addressing these risks or in
developing these commercial business opportunities.
COMPETITION
The communications equipment industry for defense applications and as a
whole is highly competitive. Declining defense budgets and increasing
pressures for cost reductions have precipitated a major consolidation in the
defense industry. The DoD's increased use of commercial off-the-shelf
products and components in military equipment is expected to increase the
entrance of new competitors. In addition, consolidation has resulted in
delays in contract funding or awards and significant predatory pricing
pressures associated with increased competition and reduced funding. The
Company expects that the emergence of merchant suppliers will increase
competition for OEM business. The Company's ability to compete for defense
contracts depends to a large extent on the effectiveness and innovativeness
of its research and development programs, its ability to offer better program
performance than its competitors at a lower cost to the Government customer
and its readiness in facilities, equipment and personnel to undertake the
programs for which it competes. In some instances, programs are sole source
or work directed by the Government to a single supplier. In such cases, there
may be other suppliers who have the capability to compete for the programs
involved, but they can only enter or reenter the market if the Government
should choose to reopen the particular program to competition. Many of the
Company's competitors are larger and have substantially greater financial and
other resources than the Company. See "Business -- Competition".
LIMITED OPERATING HISTORY
Prior to the L-3 Acquisition, the Company's operations were conducted as
divisions of Lockheed Martin, Loral, Unisys Corp. ("Unisys") and GE
Aerospace. Following the L-3 Acquisition in April 1997, the Company has
operated independently of Lockheed Martin and has provided many corporate
services on a stand-alone basis that were previously provided by Lockheed
Martin, including research and development, marketing, and general and
administrative services including tax, treasury, management information
systems, human resources and legal services. Lockheed Martin currently
provides certain management information systems services to certain divisions
of the Company. There can be no assurance that the actual corporate services
costs incurred in operating the Company will not exceed historical charges or
that the Company will be able to obtain similar services on comparable terms.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant degree upon the continued
contributions of the Company's management, including Messrs. Lanza and
LaPenta, and its ability to attract and retain other highly qualified
management and technical personnel. Messrs. Lanza and LaPenta invested
approximately $18 million to purchase 16.6% of the initial capital stock of
Holdings. Holdings has entered into employment agreements with Messrs. Lanza
and LaPenta. See "Management -- Employment Agreements". The Company also
faces competition for management and technical personnel from other companies
and organizations. There can be no assurance that the Company will continue
to be successful in hiring and retaining key personnel. See "Management --
Directors and Executive Officers".
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<PAGE>
ENVIRONMENTAL LIABILITIES
The Company's operations are subject to various federal, state and local
environmental laws and regulations relating to the discharge, storage,
treatment, handling, disposal and remediation of certain materials,
substances and wastes used in its operations. The Company continually
assesses its obligations and compliance with respect to these requirements.
Management believes that the Company's current operations are in substantial
compliance with all applicable environmental laws and permits. The Company
does not believe that its environmental compliance expenditures will have a
material adverse effect on its financial condition or the results of its
operations.
In connection with the L-3 Acquisition, the Company has agreed to assume
certain on-site and off-site environmental liabilities related to events or
activities occurring prior to the L-3 Acquisition. Lockheed Martin has agreed
to retain all environmental liabilities for all facilities no longer used by
the Businesses and to indemnify fully the Company for such prior site
environmental liabilities. Lockheed Martin has also agreed, for the first
eight years following April 1997, to pay 50% of all costs incurred by the
Company above those reserved for on the Company's balance sheet at April 1997
relating to certain Company-assumed environmental liabilities and, for the
seven years thereafter, to pay 40% of certain reasonable operation and
maintenance costs relating to any environmental remediation projects
undertaken in the first eight years. The Company is aware of environmental
contamination at two of the facilities acquired from Lockheed Martin that
will require ongoing remediation. In November 1997, the Company sold one such
facility located in Sarasota, Florida, while retaining a leasehold interest
in a portion of that facility, to Dames & Moore/Brookhill LLC ("DMB") in a
transaction in which DMB contractually agreed to assume responsibility for
further remediation of the Sarasota site. Management believes that the
Company has established adequate reserves for the potential costs associated
with the assumed environmental liabilities. However, there can be no
assurance that any costs incurred will be reimbursable from the Government or
covered by Lockheed Martin under the terms of the L-3 Acquisition Agreement
or that the Company's environmental reserves will be sufficient.
BACKLOG
The Company's backlog represents orders under contracts which are
primarily with the Government. The Government enjoys broad rights to modify
unilaterally or terminate such contracts. Accordingly, most of the Company's
backlog is subject to modification and termination at the Government's will.
There can be no assurance that the Company's backlog will become revenues in
any particular period or at all. Further, there can be no assurance that the
margins on any contract included in backlog that does become revenue will be
profitable.
OWNERSHIP OF HOLDINGS AND L-3 COMMUNICATIONS
After giving effect to the Common Stock Offering, the Lehman Partnership
will own 38.6% of the outstanding voting stock of Holdings (or 37.4% if the
Underwriters' over-allotment option is exercised in full), which owns all of
the outstanding common stock of L-3 Communications. By virtue of such
ownership, the Lehman Partnership will have the power to influence
significantly the business and the affairs of Holdings and L-3 Communications
because of its significant voting power with respect to actions requiring
stockholder approval. The concentration in ownership of Holdings may preclude
Holdings from being acquired in a transaction not supported by Holdings'
principal stockholders, may render more difficult or discourage a proposed
merger or tender offer, may preclude a successful proxy contest or may
otherwise have an adverse effect on the market price of the Common Stock. See
"Ownership of Capital Stock".
14
<PAGE>
PENSION PLAN LIABILITIES
Pursuant to the L-3 Acquisition Agreement, Holdings and L-3 Communications
assumed certain liabilities relating to defined benefit pension plans for
present and former employees and retirees of certain businesses which were
transferred from Lockheed Martin to Holdings and L-3 Communications. Prior to
the consummation of the L-3 Acquisition, Lockheed Martin received a letter
from the Pension Benefit Guaranty Corporation (the "PBGC") which requested
information regarding the transfer of such pension plans and indicated that
the PBGC believed certain of such pension plans were underfunded using the
PBGC's actuarial assumptions (which assumptions resulted in a larger
liability for accrued benefits than the assumptions used for financial
reporting under Statement of Financial Accounting Standards Board No. 87,
"Accounting for Pension Costs" ("FASB 87")). The PBGC underfunding is related
to the Communication Systems -- West, Aviation Recorders and Hycor pension
plans (collectively, the "Subject Plans"). As of December 31, 1997, the
Company calculated the net funding position of the Subject Plans and believes
them to be overfunded by approximately $5.9 million under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), assumptions,
underfunded by approximately $10.2 million under FASB 87 assumptions and, on
a termination basis, underfunded by as much as $57.5 million under PBGC
assumptions.
L-3 Communications, Lockheed Martin and the PBGC entered into certain
agreements dated as of April 30, 1997 that include Lockheed Martin providing
a commitment to the PBGC with regard to the Subject Plans and L-3
Communications providing certain assurances to Lockheed Martin regarding such
plans. See "Business -- Pension Plans". The Company expects, based in part
upon discussions with its consulting actuaries, that any increase in pension
expenses or future funding requirements from those previously anticipated for
the Subject Plans would not be material. However, there can be no assurance
that the impact of any increased pension expenses or funding requirements
under this arrangement would not be material to the Company.
RESTRICTIONS IMPOSED BY THE SENIOR CREDIT FACILITIES AND THE INDENTURES
The Senior Credit Facilities and the Indentures contain a number of
significant covenants that, among other things, restrict the ability of L-3
Communications to dispose of assets, incur additional indebtedness, repay
other indebtedness, pay dividends, make certain investments or acquisitions,
repurchase or redeem capital stock, engage in mergers or consolidations, or
engage in certain transactions with subsidiaries and affiliates and otherwise
restrict corporate activities. There can be no assurance that such
restrictions will not adversely affect L-3 Communications' ability to finance
its future operations or capital needs or engage in other business activities
that may be in the interest of L-3 Communications. In addition, the Senior
Credit Facilities also require L-3 Communications to maintain compliance with
certain financial ratios, including total EBITDA to total interest expense
and total debt to total EBITDA, and limit capital expenditures by L-3
Communications. The ability of L-3 Communications to comply with such ratios
and limits may be affected by events beyond L-3 Communications' control. A
breach of any of these covenants or the inability of L-3 Communications to
comply with the required financial ratios or limits could result in a default
under the Senior Credit Facilities. In the event of any such default, the
lenders under the Senior Credit Facilities could elect to declare all
borrowings outstanding under the Senior Credit Facilities, together with
accrued interest and other fees, to be due and payable, to require L-3
Communications to apply all of its available cash to repay such borrowings or
to prevent L-3 Communications from making debt service payments on other
indebtedness, including the 1997 Notes and the Notes. If L-3 Communications
were unable to repay any such borrowings when due, the lenders could proceed
against their collateral. In connection with the Senior Credit Facilities,
L-3 Communications has granted the lenders thereunder a first priority lien
on substantially all of its assets. The lenders under the Senior Credit
Facilities will also have a first priority security interest in all of the
capital stock of L-3 Communications and its subsidiaries. If the indebtedness
under the Senior Credit Facilities, the 1997 Notes or the Notes were to be
accelerated, there can be no assurance that the assets of L-3 Communications
would be sufficient to repay such indebtedness in full. See "Description of
Certain Indebtedness".
15
<PAGE>
ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Common Stock Offering, there has been no public market for
the Common Stock. There can be no assurance that an active trading market
will develop for the Common Stock after the Common Stock Offering or, if
developed, that such market will be sustained. The initial public offering
price of the Common Stock will be based on negotiations between the Company
and the Underwriters and may bear no relationship to the price at which the
Common Stock will trade after the completion of the Common Stock Offering.
See "Underwriting" for factors to be considered in determining the initial
public offering price. In addition, quarterly operating results of the
Company or other similar companies, changes in general conditions in the
economy, the financial markets or the defense industry, natural disasters,
changes in earnings estimates or recommendations by research analysts, or
other developments affecting the Company or its competitors could cause the
market price of the Common Stock to fluctuate substantially. In recent years,
the stock market has experienced extreme price and volume fluctuations. This
volatility has had a significant effect on the market prices of securities
issued by many companies for reasons unrelated to the operating performance
of these companies.
The Underwriters have advised the Company that they currently intend to
make a market with respect to the Common Stock. However, the Underwriters are
not obligated to do so, and any market-making with respect to the Common
Stock may be discontinued at any time without notice. Because Lehman Brothers
Inc. is an affiliate of the Company, Lehman Brothers Inc. will be required to
deliver a current "market-maker" prospectus and otherwise comply with the
registration requirements of the Securities Act in connection with any
secondary market sale of the Common Stock, which may affect its ability to
continue market-making activities. See "Underwriting".
SHARES ELIGIBLE FOR FUTURE SALE
As of March 31, 1998, the Company had 20,457,142 shares of Common Stock
outstanding (excluding shares of Common Stock offered hereby). After the
Common Stock Offering, the holders of shares of Common Stock issued prior to
the Common Stock Offering will be entitled to certain registration rights
described below, at the expense of the Company. Such shares may also be sold
under Rule 144 of the Securities Act, depending on the holding period of such
securities and subject to restrictions in the case of shares held by persons
deemed to be affiliates of the Company. No prediction can be made as to the
effect, if any, that future sales of shares, or the availability of shares
for future sale, will have on the market price of the Common Stock prevailing
from time to time. Sales of substantial amounts of Common Stock (including
shares issued upon the exercise of stock options), or the perception that
such sales could occur, may adversely affect prevailing market prices for the
Common Stock.
All executive officers and directors and the existing stockholders of
Holdings who, after the Common Stock Offering, will hold in the aggregate
20,457,142 shares of Common Stock, have agreed, pursuant to lock-up
agreements, that they will not, without the prior written consent of Lehman
Brothers Inc., offer, sell, contract to sell or otherwise dispose of any
shares of Common Stock or securities exercisable or exchangeable for Common
Stock or enter into any derivative transaction with similar effect as a sale
of Common Stock for a period of 180 days after the date of this Prospectus.
The restrictions described in this paragraph do not apply to (i) the sale of
Common Stock to the Underwriters, (ii) the issuance by Holdings of shares of
Common Stock upon the exercise of an option or a warrant or the conversion of
a security outstanding on the date of this Prospectus or (iii) transactions
by any person other than Holdings relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
offering of the Common Stock.
The Company intends to file registration statements under the Securities
Act to register all shares of Common Stock issuable pursuant to the 1997
Stock Option Plan. Upon the completion of the 180-day period described above,
236,250 shares of Common Stock issued under, or issued or issuable upon the
exercise of awards issued under, such plans and after the effective date of
such registration statements, generally will be eligible for sale in the
public market. See "Management -- Executive Compensation".
16
<PAGE>
Pursuant to the Stockholders Agreement, certain of the existing
stockholders have the right, under certain circumstances and subject to
certain conditions, to require the Company to register under the Securities
Act shares of Common Stock held by them. Lockheed Martin, the Lehman
Partnership and each of the Senior Management has three, four and one demand
registration rights, respectively. In addition, the Stockholders Agreement
also provides all of the existing stockholders with certain piggyback
registration rights. The Stockholders Agreement provides, among other things,
that the Company will pay expenses in connection with (i) up to two demand
registrations requested by Lockheed Martin, up to three demand registrations
requested by the Lehman Partnership and the two demand registrations
requested by the Senior Management and (ii) any registration in which the
existing stockholders participate through piggyback registration rights
granted under such agreement.
POTENTIAL EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS
Immediately prior to consummation of the Common Stock Offering, Holdings'
Certificate of Incorporation and Bylaws will be amended to provide for a
classified board of directors consisting of three classes and authorize the
issuance preferred stock. Holdings Certificate of Incorporation and Bylaws
contain certain other provisions that may discourage or prevent certain types
of transactions involving an actual or potential change in control of
Holdings, including transactions in which the stockholders might otherwise
receive a premium for their shares over the current market prices, and may
limit the ability of the stockholders to approve transactions that they may
deem to be in their best interests. In addition, certain provisions of
Delaware law applicable to the Company, including Section 203 of the Delaware
General Corporation Law, could have the effect of delaying, deferring or
preventing a change of control of Holdings. It is possible that the
provisions in Holdings' Certificate of Incorporation and Bylaws, the
concentration of ownership in the Lehman Partnership and Lockheed Martin and
Section 203 of the Delaware General Corporation Law may have the effect of
delaying, deferring or preventing a change of control of Holdings without
further action by the stockholders, may discourage bids for Holdings' Common
Stock at a premium over the market price of the Common Stock and may
adversely affect the market price of the Common Stock and the voting and
other rights of the holders of Common Stock. See "Description of Capital
Stock".
SUBSTANTIAL AND IMMEDIATE DILUTION
Purchasers of the Common Stock offered hereby will experience immediate
and significant dilution in net tangible book value per share of
approximately $24.86 per share of Common Stock (assuming no exercise of the
over-allotment option by the Underwriters and an initial public offering
price of $19.00 per share, which is the midpoint of the range of the
estimated offering price per share set forth on the cover of this
Prospectus). See "Dilution".
FORWARD LOOKING STATEMENTS
This Prospectus contains forward looking statements concerning the
Company's operations, economic performance and financial condition, including
in particular, the likelihood of the Company's success in developing and
expanding its business and the realization of sales from backlog. These
statements are based upon a number of assumptions and estimates which are
inherently subject to significant uncertainties and contingencies, many of
which are beyond the control of the Company, and reflect future business
decisions which are subject to change. Some of these assumptions inevitably
will not materialize, and unanticipated events will occur which will affect
the Company's future results. All such forward looking statements are
qualified by reference to matters discussed under this section entitled "Risk
Factors".
17
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the Common Stock Offering are
estimated to be approximately $96.5 million ($111.3 million if the
over-allotment option is exercised in full), at an assumed initial public
offering price of $19.00 per share, which is the midpoint of the range of the
estimated offering price per share set forth on the cover of this Prospectus,
after deducting underwriting discounts, commissions and estimated offering
expenses.
The Company intends to use the net proceeds of the Common Stock Offering,
together with the net proceeds of the Notes Offering, to repay a substantial
portion of its existing indebtedness under the Senior Credit Facilities and
for general corporate purposes, including potential acquisitions. The
borrowings under the Senior Credit Facilities had been used by the Company to
fund in part the L-3 Acquisition and the 1998 Acquisitions. The weighted
average interest rate under the Term Loan Facilities was 7.91% at April 15,
1998. Amounts repaid under the Revolving Credit Facility will be available to
be reborrowed by the Company from time to time for, among other reasons,
general corporate purposes or to finance future acquisitions. Affiliates of
the Underwriters are lenders under the Senior Credit Facilities and will
receive a portion of the net proceeds of the Offerings in repayment of
amounts outstanding thereunder. See "Description of Certain Indebtedness --
Senior Credit Facilities".
SOURCES AND USES OF FUNDS
($ in millions)
<TABLE>
<CAPTION>
SOURCES OF FUNDS AMOUNT USES OF FUNDS AMOUNT
---------------- ------ ------------- ------
<S> <C> <C> <C>
Notes Offering .......... $150.0 Cash on hand ............................ $ 40.9
Common Stock Offering(1) 104.5 Repayment of Term Loan Facilities ...... 132.3
Repayment of Revolving Credit Facility(2). 67.8
Expenses of the Offerings(3)............. 13.5
------- -------
Total Sources............ $254.5 Total Uses .............................. $254.5
======= =======
</TABLE>
- ------------
(1) At an assumed initial offering price of $19.00 per share, which is the
midpoint of the range of the estimated offering price per share set
forth on the cover of this Prospectus and assumes no exercise of the
over-allotment option by the Underwriters.
(2) Availability under the Revolving Credit Facility at any given time is
$200.0 million, less the amount of outstanding borrowings and
outstanding letters of credit. Upon consummation of the Offerings, the
Company will have available under its Revolving Credit Facility $200.0
million less amounts outstanding for letters of credit (which amounted
to $17.8 million at March 31, 1998).
(3) Expenses are estimated and include the underwriting discounts and
commissions of the Offerings.
18
<PAGE>
DILUTION
As of March 31, 1998, the Company's net tangible deficit defined as total
stockholders' equity plus common stock subject to repurchase agreement (which
will convert to Common Stock after the Common Stock Offering), less
intangibles, was $(12.14) per share. After giving effect to the Common Stock
Offering (assuming that the Underwriters' over-allotment option is not
exercised) at an assumed initial offering price of $19.00 per share, which is
the midpoint of the range of the estimated offering price per share set forth
on the cover of this Prospectus, and after deducting the Underwriters'
discounts and commissions and estimated expenses of the Common Stock
Offering, the pro forma net tangible deficit at March 31, 1998 was $(5.86)
per share. This amount represents an immediate dilution in pro forma net
tangible book value of $24.86 per share of Common Stock to new public
investors. The following table illustrates this dilution:
<TABLE>
<CAPTION>
<S> <C> <C>
Initial public offering price per share ...................... $19.00
Consolidated net tangible deficit per share before the Common
Stock Offering(1)............................................ $(12.14)
Decrease in consolidated net tangible deficit
per share attributable to the Common
Stock Offering(2) ........................................... 6.28
Pro forma consolidated net tangible deficit per share after
the Common Stock Offering(3) ................................ (5.86)
--------
Dilution per share to new public investors.................... $24.86
========
</TABLE>
- ------------
(1) Determined by dividing the Company's consolidated net tangible deficit
at March 31, 1998 by 20,457,142, the number of shares of Common Stock
outstanding at March 31, 1998.
(2) Determined as the difference between (i) the pro forma consolidated net
tangible deficit per share after the Common Stock Offering and (ii)
consolidated net tangible deficit per share before the Common Stock
Offering.
(3) Determined by dividing the Company's pro forma net tangible deficit at
March 31, 1998 by 25,957,142, the assumed shares to be outstanding
after the Common Stock Offering.
The following table summarizes, as of March 31, 1998, on a pro forma basis
giving effect to the Common Stock Offering, the number of shares of Common
Stock to be sold by Holdings in the Common Stock Offering and the net
tangible book value of the average contribution per share based on total
contributions.
<TABLE>
<CAPTION>
COMMON STOCK TOTAL CONSIDERATION
--------------------------- ------------------------- AVERAGE PRICE
NUMBER PERCENTAGE $ PERCENT PER SHARE
----------- ---------- ---------- ------- --------------
(IN MILLIONS) ($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Existing shareholders 20.5 78.8% $128.0 55.1% $ 6.26
New public investors . 5.5 21.2 104.5 44.9 $19.00
------ ------- -------- -------
Total ................. 26.0 100.0% $232.5 100.0%
====== ======= ======== =======
</TABLE>
DIVIDEND POLICY
Holdings currently intends to retain its earnings to finance future growth
and, therefore, does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future. Any determination as to the payment of
dividends will depend upon the future results of operations, capital
requirements and financial condition of Holdings and its subsidiaries and
such other facts as the Board of Directors of Holdings may consider,
including any contractual or statutory restrictions on the Holdings' ability
to pay dividends. Moreover, Holdings is a holding company and its ability to
pay dividends is dependent upon receipt of dividends, distributions,
advances, loans or other cash transfers from L-3 Communications. The Senior
Credit Facilities and the Indentures each limit L-3 Communications' ability
to pay dividends or other distributions on its common stock or to make
advances, loans or other cash transfers to Holdings. See "Description of
Certain Indebtedness".
19
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at March
31, 1998 and as adjusted to give effect to the Offerings (at an assumed
initial public offering price for the Common Stock Offering of $19.00 per
share, which is the midpoint of the range of the estimated offering price per
share set forth on the cover page of this Prospectus and assuming no exercise
of the over-allotment option by the Underwriters) and the application of the
net proceeds therefrom as if these transactions had occurred on March 31,
1998. See "Use of Proceeds" and "Unaudited Pro Forma Condensed Consolidated
Financial Information".
<TABLE>
<CAPTION>
MARCH 31, 1998
--------------------
AS
ACTUAL ADJUSTED
-------- ----------
($ IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents..................... $ 9.1 $ 50.0
Current portion of long-term debt............. 5.7 1.8
Revolving Credit Facility(1) ................. 67.8 --
Term Loan Facilities ......................... 165.3 36.9
10 3/8% Senior Subordinated Notes due 2007 .. 225.0 225.0
% Senior Subordinated Notes due 2008 ...... -- 150.0
Industrial development bond .................. 1.5 1.5
Total debt ................................. $465.3 $415.2
Common Stock subject to repurchase agreement $ 14.6 --
Shareholders' equity
Common Stock ................................ 113.8 $224.9
Retained earnings............................ 19.3 19.3
Deemed distribution.......................... (9.0) (9.0)
Total shareholders' equity.................. 124.1 235.2
------ ------
Total capitalization........................ $604.0 $650.4
====== ======
</TABLE>
- ------------
(1) Availability under the Revolving Credit Facility at any given time is
$200.0 million, less the amount of outstanding borrowings and
outstanding letters of credit. Upon consummation of the Offerings, the
Company will have available under its Revolving Credit Facility $200.0
million less amounts outstanding for letters of credit (which amounted
to $17.8 million at March 31, 1998).
20
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma financial information gives effect to
the L-3 Acquisition, the 1998 Acquisitions and the Offerings (collectively,
the "Transactions") as if they had occurred as of January 1, 1997. The pro
forma financial information is based on (i) the unaudited condensed
consolidated financial statements of the Company for the three-month period
ended March 31, 1998, (ii) the consolidated financial statements of the
Company for the nine-month period ended December 31, 1997, (iii) the Combined
Statement of Operations of the Predecessor Company for the three-month period
ended March 31, 1997 and (iv) the financial statements of the 1998
Acquisitions for the year ended December 31, 1997, using the purchase method
of accounting and the assumptions and adjustments in the accompanying notes
to the unaudited pro forma condensed consolidated financial statements.
The pro forma adjustments are based upon preliminary estimates for the
1998 Acquisitions. Actual adjustments will be based on final appraisals and
other analyses of fair values which are in process and adjustment of the
final purchase prices. Management does not expect that differences between
the preliminary and final allocations will have a material impact on the
Company's pro forma financial position or results of operations. The pro
forma statement of operations does not reflect any cost savings that
management of the Company believes would have resulted had the Transactions
occurred on January 1, 1997. The pro forma financial information should be
read in conjunction with (i) the unaudited condensed consolidated financial
statements of the Company for the three-month period ended March 31, 1998,
(ii) the audited Consolidated (Combined) Financial Statements of the Company
and the Predecessor Company as of December 31, 1997 and for the nine months
ended December 31, 1997 and the three months ended March 31, 1997, (iii) the
audited financial statements of STS for the year ended June 30, 1997, (iv)
the unaudited condensed financial statements of STS as of December 31, 1997
and for the six months ended December 31, 1997 and 1996, (v) the audited
consolidated financial statements of ILEX as of December 31, 1997 and for the
year ended December 31, 1997 and (vi) the audited combined financial
statements of Ocean Systems as of December 31, 1997 and for the year ended
December 31, 1997, all of which are included elsewhere herein. The unaudited
pro forma condensed financial information may not be indicative of the
financial position and results of operations of the Company that actually
would have occurred had the Transactions been in effect on the dates
indicated or the financial position and results of operations that may be
obtained in the future.
21
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
COMPANY
THREE MONTHS PRO FORMA
ENDED ADJUSTMENTS
MARCH 31, 1998 1998
1998 ACQUISITIONS(3) ACQUISITIONS(2)
------------ --------------- ------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS:
Sales......................................... $186.6 $20.7 $ --
Costs and expenses............................ 172.5 23.2 0.5 (4)
Operating income (loss)..................... 14.1 (2.5) (0.5)
Interest and investment income (expense) ..... 0.8 --
Interest expense.............................. 10.6 0.1
Income (loss) before income taxes........... 4.3 (2.6) (0.5)
Income tax expense (benefit).................. 1.7 (0.6) (0.2)(6)
Net income (loss)........................... $ 2.6 $(2.0) $ (0.3)
======= ======= ========
EARNINGS PER COMMON SHARE(7):
Basic....................................... $ 0.13
=======
Diluted..................................... $ 0.13
=======
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING(7):
Basic....................................... 20.2
=======
Diluted..................................... 20.8
=======
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
THE
OFFERINGS PRO FORMA
--------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS:
Sales......................................... $ -- $207.3
Costs and expenses............................ -- 196.2
Operating income (loss)..................... -- 11.1
Interest and investment income (expense) ..... (0.8) (5) --
Interest expense.............................. (0.1) (5) 10.6
Income (loss) before income taxes........... (0.7) 0.5
Income tax expense (benefit).................. (0.3) (6) 0.6
Net income (loss)........................... $ (0.4) $ (0.1)
======= =======
EARNINGS PER COMMON SHARE(7):
Basic....................................... $(0.00)
========
Diluted..................................... $(0.00)
========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING(7):
Basic....................................... 5.5 26.7
====== ========
Diluted..................................... 5.5 26.8
====== ========
</TABLE>
THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY
THREE MONTHS PRO FORMA
ENDED ADJUSTMENTS PRO FORMA
MARCH 31, L-3 L-3
1997(1) ACQUISITION(1) ACQUISITION
-------------- ---------------- -------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS:
Sales.......................... $158.9 $(1.8) $157.1
Costs and expenses............. 151.0 (3.2) 147.8
-------------- ---------------- -------------
Operating income (loss) ..... 7.9 1.4 9.3
Interest and investment income
(expense)..................... -- -- --
Interest expense............... 8.4 1.5 9.9
-------------- ---------------- -------------
Income (loss) before income
taxes....................... (0.5) (0.1) (0.6)
Income tax expense (benefit) .. (0.2) -- (0.2)
-------------- ---------------- -------------
Net income (loss)............ $ (0.3) $(0.1) $ (0.4)
============== ================ =============
LOSS PER COMMON SHARE(7):
Basic......................... $(0.02)
=============
Diluted....................... $(0.02)
=============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING(7):
Basic......................... 20.0
=============
Diluted....................... 20.0
=============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
------------
1998 1998 THE
ACQUISITIONS(3) ACQUISITIONS(2) OFFERINGS PRO FORMA
--------------- --------------- ----------- -----------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Sales.......................... $32.1 $ -- $-- $189.2
Costs and expenses............. 40.2 0.7 (4) -- 188.7
--------------- -------------- ----------- -----------
Operating income (loss) ..... (8.1) (0.7) -- 0.5
Interest and investment income
(expense)..................... -- -- -- --
Interest expense............... 0.1 -- 0.6 (5) 10.6
--------------- -------------- ----------- -----------
Income (loss) before income
taxes....................... (8.2) (0.7) (0.6) (10.1)
Income tax expense (benefit) .. (2.1) (0.3)(6) (0.2)(6) (2.8)
--------------- -------------- ----------- -----------
Net income (loss)............ $(6.1) $(0.4) $(0.4) $ (7.3)
=============== ============== =========== ===========
LOSS PER COMMON SHARE(7):
Basic......................... $(0.29)
===========
Diluted....................... $(0.29)
===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING(7):
Basic......................... 5.5 25.5
============== ===========
Diluted....................... 5.5 25.5
============== ===========
</TABLE>
22
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY COMPANY
NINE MONTHS THREE MONTHS PRO FORMA
ENDED ENDED ADJUSTMENTS
DECEMBER 31, MARCH 31, L-3
1997 1997(1) ACQUISITION(1)
-------------- -------------- ----------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS:
Sales.................... $546.5 $158.9 $(1.8)
Costs and expenses....... 490.6 151.0 (3.2)
-------------- -------------- ----------------
Operating income
(loss)................ 55.9 7.9 1.4
Interest and investment
income (expense)........ 1.4 -- --
Interest expense......... 29.9 8.4 1.5
-------------- -------------- ----------------
Income (loss) before
income taxes.......... 27.4 (0.5) (0.1)
Income tax expense
(benefit)............... 10.7 (0.2) --
-------------- -------------- ----------------
Net income (loss)...... $ 16.7 $ (0.3) $(0.1)
============== ============== ================
EARNINGS PER COMMON
SHARE(7):
Basic.................. $ 0.84
==============
Diluted................ $ 0.84
==============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING(7):
Basic.................. 20.0
Diluted................ 20.0
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
PRO FORMA -------------
L-3 1998 1998 THE
ACQUISITION ACQUISITIONS(3) ACQUISITIONS(2) OFFERING PRO FORMA
------------- --------------- --------------- ---------- -----------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Sales.................... $703.6 $190.4 $ -- $ -- $894.0
Costs and expenses....... 638.4 196.3 0.9 (4) -- 835.6
------------- --------------- -------------- ---------- -----------
Operating income
(loss)................ 65.2 (5.9) (0.9) -- 58.4
Interest and investment
income (expense)........ 1.4 (0.1) (1.4)(5) (0.1)
Interest expense......... 39.8 0.5 2.1 (5) 42.4
------------- --------------- -------------- ---------- -----------
Income (loss) before
income taxes.......... 26.8 (6.5) (0.9) (3.5) 15.9
Income tax expense
(benefit)............... 10.5 (4.0) (0.4)(6) 1.4 (6) 4.7
------------- --------------- -------------- ---------- -----------
Net income (loss)...... $ 16.3 $ (2.5) $(0.5) $(2.1) $ 11.2
============= =============== ============== ========== ===========
EARNINGS PER COMMON
SHARE(7):
Basic.................. $ 0.82 $ 0.44
============= ===========
Diluted................ $ 0.79 $ 0.43
============= ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING(7):
Basic.................. 20.0 5.5 25.5
============= ========== ===========
Diluted................ 20.8 5.5 26.3
============= ========== ===========
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
23
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following facts and assumptions were used in determining the pro forma
effect of the Transactions.
1. The Company's historical financial statements reflect the results of
operations of the Company since the effective date of the L-3 Acquisition,
April 1, 1997, and the Predecessor Company historical financial statements
reflect the results of operations of the Predecessor Company for the three
months ended March 31, 1997. The adjustments made to the pro forma
statement of operations for the three months ended March 31, 1997,
relating to the Predecessor Company are: (a) the elimination of $1.8
million of sales and $1.8 million of costs and expenses related to the
Hycor business which was acquired as part of the L-3 Acquisition and which
has been accounted for as "net assets of acquired business held for sale",
(b) a reduction to costs and expenses of $0.8 million to record
amortization expenses on the excess of the L-3 Acquisition purchase price
over net assets acquired of $303.2 million over 40 years, net of the
reversal of amortization expenses of intangibles included in the
Predecessor Company historical financial statements, (c) a reduction to
costs and expenses of $0.6 million to record estimated pension cost on a
separate company basis net of the reversal of the allocated pension cost
included in the Predecessor Company historical financial statements and
(d) a net increase to interest expense of $1.5 million, comprised of a
$0.2 million allocated interest expense reduction related to the Hycor
business and a net $1.7 million increase, reflecting pro forma interest
expense of $10.2 million based on actual borrowings of $400.0 million and
the effective cost of borrowing rate incurred by the Company to finance
the L-3 Acquisition less interest expense of approximately $8.5 million
included in the historical financial statements of the Predecessor
Company. A statutory (federal, state and foreign) tax rate of 39.0% was
assumed on these pro forma adjustments.
2. On February 5, 1998, L-3 Communications purchased the assets of STS for
$27.0 million of cash. On March 4, 1998, L-3 Communications purchased
substantially all the assets of ILEX for $49.2 million of cash (net of
acquired cash of $2.7 million) plus additional consideration contingent
upon post-acquisition performance of ILEX. On March 30, 1998, L-3
Communications purchased the assets of Ocean Systems for $67.5 million of
cash. The STS and ILEX purchase prices are subject to adjustment based
upon the actual closing net assets as defined. For purposes of the pro
forma financial information, the aggregate purchase prices (including
estimated expenses of $2.6 million) for the 1998 Acquisitions of $146.3
million were assumed to be financed using cash on hand of $77.5 million
and initially using $68.8 million of borrowings under the Revolving Credit
Facility. See Note 5 for the pro forma effects of the Offerings on
interest expense and long-term debt including the Revolving Credit
Facility.
3. The pro forma statements of operations include the following historical
financial data for the 1998 Acquisitions:
The pro forma statement of operations for the three months ended March 31,
1998 includes the following historical data for the periods indicated for
the 1998 Acquisitions.
<TABLE>
<CAPTION>
OCEAN 1998
STS(A) ILEX(A) SYSTEMS(B) ACQUISITIONS
-------- ------- ---------- --------------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
Sales................................ $ 2.3 $4.5 $13.9 $20.7
Costs and expenses................... 5.9 4.4 12.9 23.2
-------- ------- ---------- --------------
Operating (loss) income............ (3.6) 0.1 1.0 (2.5)
Interest and investment income
(expense)............................ -- -- -- --
Interest expense..................... -- -- 0.1 0.1
-------- ------- ---------- --------------
Income (loss) before income taxes.. (3.6) 0.1 0.9 (2.6)
Income tax (benefit) provision....... (1.0) -- 0.4 (0.6)
-------- ------- ---------- --------------
Net (loss) income.................. $(2.6) $0.1 $ 0.5 $(2.0)
======== ======= ========== ==============
</TABLE>
- ------------
(a) Represents results for the one-month period ended January 31, 1998.
(b) Represents results for the three-month period ended March 31, 1998.
24
<PAGE>
The pro forma statement of operations for the three months ended March 31,
1997 includes the following historical data for the 1998 Acquisitions.
<TABLE>
<CAPTION>
OCEAN 1998
STS ILEX SYSTEMS ACQUISITIONS
-------- ------- --------- --------------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
Sales................................ $ 8.9 $13.8 $ 9.4 $32.1
Costs and expenses................... 10.6 12.4 17.2 40.2
-------- ------- --------- --------------
Operating (loss) income............ (1.7) 1.4 (7.8) (8.1)
Interest and investment income
(expense)............................ -- -- -- --
Interest expense..................... -- -- 0.1 0.1
-------- ------- --------- --------------
Income (loss) before income taxes.. (1.7) 1.4 (7.9) (8.2)
Income tax (benefit) provision....... (0.5) 0.1 (1.7) (2.1)
-------- ------- --------- --------------
Net (loss) income.................. $(1.2) $ 1.3 $(6.2) $(6.1)
======== ======= ========= ==============
</TABLE>
The pro forma statement of operations for the year ended December 31, 1997
includes the following historical data for the 1998 Acquisitions. Such
data have been derived from each entity's historical financial statements
included elsewhere herein.
<TABLE>
<CAPTION>
OCEAN 1998
STS(A) ILEX SYSTEMS ACQUISITIONS
-------- ------- --------- --------------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
Sales................................ $53.9 $63.5 $73.0 $190.4
Costs and expenses................... 61.7 55.9 78.7 196.3
-------- ------- --------- --------------
Operating (loss) income............ (7.8) 7.6 (5.7) (5.9)
Interest and investment income
(expense)............................ -- (0.2) 0.1 (0.1)
Interest expense..................... -- -- 0.5 0.5
-------- ------- --------- --------------
Income (loss) before income taxes.. (7.8) 7.4 (6.1) (6.5)
Income tax (benefit) provision ...... (2.1) 0.5 (2.4) (4.0)
-------- ------- --------- --------------
Net (loss) income.................. $(5.7) $ 6.9 $(3.7) $ (2.5)
======== ======= ========= ==============
</TABLE>
- ------------
(a) Represents fiscal year ended June 30, 1997 plus the six month period
ended December 31, 1997 minus the six month period ended December 31,
1996.
4. The aggregate estimated excess of purchase price over fair value of net
assets acquired related to the 1998 Acquisitions is $89.0 million,
comprised of $37.2 million and $51.8 million, respectively, for ILEX and
Ocean Systems and is being amortized over 40 years resulting in a pro
forma charge of $2.2 million per annum. Based upon preliminary estimates
of fair value, the acquisition of STS resulted in no goodwill being
recorded since the purchase price was equal to the net assets acquired.
Adjustments to costs and expenses in the pro forma statements of
operations relating to the 1998 Acquisitions were comprised of the
following:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------- 1997
1998 1997 ------------
------- -------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
(a) Amortization expense of estimated purchase cost in excess
of net assets ............................................. $ 0.4 $ 0.6 $ 2.2
(b) Elimination of goodwill amortization expense included in
the historical financial statements for the 1998
Acquisitions................................................ (0.1) (0.1) (2.1)
(c) Estimated annual rent expense on the Sylmar facility of
Ocean Systems which will not be acquired by L-3
Communications.............................................. 0.3 0.3 1.1
(d) Elimination of depreciation expense on buildings and
improvements on the Sylmar facility of Ocean Systems
which will not be acquired by L-3 Communications .......... (0.1) (0.1) (0.3)
------- ------- --------------
Total increase to costs and expenses...................... $ 0.5 $ 0.7 $ 0.9
======= ======= ==============
</TABLE>
5. Adjustments to the pro forma statements of operations include the
elimination of interest income of $0.8 million and $1.3 million for the
three months ended March 31, 1998 and the year ended December 31, 1997,
respectively, to reflect the use of cash on hand to fund partially the
aggregate
25
<PAGE>
purchase prices for the 1998 Acquisitions. Adjustments to pro forma
interest expense include increases of $0.1 million, $0.6 million and $1.3
million for the three months ended March 31, 1998 and 1997 and the year
ended December 31, 1997, respectively, to reflect interest expense on the
pro forma outstanding debt after the use of proceeds of the Offerings. The
details of interest expense, after such pro forma adjustments follow:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED
---------------- DECEMBER 31,
1998 1997 1997
------- ------- ------------
($ IN MILLIONS)
<S> <C> <C> <C>
Interest on the 1997 Notes (10.375% on $225.0 million) ... $ 5.8 $ 5.8 $23.3
Interest on the Notes (assumed 8.25% on $150.0 million) .. 3.1 3.1 12.4
Interest on borrowings under Term Loan Facilities (8.0%
on $38.9 million)........................................ 0.8 0.8 3.1
Interest on industrial development bond (4.0% on $1.3
million)................................................. -- -- 0.1
Commitment fee of 0.5% on unused portion of Revolving
Credit Facility (0.5% on $200.0 million) ................ 0.3 0.3 1.0
Amortization of deferred debt issuance costs.............. 0.6 0.6 2.5
------- ------- --------------
Total pro forma interest expense ....................... $10.6 $10.6 $42.4
======= ======= ==============
</TABLE>
In accordance with SEC regulations, the pro forma statement of operations
does not reflect interest income on the $50.0 million pro forma cash
balance.
The Offerings include the sale of 5.5 million shares of Common Stock for
$104.5 million and $150.0 million of Notes. The net proceeds from the
Offerings of $241.0 million, after deducting estimated expenses of $13.5
million, including $5.5 million of debt issuance costs, have been assumed
to reduce borrowings under the Revolving Credit Facility and Term Loan
Facilities by $191.0 million and increase cash and cash equivalents by
$40.9 million. On a pro forma basis the balance sheet reflects the
following adjustments and resulting balances:
<TABLE>
<CAPTION>
INCREASE
(DECREASE)
-----------------
($ IN MILLIONS)
<S> <C>
Cash and cash equivalents .............................................. $ 40.9
=================
Senior subordinated notes (proceeds from the Notes) .................... 150.0
=================
Other assets (deferred debt issuance costs) ............................ $ 5.5
=================
The net proceeds from the Offerings will be used to reduce borrowings
and were recorded as follows:
Current portion of long-term debt ..................................... $ (3.9)
Revolving Credit Facility ............................................. (67.8)
Term Loan Facilities .................................................. (128.4)
-----------------
$(200.1)
=================
Shareholders' equity:
Proceeds of sale of Common Stock, less expenses ........................ $ 96.5
Conversion of Class B Common stock subject to repurchase agreement to
Class A Common Stock .................................................. 14.6
-----------------
$ 111.1
=================
</TABLE>
26
<PAGE>
The following presents summary balance sheet data after giving effect to
the Offerings:
<TABLE>
<CAPTION>
($ IN MILLIONS)
<S> <C>
Current assets ...... $356.9
===============
Other assets ........ 74.7
===============
Total assets ........ 926.8
===============
Current liabilities 219.4
===============
Long term debt ...... 415.2
===============
Shareholders' equity 235.2
===============
</TABLE>
6. The pro forma adjustments were tax-effected, as appropriate, using a
statutory (federal, state and foreign) tax rate of 39.0%.
7. Pro forma basic earnings per common share are computed based upon the
weighted-average number of shares of Common Stock outstanding, giving
effect to the Common Stock Offering. Pro forma diluted earnings per Common
Stock are computed based upon: (a) the weighted average number of shares
of Common Stock and potential Common Stock outstanding, to the extent the
potential common stock is not anti-dilutive, giving effect to the Common
Stock Offering; and (b) an assumed average market price of Common Stock
for the year ended December 31, 1997 and the three months ended March 31,
1998 and 1997 of $19.00 per share, based on the midpoint of the estimated
initial public offering price of the Common Stock, used for the assumed
purchase of common shares for treasury. For purposes of these earnings per
share computations, Class B Common Stock of Holdings subject to repurchase
agreement has been included in the weighted average number of shares of
Common Stock outstanding because the Class B Common Stock converts to
Class A Common Stock upon the completion of the Common Stock Offering.
27
<PAGE>
SELECTED FINANCIAL INFORMATION
The selected unaudited pro forma data as of March 31, 1998 and for the
three months ended March 31, 1998 and 1997 and for the year ended December
31, 1997 have been derived from, and should be read in conjunction with, the
unaudited pro forma condensed consolidated financial statements included
elsewhere herein. The unaudited pro forma statement of operations and other
data reflect the L-3 Acquisition, the 1998 Acquisitions and the Offerings as
if such transactions had occurred on January 1, 1997 for the statement of
operations and other data. The unaudited pro forma balance sheet data reflect
the Offerings as if such transactions had occurred on March 31, 1998.
The selected consolidated (combined) financial data as of December 31,
1997, 1996, 1995 and 1994, and for the nine months ended December 31, 1997,
the three months ended March 31, 1997 and the years ended December 31, 1996
and 1995 have been derived from the audited financial statements for the
respective periods. The selected consolidated (combined) financial data as of
and for the periods ended March 31, 1998, December 31, 1993 and March 31,
1993, the nine months ended December 31, 1993 and the three months ended
March 31, 1993 have been derived from the unaudited financial statements of
the Company. In the opinion of management, such unaudited financial
statements reflect all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the results for
the interim periods presented. The results of operations for the three months
ended March 31, 1998 may not be indicative of results for the full year.
The selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated (Combined) Financial Statements of the
Company (Predecessor Company) and the Loral Acquired Businesses included
elsewhere herein. Prior to April 1, 1996, the Predecessor Company was only
comprised of Communication Systems -- East.
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
-------------------------------------------- ----------------------------------------------
NINE THREE NINE THREE
THREE MONTHS ENDED YEAR ENDED MONTHS MONTHS MONTHS MONTHS
MARCH 31, 1998 DECEMBER 31, ENDED ENDED YEAR ENDED DECEMBER 31, ENDED ENDED
-------------------- 1997 DEC. 31,(1) MARCH 31, ----------------------- DEC. 31,(3) MARCH 31,(4)
PRO FORMA HISTORICAL PRO FORMA 1997 1997 1996(2) 1995(3) 1994(3) 1993 1993
--------- ---------- ------------ ----------- --------- ------- ------- ------- ----------- ------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
sales ................... $207.3 $ 186.6 $894.0 $ 546.5 $158.9 $ 543.1 $166.8 $218.9 $200.0 $67.8
Operating income ........ 11.1 14.1 58.4 55.9 7.9 43.7 4.7 8.4 12.4 5.1
Interest expense, net(5)
........................ 10.6 9.8 42.4 28.5 8.4 24.2 4.5 5.5 4.1
Provision (benefit) for
income taxes(5) ........ 0.6 1.7 4.7 10.7 (0.2) 7.8 1.2 2.3 3.8 2.0
Net income (loss)........ (0.1) 2.6 11.2 16.7 (0.3) 11.7 (1.0) 0.6 4.5 3.1
Net income (loss) per
share:
Basic................... $(0.00) $ 0.13 $ 0.44 $ 0.84
Diluted................. (0.00) 0.13 0.43 0.84
Weighted average number
of shares outstanding:
Basic................... 26.7 20.2 25.5 20.0
Diluted................. 26.8 20.8 26.3 20.0
BALANCE SHEET DATA:
Working capital ......... $137.5 $ 92.6 $ 131.8 $ 98.8 $ 21.1 $ 19.3 $ 24.7 $22.8
Total assets ............ 926.8 880.4 703.4 593.3 228.5 233.3 241.7 93.5
Long-term debt........... 415.2 459.6 392.0
Invested equity ......... 473.6 194.7 199.5 202.0 59.9
Shareholders' equity .... 235.2 124.1 118.1
OTHER DATA:
EBITDA(6) ............... $ 20.0 $ 21.6 $ 95.1 $ 78.1 $ 15.7 $ 71.8 $ 16.3 $ 19.9 $ 23.4 $ 7.0
Net cash from
(used in) operating
activities.............. 11.1 73.9 (16.3) 30.7 9.3 21.8
Net cash (used in)
investing activities ... (148.7) (457.8) (4.3) (298.0) (5.5) (3.7)
Net cash from
(used in) financing
activities.............. 69.2 461.4 20.6 267.3 (3.8) (18.1)
Depreciation expense ... 5.3 4.6 22.0 13.3 4.5 14.9 5.5 5.4 6.1 1.8
Amortization expense ... 3.6 2.9 14.7 8.9 3.3 13.2 6.1 6.1 4.9 0.1
Capital expenditures ... 2.9 2.3 19.9 11.9 4.3 13.5 5.5 3.7 2.6 0.8
Ratios of:
Earnings to fixed
charges(7)............. 1.0x 1.4x 1.3x 1.8x --(8) 1.7x 1.0x 1.4x 2.5x --
EBITDA to cash interest
expense(9)(10)......... 2.7x 2.5x 2.4x
Net debt to
ebitda(10)(11)......... 3.4x 4.6x 4.0x
</TABLE>
(Footnotes on following page)
28
<PAGE>
- ------------
(1) Reflects the L-3 Acquisition effective April 1, 1997.
(2) Reflects ownership of Loral's Communication Systems -- West and
Specialized Communication Products businesses commencing April 1, 1996.
(3) Reflects ownership of Communication Systems --East by Lockheed Martin
effective April 1, 1993.
(4) Reflects ownership of Communications Systems -- East by GE Aerospace.
The amounts shown herein include only those amounts as reflected in the
financial records of Communications Systems --East.
(5) For periods prior to April 1, 1997, interest expense and income tax
(benefit) provision were allocated from Lockheed Martin.
(6) EBITDA is defined as operating income plus depreciation expense and
amortization expense (excluding the amortization of deferred debt
issuance costs). EBITDA is not a substitute for operating income, net
income and cash flow from operating activities as determined in
accordance with generally accepted accounting principles as a measure
of profitability or liquidity. EBITDA is presented as additional
information because management believes it to be a useful indicator of
the Company's ability to meet debt service and capital expenditure
requirements.
(7) For purposes of this computation, earnings consist of income before
income taxes plus fixed charges. Fixed charges consist of interest on
indebtedness plus that portion of lease rental expense representative
of the interest element.
(8) Earnings were insufficient to cover fixed charges by $0.5 million for
the three months ended March 31, 1997.
(9) For purposes of this computation, cash interest expense consists of pro
forma interest expense excluding amortization of deferred debt issuance
costs.
(10) These ratios as of and for the three months ended March 31, 1998 are
based on the results of operations for the twelve month period ended
March 31, 1998. The pro forma ratios have been calculated by adding the
pro forma EBITDA and cash interest expense for the year ended December
31, 1997 and the three months ended March 31, 1998 and deducting the
pro forma EBITDA and cash interest expense for the three months ended
March 31, 1997. For purposes of computing pro forma EBITDA for the
three months ended March 31, 1997, depreciation expense and
amortization expense were $6.0 million and $2.7 million, respectively.
The historical ratios have been calculated by adding historical EBITDA
and cash interest expense for the nine months ended December 31, 1997
and the three months ended March 31, 1998.
(11) Net debt is defined as long-term debt plus current portion of long-term
debt less cash and cash equivalents.
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The section of this Prospectus entitled "Risk Factors" should be read in
conjunction with this Management's Discussion and Analysis of Financial
Condition and Results of Operations section.
GENERAL
The Company is a leading merchant supplier of sophisticated secure
communication systems and specialized communication products including
secure, high data rate communication systems, microwave components, avionics
and ocean systems, telemetry, instrumentation and space products. These
systems and products are critical elements of virtually all major
communication, command and control, intelligence gathering and space systems.
The Company's systems and specialized products are used to connect a variety
of airborne, space, ground-and sea-based communication systems and are
incorporated into the transmission, processing, recording, monitoring and
dissemination functions of these communication systems. The Company's
customers include the DoD, selected Government intelligence agencies, major
aerospace/defense prime contractors, foreign governments and commercial
customers. The Company operates primarily in one industry segment, electronic
components and systems.
All domestic government contracts and subcontracts of the Company are
subject to audit and various cost controls, and include standard provisions
for termination for the convenience of the Government. Multi-year Government
contracts and related orders are subject to cancellation if funds for
contract performance for any subsequent year become unavailable. Foreign
government contracts generally include comparable provisions relating to
termination for the convenience of the relevant foreign government.
The defense industry has recently undergone significant changes
precipitated by ongoing federal budget pressures and new roles and missions
to reflect changing strategic and tactical threats. Since the mid-1980's, the
overall U. S. defense budget has declined in real dollars. In response, the
DoD has focused its resources on enhancing its military readiness, joint
operations and digital command and control communications by incorporating
advanced electronics to improve the performance, reduce operating cost and
extend the life expectancy of its existing and future platforms. The emphasis
on system interoperability, force multipliers and providing battlefield
commanders with real-time data is increasing the electronics content of
nearly all of the major military procurement and research programs. As a
result, the DoD's budget for communications and defense electronics is
expected to grow. According to Federal Sources, an independent private
consulting group, the defense budget for C(3)I is expected to increase from
$31.0 billion in the fiscal year ended September 30, 1997 to $42.0 billion in
the fiscal year ended September 30, 2002, a compound annual growth rate of
6.3%.
ACQUISITION HISTORY
The Company was formed to acquire substantially all of the assets of (i)
nine business units previously purchased by Lockheed Martin as part of its
acquisition of Loral in April 1996 (the "Loral Acquired Businesses") which
include eight business units of Loral ("Specialized Communications products")
and one business unit purchased by Loral as part of its acquisition of the
Defense Systems business of Unisys Corporation in May 1995 ("Communications
System --West"), and (ii) one business unit purchased by Lockheed Martin as
part of its acquisition of the aerospace business of General Electric Company
in April 1993 ("Communication Systems -- East"). Collectively, the Loral
Acquired Businesses and Communications Systems -- East comprise the
"Predecessor Company" or "Businesses".
The Company acquired the assets and liabilities of Ocean Systems, ILEX and
STS on March 30, 1998, March 4, 1998 and February 5, 1998, respectively.
RESULTS OF OPERATIONS
The following information should be read in conjunction with the Company's
Condensed Consolidated Financial Statements and Consolidated (Combined)
Financial Statements and the notes thereto included herein.
30
<PAGE>
The financial statements reflect the Company's results of operations from
the effective date of the L-3 Acquisition, April 1, 1997, and also include
the results of operations of Ocean Systems, ILEX and STS (collectively, the
"1998 Acquisitions") from the effective dates of such acquisitions, which
were March 31, 1998 for Ocean Systems, and February 1, 1998 for ILEX and STS.
The results of operations presented below exclude the results of operations
of the 1998 Acquisitions for the years ended December 31, 1997, 1996 and
1995.
The financial statements also reflect the results of operations of the
Predecessor Company for the three months ended March 31, 1997 and the years
ended December 31, 1996 and 1995 which include the results of operations of
the Loral Acquired Businesses beginning on April 1, 1996, the effective date
of that acquisition by Lockheed Martin. Therefore, the results of operations
for the year ended December 31, 1996 reflect the results of operations of the
Loral Acquired Businesses for the nine months from April 1, 1996 to December
31, 1996. Accordingly, changes between periods for the year ended December
31, 1997 and the year ended December 31, 1996 of the Predecessor Company are
significantly affected by the timing of the L-3 Acquisition and Loral
Acquired Businesses acquisition. The results of operations for the year ended
December 31, 1995 and the period from January 1 to March 31, 1996 only
comprise the results of operations of Communications Systems -- East.
Operating income of the Company and the Predecessor Company are not directly
comparable between periods indicated as a result of the effects of valuation
of assets and liabilities recorded in accordance with Accounting Principles
Board Opinion No. 16 ("APB 16") by the Company and the Predecessor Company,
in the purchase accounting for the L-3 Acquisition and Loral Acquired
Businesses acquisition. Interest expense and income taxes expense for the
periods are also not comparable and the impact of interest expense and income
tax expense on the Company is discussed below.
As indicated in Note 6 to the Consolidated (Combined) Financial Statements
as of December 31, 1997, effective April 1, 1997 the Company has accounted
for the sale of its Hycor business in accordance with FASB Emerging Issues
Task Force Issue No. 87-11 "Allocation of Purchase Price to Assets to Be
Sold". Accordingly, the results of operations of the Hycor business are not
included in the results of operations of the Company for the three months
ended March 31, 1998 and the nine months ended December 31, 1997. Hycor is a
business unit of the Loral Acquired Businesses, and, accordingly, Hycor is
only included in the results of operations of the Predecessor Company
beginning on April 1, 1996, the effective date of the Loral Acquired
Businesses acquisition by Lockheed Martin. On January 29, 1998, the Company
sold the Hycor business, excluding land and buildings, for $3.5 million in
cash subject to adjustment based on final closing net assets.
The results of operations of the Predecessor Company for the three months
ended March 31, 1997 and the years ended December 31, 1996 and 1995, include
certain costs and expenses allocated by Lockheed Martin for corporate office
expenses based primarily on the allocation methodology prescribed by
government regulations pertaining to government contractors. Interest expense
was allocated based on Lockheed Martin's actual weighted average consolidated
interest rate applied to the portion of the beginning of the year invested
equity deemed to be financed by consolidated debt based on Lockheed Martin's
debt to equity ratio on such date. The provision (benefit) for income taxes
was allocated to the Predecessor Company as if it were a separate taxpayer,
calculated by applying statutory rates to reported pre-tax income after
considering items that do not enter into the determination of taxable income
and tax credits related to the Predecessor Company. Also, pension and
post-employment benefit costs were allocated based on employee headcount.
Accordingly, the results of operations and financial position hereinafter of
the Predecessor Company may not be the same as would have occurred had the
Predecessor Company been an independent entity.
31
<PAGE>
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31,
1997
The following table sets forth selected statement of operations data for
the Company and the Predecessor Company for the periods indicated.
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
-------------- -------------------
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- -------------------
($ IN MILLIONS)
<S> <C> <C>
Sales............................................................. $186.6 $158.9
Costs and expenses................................................ 172.5 151.0
Operating income.................................................. 14.1 7.9
Net interest expense.............................................. 9.8 8.4
Income (loss) before income taxes................................. 4.3 (0.5)
Income tax expense (benefit)...................................... 1.7 (0.2)
Net income (loss)................................................. 2.6 (0.3)
Depreciation and amortization expenses included in operating
income........................................................... 7.5 7.8
EBITDA(1)......................................................... 21.6 15.7
</TABLE>
- ------------
(1) EBITDA is defined as operating income plus depreciation expense and
amortization expense (excluding the amortization of debt issuance
costs). EBITDA is not a substitute for operating income, net income or
cash flows from operating activities as determined in accordance with
generally accepted accounting principles as a measure of profitability
or liquidity. EBITDA is presented as additional information because the
Company believes it to be a useful indicator of the Company's ability
to meet debt service and capital expenditure requirements.
Sales increased to $186.6 million for the three months ended March 31,
1998 (the "1998 First Quarter") from $158.9 million for the three months
ended March 31, 1997 (the "1997 First Quarter"). Operating income increased
to $14.1 million in the 1998 First Quarter from $7.9 million in the 1997
First Quarter. Net income increased to $2.6 million in the 1998 First Quarter
from a net loss of $0.3 million in the 1997 First Quarter.
ILEX and STS contributed sales of $16.9 million to the 1998 First Quarter.
The remaining increase of $10.8 million was primarily attributable to an
increase in production and shipments on the CHBDL and UAV programs and
increased sales volumes on the E2-C and F-14 display systems and RF safety
products, partially offset by lower sales volume on the U-2 Program.
Operating income increased by $6.2 million to $14.1 million in the 1998
First Quarter from $7.9 million in the 1997 First Quarter. Operating income
as a percentage of sales increased to 7.6% for the 1998 First Quarter
compared to 5.0% for the 1997 First Quarter. The increase in operating
margins for the 1998 First Quarter is attributable to improved operating
performance on sales of aviation recorders and display systems and increased
sales volume on the CHBDL program and RF safety products, partially offset by
lower sales volume on the U-2 Program. Also, the 1997 First Quarter operating
income was negatively impacted by losses incurred on three programs by
Communication Systems --East. ILEX and STS contributed $0.3 million of
operating income to the 1998 First Quarter.
EBITDA for the 1998 First Quarter increased by $5.9 million to $21.6
million from $15.7 million in the 1997 First Quarter. EBITDA as a percentage
of sales ("EBITDA margin") increased to 11.6% for the 1998 First Quarter
compared to 9.9% for the 1997 First Quarter. The increases in EBITDA and
EBITDA margin were attributable to the items affecting the trends in
operating income between the 1998 First Quarter and the 1997 First Quarter
discussed above.
Sales and operating income of the Hycor business included in the
Predecessor Company's results of operations for the 1997 First Quarter were
$1.8 million and $0.0 million, respectively.
Net interest expense for the 1998 First Quarter was $9.8 million
representing interest expense on the Company's borrowings under the Senior
Credit Facilities and the 10 3/8% senior subordinated notes, and related
amortization of debt issuance cost, less interest income of $0.8 million.
Interest expense for the 1997 First Quarter of $8.4 million was allocated to
the Predecessor Company by applying Lockheed
32
<PAGE>
Martin's weighted average consolidated interest rate to the portion of the
Predecessor Company's invested equity account deemed to be financed by
Lockheed Martin's consolidated debt.
The income tax provision for the 1998 First Quarter reflects the Company's
estimated effective income tax rate of 39%. In the 1997 First Quarter, income
taxes were allocated to the Predecessor Company by Lockheed Martin and the
effective income tax rate was significantly impacted by amortization of costs
in excess of net assets acquired, which were not deductible for income tax
purposes.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
The following table sets forth selected statement of operations data for
the Company and the Predecessor Company for the periods indicated.
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
------------- -----------------------------------------------------------
NINE MONTHS NINE MONTHS THREE MONTHS THREE MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31, DECEMBER 31,
1997 1996 1997 1996 1996
------------- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Sales.............................. $546.5 $501.9 $158.9 $41.2 543.1
Costs and expenses ................ 490.6 459.9 151.0 39.5 499.4
Operating income .................. 55.9 42.0 7.9 1.7 43.7
Net interest expense .............. 28.5 22.2 8.4 2.0 24.2
Income (loss) before income taxes 27.4 19.8 (0.5) (0.3) 19.5
Income tax provision (benefit) ... 10.7 7.6 (0.2) 0.2 7.8
Net income (loss).................. 16.7 12.2 (0.3) (0.5) 11.7
</TABLE>
Sales for the nine months ended December 31, 1997 as compared to the
corresponding period in 1996 increased by $44.6 million, of which $30.5
million is attributable to the Loral Acquired Businesses and $14.1 million to
Communication Systems -- East. The increase in sales is attributable to
increased volume in sales of microwave components, CHBDL, UAV programs, F-14
display system contract, power supplies and P3-C Repair Depot. Operating
income for the nine months ended December 31, 1997 as compared to the
corresponding period in 1996 increased by $13.9 million, of which $5.8
million is attributable to the Loral Acquired Businesses and $8.1 million to
Communication Systems -- East. The increase in operating income for the nine
months ended December 31, 1997 is attributable to increased sales, improved
operating performance on sales of aviation recorders, passive microwave
components and display systems, the GEMnet product-line and P3-C Repair Depot
sales, partially offset by $3.3 million of cost of sales related to ongoing
certification efforts for the Company's Explosive Detection System ("EDS")
contract and lower sales volume on the U-2 Program.
Sales and operating income for the three months ended March 31, 1997
increased by $117.7 million and $6.2 million, respectively, as compared to
the corresponding period in 1996. The increases are attributable to the
acquisition of the Loral Acquired Businesses, offset by losses incurred on
three programs by Communication Systems -- East.
Sales and operating income of the Hycor business included in the
Predecessor Company's results of operations for the three months ended March
31, 1997 and the year ended December 31, 1996 were $1.8 million and $0.0
million, and $7.5 million and $0.3 million, respectively.
Net interest expense for the nine months ended December 31, 1997 was $28.5
million representing interest expense on the Company's outstanding borrowings
(see Note 8 to Consolidated (Combined) Financial Statements as of December
31, 1997), and amortization of debt issuance costs, less interest income of
$1.4 million and interest expense of $0.6 million allocated to the Hycor
business net assets held for sale. Interest expense for the three months
ended March 31, 1997 and the prior period was $8.4 million and $24.2 million,
respectively, and was allocated to the Predecessor Company by applying
Lockheed Martin's weighted average consolidated interest rate to the portion
of the Predecessor Company's invested equity account deemed to be financed by
Lockheed Martin's consolidated debt. The increase in interest expense
reflects higher interest rates on the third party debt, as compared to the
interest rate utilized to calculate interest expense by the Predecessor
Company.
33
<PAGE>
The income tax provision for the nine months ended December 31, 1997
reflects the Company's effective income tax rate of 39%. For the three months
ended March 31, 1997 and in the prior period, income taxes were allocated to
the Predecessor Company by Lockheed Martin and the effective income tax rate
was significantly impacted by amortization of costs in excess of net assets
acquired, which were not deductible for income tax purposes. See Note 11 to
Consolidated (Combined) Financial Statements as of December 31, 1997.
SUPPLEMENTAL ANALYSIS OF ANNUAL RESULTS OF OPERATIONS OF THE COMPANY AND THE
PREDECESSOR COMPANY
As noted above, the Company's financial statements reflect operations
since the effective date of the L-3 Acquisition, April 1, 1997, and the
results of operations for the year ended December 31, 1996 represent the
results of operations of the Predecessor Company, and include the results of
operations of the Loral Acquired Businesses beginning on April 1, 1996, the
effective date of that acquisition. Accordingly, changes between periods for
the year ended December 31, 1997 to the year ended December 31, 1996 of the
Predecessor Company are significantly affected by the timing of these
acquisitions. To enable investors to better assess the trends in the results
of operations and to facilitate comparisons, the following presentation of
results of operations for the year ended December 31, 1997 were obtained by
aggregating, without adjustment, the historical results of operations of the
Predecessor Company for the period from January 1, 1997 through March 31,
1997 with the historical results of operations of the Company for the nine
months period from April 1, 1997 through December 31, 1997 (the "1997
period"), and the results of operations for the year ended December 31, 1996
were obtained by aggregating, without adjustments, the historical results of
operations of the Predecessor Company for the year ended December 31, 1996
with the historical results of operations of the Loral Acquired Businesses
for the period from January 1, 1996 through March 31, 1996 (the "1996
period"). All the historical results were derived from the audited financial
statements for respective periods included herein.
The following table sets forth historical selected statement of operations
data for the Company, Predecessor Company and the Loral Acquired Businesses
for the periods indicated and the related calendar year results of operation
data derived therefrom.
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR LORAL ACQUIRED
COMPANY COMPANY COMPANY BUSINESSES
-------------- -------------- --------------- --------------
YEAR
NINE MONTHS THREE MONTHS ENDED THREE MONTHS
ENDED ENDED DECEMBER ENDED
DECEMBER 31, MARCH 31, 1997 31, MARCH 31, 1996
1997 1997 PERIOD 1996 1996 PERIOD
-------------- -------------- -------- -------------- -------------- --------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Sales.............. $546.5 $158.9 $705.4 $543.1 $132.2 $675.3
Costs and
expenses.......... 490.6 151.0 641.6 499.4 124.4 623.8
-------------- -------------- -------- -------------- -------------- --------
Operating income .. $ 55.9 $ 7.9 $ 63.8 $ 43.7 $ 7.8 $ 51.5
============== ============== ======== ============== ============== ========
EBITDA(1) ......... $ 78.1 $ 15.7 $ 93.8 $ 71.8 $ 12.8 $ 84.6
============== ============== ======== ============== ============== ========
</TABLE>
- ------------
(1) EBITDA is defined as operating income plus depreciation expense and
amortization expense (excluding the amortization of debt issuance
costs). EBITDA is not a substitute for operating income, net income or
cash flows from operating activities as determined in accordance with
generally accepted accounting principles as a measure of profitability
or liquidity. EBITDA is presented as additional information because the
Company believes it to be a useful indicator of the Company's ability
to meet debt service and capital expenditure requirements.
Sales for the 1997 period increased to $705.4 million from $675.3 million
for the 1996 period. Operating income increased to $63.8 million in the 1997
period from $51.5 million in the 1996 period. Operating income is not
directly comparable between the periods as a result of the effects of
valuation of assets and liabilities in accordance with Accounting Principles
Opinion No. 16.
The sales increase in the 1997 period was primarily attributable to sales
of the Loral Acquired Businesses which increased by $18.1 million to $531.4
million in the 1997 period as compared to
34
<PAGE>
$513.3 million in the 1996 period. This sales increase was primarily
attributable to increased sales volume on E2-C antenna program, the E2-C and
F-14 display systems and passive microwave components, additional production
and shipments on CHBDL and UAV programs, and partially offset by lower sales
volume on the U-2 Program. Additionally, sales of Communication Systems
- --East increased by $12.0 million to $174.0 million in the current period
from $162.0 million in the 1996 period, and were primarily attributable to
increased sales of power supplies, the GEMnet product line and the P3-C
Repair Depot.
Operating income increased by 23.9% to $63.8 million in the 1997 period
from $51.5 million in the 1996 period. Operating income as a percentage of
sales increased to 9.0% in the 1997 period as compared to 7.6% in the 1996
period. The increase in operating income was largely attributable to cost
reductions, increased sales volume of the Loral Acquired Businesses and
operating improvements at Communications Systems -- East. Operating income
for the 1997 period also reflected fourth quarter cost of sales of $3.3
million related to on-going certification efforts for the Company's EDS
contract. Excluding these EDS costs, operating income would have been $67.1
million for the 1997 period and operating income as a percentage of sales
would have been 9.5%.
EBITDA for the 1997 period increased by $9.2 million to $93.8 million from
$84.6 million from the 1996 period. EBITDA margin increased to 13.3% for the
1997 period from 12.5% for the 1996 period. The increases in EBITDA and
EBITDA margin were attributable to the items affecting the trends in
operating income between the 1997 period and 1996 period discussed above.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
The following table sets forth selected statement of operations data for
the Predecessor Company for the periods indicated.
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY
------------------
YEAR ENDED
DECEMBER 31,
------------------
1996 1995
-------- --------
($ IN MILLIONS)
<S> <C> <C>
Sales..................... $543.1 $166.8
Costs and expenses........ 499.4 162.1
Operating income.......... 43.7 4.7
Net interest expense ..... 24.2 4.5
Income before income
taxes.................... 19.5 0.2
Income tax provision .... 7.8 1.2
Net income (loss)......... 11.7 (1.0)
</TABLE>
The results of operations of the Loral Acquired Businesses are reflected
in the results of operations of the Predecessor Company beginning on April 1,
1996, the effective date of that acquisition by Lockheed Martin. During 1996,
sales increased to $543.1 million from $166.8 million in 1995. Operating
income increased to $43.7 million compared with $4.7 million in 1995. Net
income increased to $11.7 million as compared to a net loss of $1.0 million
in 1995. The Loral Acquired Businesses contributed $13.6 million to net
income for the year ended December 31, 1996.
The sales increase in 1996 was attributable to the sales of the Loral
Acquired Businesses which contributed $381.1 million of the increase. Sales
of Communication Systems -East decreased in 1996 by $4.8 million as compared
to 1995 primarily due to lower volume on Aegis power supplies and SIGINT
system production, partially offset by Local Management Device/Key Processor
("LMD/KP") production startup.
The increase in 1996 operating income was largely attributable to the
Loral Acquired Businesses, which contributed $36.9 million of the increase.
Communication Systems -East operating income in 1996 increased $2.2 million
primarily due to improved operating performance on the Shipboard Telephone
Communications ("STC-2") program partially offset by increased costs on the
Space Station contract. As a percentage of sales, operating income increased
to 8.0% from 2.8%. This increase is attributable to the improvement in
Communication Systems -- East noted above, higher contract margins and
operating improvements in the Loral Acquired Businesses.
35
<PAGE>
Allocated interest expense increased to $24.2 million in 1996 from $4.5
million in 1995 due primarily to the acquisition of the Loral Acquired
Businesses, which was assumed to be fully financed by debt, coupled with a
higher debt-to-equity ratio used in the allocation for Communication Systems
- -- East. See Note 9 to Consolidated (Combined) Financial Statements.
The effective income tax rate declined to 40% in 1996 as compared to 681%
in 1995. The 1995 effective rate was significantly impacted by non-deductible
amortization of costs in excess of net assets acquired. As a percentage of
income subject to tax, such amortization declined significantly in 1996.
LIQUIDITY AND CAPITAL RESOURCES
THE L-3 ACQUISITION
Effective April 1, 1997, the Company purchased the Businesses from
Lockheed Martin for $503.8 million, after a purchase price adjustment of
$21.2 million and acquisition costs of $8.0 million. On November 5, 1997 the
L-3 Acquisition Agreement was amended to finalize the purchase price
adjustment which amounted to $21.2 million of which $15.9 million was
received on April 30, 1997 and $5.3 million was received on November 7, 1997,
plus interest thereon. The amendment also included the assumption by the
Company of Lockheed Martin's rights and obligations under a contract for the
U.S. Army's Command and Control Vehicle ("C(2)V") Mission Module Systems
("MMS"), for which the Company received a cash payment of $12.2 million from
Lockheed Martin.
FINANCING
The L-3 Acquisition was funded by a combination of debt and equity
aggregating $525.0 million. The equity of $125.0 million was comprised of
$80.0 million in cash contributed to Holdings by the Lehman Partnership and
Senior Management and a $45.0 million retained interest in Holdings by
Lockheed Martin representing partial consideration to Lockheed Martin for its
sale of the Businesses to the Company. In connection with the L-3
Acquisition, the Company entered into a $275.0 million credit facility
consisting of $175.0 million of term loans (the "Term Loan Facilities") and a
$100.0 million revolving credit facility (the "Revolving Credit Facility")
(collectively, the "Senior Credit Facilities"). The initial debt balance of
$400.0 million consisted of $175.0 million of borrowings under the Term Loan
Facilities and $225.0 million of 10 3/8% Senior Subordinated Notes (the "1997
Notes") due May 1, 2007.
The required principal payments under the Term Loans Facilities are: $5.0
million in 1998, $11.0 million in 1999, $19.0 million in 2000, $25.0 million
in 2001, $33.2 million in 2002, $20.0 million in 2003, and $25.2 million in
2004, $24.9 million 2005, and $8.7 million in 2006. Interest payments on the
Term Loan Facilities vary in accordance with the type of borrowings and are
made at a minimum every three months. At December 31, 1997, the Senior Credit
Facilities also included a $100.0 million Revolving Credit Facility. In
February 1998, the Senior Credit Facilities were amended to, among other
things, increase the amount available under the revolving credit facility to
$200.0 million, waive certain excess cash flow prepayments, as defined,
otherwise required, and permit the incurrence of up to an additional $150.0
million of subordinated debt. Other than upon a change of control or the
occurrence of certain asset sales, L-3 Communications will not be required to
repurchase the 1997 Notes until maturity on May 1, 2007. L-3 Communications
is required to make semi-annual interest payments with respect to the 1997
Notes.
The Company has a substantial amount of indebtedness. Based upon the
current level of operations, management believes that the Company's cash flow
from operations, together with available borrowings under the Revolving
Credit Facility, will be adequate to meet its anticipated requirements for
working capital, capital expenditures, research and development expenditures,
program and other discretionary investments, interest payments and scheduled
principal payments for the foreseeable future including at least the next
three years. There can be no assurance, however, that the Company's business
will continue to generate cash flow at or above current levels or that
currently anticipated improvements will be achieved. If the Company is unable
to generate sufficient cash flow from operations in the future to service its
debt, it may be required to sell assets, reduce capital expenditures,
refinance all or a portion of its existing debt or obtain additional
financing. The Company's ability to make scheduled principal payments,
36
<PAGE>
to pay interest on or to refinance its indebtedness depends on its future
performance and financial results, which, to a certain extent, are subject to
general conditions in or affecting the defense industry and to general
economic, political, financial, competitive, legislative and regulatory
factors beyond its control. There can be no assurance that sufficient funds
will be available to enable the Company to service its indebtedness,
including the 1997 Notes, or make necessary capital expenditures and program
and discretionary investments.
On November 5, 1997, L-3 Communications completed its exchange offer
relating to the 1997 Notes and the holders of the 1997 Notes received
registered securities. The 1997 Notes are redeemable at the option of L-3
Communications, in whole or in part, at any time on or after May 1, 2002, at
various redemption prices plus accrued and unpaid interest to the applicable
redemption date. In addition, prior to May 1, 2000, L-3 Communications may
redeem up to 35% of the aggregate principal amount of the 1997 Notes at a
redemption price of 109.375% of the principal amount thereof, plus accrued
and unpaid interest to the redemption date with the net cash proceeds of one
or more equity offerings by Holdings that are contributed to L-3
Communications as common equity capital. See "Risk Factors -- Substantial
Leverage".
The Senior Credit Facilities and the 1997 Notes contain financial
covenants, which remain in effect so long as any amount is owed thereunder by
L-3 Communications. The financial covenants under the Senior Credit
Facilities require that (i) L-3 Communications' debt ratio, as defined, be
less than or equal to 5.50 for the quarter ended December 31, 1997, and that
the maximum allowable debt ratio, as defined, thereafter be further reduced
to less than or equal to 3.1 for the quarters ending after June 30, 2002, and
(ii) L-3 Communications' interest coverage ratio, as defined, be at least
1.85 for the quarter ended December 31, 1997, and thereafter increasing the
interest coverage ratio, as defined, to at least 3.10 for any fiscal quarters
ending after June 30, 2002. At December 31, 1997, L-3 Communications was and
has been in compliance with these covenants at all times.
To mitigate risks associated with changing interest rates on certain of
its debt, the Company entered into the interest rate cap and floor contracts
(the "interest rate agreements"). The Company manages exposure to
counterparty credit risk by entering into the interest rate agreements only
with major financial institutions that are expected to perform fully under
the terms of such agreements. Cash payments to (from) the Company and the
counterparties are made at the end of the quarter to the extent due under the
terms of the interest rate agreements. Such payments are recorded as
adjustments to interest expense. The initial costs of the interest rate
agreements are capitalized as deferred debt issuance costs and amortized into
interest expense. The impact of the interest rate agreements on interest
expense was not material for the nine months ended December 31, 1997. See
Note 10 to the Consolidated (Combined) Financial Statements.
1998 ACQUISITIONS
On March 30, 1998, the Company purchased the assets of Ocean Systems for
$67.5 million of cash. On March 4, 1998, the Company purchased the assets of
ILEX for $51.9 million of cash, subject to adjustment based on closing net
assets, and additional consideration based on post-acquisition performance of
ILEX. On February 5, 1998, the Company purchased the assets of STS for $27.0
million in cash, subject to adjustment based upon closing net assets.
The Company financed the 1998 Acquisitions using cash on hand and
borrowings under the Revolving Credit Facility.
The Company considers and executes strategic acquisitions on an ongoing
basis and may be evaluating acquisitions or engaged in acquisition
negotiations at any given time. As of the date hereof, the Company has
completed, has reached agreement on or is in discussions regarding certain
acquisitions, in addition to the 1998 Acquisitions, that are either
individually or in the aggregate not material to the financial condition of
results of operations of the Company.
37
<PAGE>
CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1997
The following table sets forth selected cash flow statement data for the
Company and the Predecessor Company for the periods indicated:
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY COMPANY
-------------- --------------
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
($ IN MILLIONS)
<S> <C> <C>
Net cash from (used in) operating
activities.................................. $ 11.1 $(16.3)
Net cash (used in) investing activities ..... (148.7) (4.3)
Net cash from financing activities........... 69.2 20.6
</TABLE>
NET CASH FROM (USED IN) OPERATING ACTIVITIES: Cash provided by operating
activities of the Company for the three months ended March 31, 1998 was $11.1
million. Earnings after adjustment for non-cash items provided $12.3 million,
offset by uses of cash caused by changes in operating assets and liabilities
of $1.3 million, net of amounts acquired. Increases in contracts in process
of $21.3 million during the three months ended March 31, 1998 were partially
offset by increases of $19.8 million primarily in operating liabilities.
Net cash used in operating activities of the Predecessor Company was $16.3
million for the three months ended March 31, 1997, resulting primarily from
the increase in contracts in process and decrease in current liabilities.
Cash flows used by the Loral Acquired Businesses was $10.2 million. Cash used
for operating activities by Communication Systems -- East amounted to $6.1
million.
The Company's current ratio at March 31, 1998 decreased to 1.4:1 compared
with 2.0:1 at December 31, 1997.
NET CASH (USED IN) INVESTING ACTIVITIES: Cash used in investing activities
for the three months ended March 31, 1998 consisted primarily of $151.4
million, net of cash acquired of $2.7 million, paid by the Company for
acquisitions, of which $146.3 million pertained to the 1998 Acquisitions.
Cash proceeds from assets held for sale was $4.8 million. Cash used for
capital expenditures was $2.3 million and $4.3 million, respectively, for the
three months ended March 31, 1998 and the three months ended March 31, 1997.
The Company typically makes capital expenditures related primarily to
improvement of manufacturing facilities and equipment. The Company expects
that its capital expenditures for 1998 will be approximately $27.0 million.
NET CASH FROM FINANCING ACTIVITIES: For the three months ended March 31,
1998, the Company's cash from financing activities was $69.2 million, and was
comprised of borrowings under the Revolving Credit Facility of $67.8 million;
proceeds of $3.0 million from the exercise of stock options on March 2, 1998
by Mr. Lanza and Mr. LaPenta; scheduled debt payments under the Term Loan
Facilities of $1.0 million; and, debt issuance costs of $0.6 million which
were incurred in connection with the February 1998 amendment to the Senior
Credit Facilities.
Prior to the L-3 Acquisition, the Predecessor Company participated in the
Lockheed Martin cash management system, under which all cash was received and
all payments were made by Lockheed Martin. For purposes of the statements of
cash flows, all transactions with Lockheed Martin were deemed to have been
settled in cash at the time they were recorded by the Predecessor Company.
Net cash from financing activities of the Predecessor Company for the three
months ended March 31, 1997 was $20.6 million, and represent advances from
Lockheed Martin, the Predecessor Company's parent company.
38
<PAGE>
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEARS ENDED DECEMBER 31, 1996 AND
1995
The following table sets forth selected cash flow statement data for the
Company and the Predecessor Company for the periods indicated:
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR
COMPANY COMPANY COMPANY
-------------- -------------- ------------------
NINE MONTHS THREE MONTHS YEAR
ENDED ENDED ENDED
DECEMBER 31, MARCH 31, DECEMBER 31,
-------------- -------------- ------------------
1997 1997 1996 1995
-------------- -------------- --------- -------
($ IN MILLIONS)
<S> <C> <C> <C> <C>
Net cash from (used in) operating
activities.................................. $ 73.9 $(16.3) $ 30.7 $ 9.3
Net cash used in investing activities ....... (457.8) (4.3) (298.0) (5.5)
Net cash from (used in) financing
activities.................................. 461.4 20.6 267.3 (3.8)
</TABLE>
NET CASH FROM (USED IN) OPERATING ACTIVITIES: Cash provided by operating
activities of the Company for the nine months ended December 31, 1997 was
$73.9 million. Cash provided by operations benefited from improved operating
results, effective management of contracts in process and increases in
accrued employment costs. Contracts in process declined by $18.2 million to
$167.2 million from April 1, 1997 to December 31, 1997, and was primarily
attributable to collections of and reductions in the levels of commercial and
affiliate receivables.
Net cash used in operating activities of the Predecessor Company was $16.3
million for the quarter ended March 31, 1997, resulting primarily from the
increase in contracts in process and decrease in current liabilities. Cash
flows used by the Loral Acquired Businesses was 10.2 million. Cash used for
operating activities by Communication Systems -- East amounted to $6.1
million.
Cash provided by operating activities of the Predecessor Company was $30.7
million in 1996 and $9.3 million in 1995. The increase of $21.4 million in
1996 was due primarily to the impact of the Loral Acquired Businesses which
were acquired by Lockheed Martin effective April 1, 1996. Earnings after
adjustment for non-cash items provided $36.7 million, offset by changes in
other operating assets and liabilities. Without the Loral Acquired
Businesses, cash provided by operating activities for Communication
Systems--East increased to $13.7 million in 1996, 46% over 1995.
The Company's current ratio at December 31, 1997 remained constant at 2.0:
1 as compared to the Predecessor Company's current ratio at December 31,
1996.
NET CASH (USED IN) INVESTING ACTIVITIES: Cash used in investing
activities for the nine months ended December 31, 1997 consisted primarily of
$466.3 million paid by the Company for the L-3 Acquisition (See Note 1 to
Consolidated (Combined) Financial Statements); offset by proceeds from the
sale of the Company's Sarasota, Florida property of approximately $9.5
million and cash received in connection with the assumption of obligations
under the C(2)V MMS contract from Lockheed Martin of $12.2 million. During
the year ended December 31, 1996, $287.8 million was paid by the Predecessor
Company for the acquisition of the Loral Acquired Businesses. See Note 4 to
the Consolidated (Combined) Financial Statements. In addition, for the nine
months ended December 31, 1997 and the three months ended March 31, 1997,
$11.9 million and $4.3 million, respectively, was used for capital
expenditures, and $5.1 million and nil, respectively, for purchase of
investments. The Company typically makes capital expenditures related
primarily to improvement of manufacturing facilities and equipment. The
Company expects that its capital expenditures for 1998 will be approximately
$27.0 million.
All transactions between the Businesses and Lockheed Martin have been
accounted as settled in cash at the time such transactions were recorded by
the Businesses. Accordingly, in 1996, cash flows reflect the purchase of the
Loral Acquired Businesses.
NET CASH FROM (USED IN) FINANCING ACTIVITIES: Cash from financing
activities of the Company was $461.4 million for the nine months ended
December 31, 1997, and was due to the debt incurred and proceeds from the
issuance of common stock which were issued to finance the L-3 Acquisition.
See "--Financing" above. Net cash from financing activities also reflects the
payment of debt issue costs of $15.6 million and $3.0 million of scheduled
debt payments of the Term Loan Facilities.
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Prior to the L-3 Acquisition, the Businesses participated in the Lockheed
Martin cash management system, under which all cash was received and all
payments were made by Lockheed Martin. For purposes of the statements of cash
flows, all transactions with Lockheed Martin were deemed to have been settled
in cash at the time they were recorded by the Predecessor Company. Net cash
from (used in) financing activities of the Predecessor Company for the three
months ended March 31, 1997 and the years ended December 31, 1996 and 1995,
were approximately $20.6 million, $267.3 million and ($3.8) million,
respectively, and represent advances from (repayments to) Lockheed Martin,
the Predecessor Company's parent company.
BACKLOG
The Company's funded backlog at December 31, 1997 totaled $516.9 million,
as compared with the Predecessor Company's funded backlog at December 31,
1996 of $542.5 million. Funded orders, on a pro forma basis, for the Company
for 1997 were $711.5 million. The Predecessor Company's funded orders for
1996 were $619.5 million. It is expected that 86.0% of the backlog at
December 31, 1997 will be recorded as sales during 1998. However, there can
be no assurance that the Company's backlog will become revenues in any
particular period, if at all. See "Risk Factors -- Backlog". Approximately
81% of the total backlog at December 31, 1997 was directly or indirectly for
defense contracts for end use by the Government. Approximately $434.0 million
of total backlog was directly or indirectly for U.S. and foreign government
defense contracts, and approximately $19.5 million of total backlog was
directly or indirectly for U.S. and foreign government non-defense contracts.
Foreign customers account for approximately $34.6 million of the total
backlog.
RESEARCH AND DEVELOPMENT
Research and development, including bid and proposal, costs ("R&D costs")
sponsored by the Company was $28.9 million for the nine months ended December
31, 1997. R&D costs sponsored by the Predecessor Company were $12.0 million,
$36.5 million and $9.8 million for the three months ended March 31, 1997 and
the years ended December 31, 1996 and 1995, respectively. The Loral Acquired
Businesses sponsored R&D costs of $5.6 million for the three months ended
March 31, 1996 and $21.4 million for the year ended December 31, 1995.
Accordingly, the Company, Predecessor Company and the Loral Acquired
Businesses, in the aggregate, sponsored R&D costs of $40.9 million, $42.1
million and $31.2 million, respectively, for the years ended December 31,
1997, 1996 and 1995. Customer-funded research and development was $117.1
million in 1997, as compared with $153.5 million for 1996. The decrease in
customer-funded research and development in 1997 is due primarily to research
and development programs existing in 1996 which moved into the production
phase during 1997.
CONTINGENCIES
See Note 9 to the Unaudited Condensed Consolidated (Combined) Financial
Statements as of March 31, 1998 and Note 13 to the Consolidated (Combined)
Financial Statements as of December 31, 1997.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosure
about Segments of an Enterprise and Related Information". SFAS No. 131
establishes accounting standards for the way that public business enterprises
report information about operating segments and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. In February 1998, the FASB issued
SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits". SFAS No. 132 revises employers' disclosures about pension and
other postretirement benefits plans. It does not change the measurement or
recognition of those plans. It standardizes the disclosure requirements for
pensions and other postretirement benefits to the extent practicable,
requires additional information on changes in the benefit obligations and
fair values of plan assets that will facilitate financial analysis, and
eliminates certain disclosures that are no longer as useful as they were when
SFAS No. 87 "Employers' Accounting for Pensions", SFAS No. 88 "Employers'
Accounting for Settlements and
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Curtailments of Defined Benefit Pension Plans and for Termination Benefits"
and SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other
Than Pensions" were issued. SFAS 132 suggests combined formats for
presentation of pension and other postretirement benefits disclosures. The
Company is currently evaluating the impact, if any, of SFAS No. 131 and SFAS
No. 132.
INFLATION
The effect of inflation on the Company's sales and earnings has not been
significant. Although a majority of the Company's sales are made under
long-term contracts, the selling prices of such contracts, established for
deliveries in the future, generally reflect estimated costs to be incurred in
these future periods. In addition, some contracts provide for price
adjustments through escalation clauses.
YEAR 2000 CONVERSION
Under the Company's decentralized structure, each division maintains
and/or outsources its computer-based data processing functions. While each
division is responsible for its own computer-based functions, in late 1997 a
corporate-wide Year 2000 program (the "Program") was instituted for purposes
of overseeing Year 2000 compliance efforts. The Program's major phases
include (i) identification of areas requiring update, which began in late
1997; (ii) assessment of required actions and related impacts, which
commenced in the first quarter of 1998; (iii) development of update schedule
and cost estimates, which is scheduled to be concluded in the second quarter
of 1998 and (iv) implementation of such plan, including follow-up testing,
which is scheduled to commence during the second quarter of 1998 and be
completed by mid-1999. Through December 31, 1997, the costs incurred in
connection with the Program were not material. While these cost estimates
have not been finalized, based upon the type of systems employed by the
Company, costs of the Program are not expected to be material to the results
of operations, liquidity or capital resources of the Company.
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<PAGE>
BUSINESS
COMPANY OVERVIEW
L-3 is a leading merchant supplier of sophisticated secure communication
systems and specialized communication products including secure, high data
rate communication systems, microwave components, avionics and ocean systems,
and telemetry, instrumentation and space products. These systems and products
are critical elements of virtually all major communication, command and
control, intelligence gathering and space systems. The Company's systems and
specialized products are used to connect a variety of airborne, space,
ground-and sea-based communication systems and are incorporated into the
transmission, processing, recording, monitoring and dissemination functions
of these communication systems. The Company's customers include the DoD,
selected Government intelligence agencies, major aerospace/defense prime
contractors, foreign governments and commercial customers. In 1997, L-3 had
pro forma sales of $894.0 million and pro forma EBITDA of $95.1 million. The
Company's pro forma funded backlog as of December 31, 1997 was $638.1
million. These results reflect internal growth as well as the execution of
the Company's strategy of acquiring businesses that complement or extend
L-3's product lines.
The Company's business areas enjoy proprietary technologies and
capabilities and have leading positions in their respective primary markets.
Management has organized the Company's operations into two primary business
areas: Secure Communication Systems and Specialized Communication Products.
In 1997, the Secure Communication Systems and Specialized Communication
Products business areas generated approximately $456.0 million and $438.0
million of pro forma sales, respectively, and $52.3 million and $42.8 million
of pro forma EBITDA, respectively. In addition, the Company is seeking to
expand its products and technologies in commercial markets. See "--Emerging
Commercial Products" below.
SECURE COMMUNICATION SYSTEMS. L-3 is the established leader in secure,
high data rate communications in support of military and other national
agency reconnaissance and surveillance applications. The Company's Secure
Communication Systems operations are located in Salt Lake City, Utah, Camden,
New Jersey and Shrewsbury, New Jersey. These operations are predominantly
cost plus, sole source contractors supporting long-term programs for the U.S.
Armed Forces and classified customers. The Company's major secure
communication programs and systems include: secure data links for airborne,
satellite, ground-and sea-based information collection and transmission;
strategic and tactical signal intelligence systems that detect, collect,
identify, analyze and disseminate information and related support contracts
for military and national agency intelligence efforts; as well as secure
telephone and network equipment. The Company believes that it has developed
virtually every high bandwidth data link used by the military for
surveillance and reconnaissance in operation today. L-3 is also a leading
supplier of communication software support services to military and related
government intelligence markets. In addition to these core Government
programs, L-3 is leveraging its technology base by expanding into related
commercial communication equipment markets, including applying its high data
rate communications and archiving technology to the medical image archiving
market and wireless communication expertise to develop local wireless loop
telecommunications equipment.
SPECIALIZED COMMUNICATION PRODUCTS. This business area includes (i)
Microwave Components, (ii) Avionics and Ocean Systems and (iii) Telemetry,
Instrumentation and Space Products operations of the Company.
Microwave Components. L-3 is the preeminent worldwide supplier of
commercial off-the-shelf, high performance microwave components and frequency
monitoring equipment. L-3's microwave products are sold under the
industry-recognized Narda brand name through a standard catalog to wireless,
industrial and military communication markets. L-3 also provides
state-of-the-art communication components including channel amplifiers and
frequency filters for the commercial communication satellite market.
Approximately 76% of Microwave Components sales is made to commercial
customers, including Loral Space & Communications, Ltd., Motorola, Lucent,
AT&T and Lockheed Martin.
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Avionics and Ocean Systems. Avionics and Ocean Systems include the
Company's Aviation Recorders, Display Systems, Antenna Systems and Acoustic
Undersea Warfare Systems operations. L-3 is the world's leading manufacturer
of commercial cockpit voice and flight data recorders ("black boxes"). These
recorders are sold under the Fairchild brand name both on an original
equipment manufacturer ("OEM") basis to aircraft manufacturers as well as
directly to the world's major airlines for their existing fleets of aircraft.
L-3's aviation recorders are also installed on military transport aircraft
throughout the world. L-3 provides military and high-end commercial displays
for use on a number of DoD programs including the F-14, V-22, F-117 and E-2C.
Further, L-3 manufactures high performance surveillance antennas and related
equipment for U.S. Air Force, U.S. Army and U.S. Navy aircraft including the
F-15, F-16, AWACS, E-2C and B-2, as well as the U.K.'s maritime patrol
aircraft. L-3 is also one of the world's leading product suppliers of
acoustic undersea warfare systems and airborne dipping sonar systems to the
U.S. and over 20 foreign navies.
Telemetry, Instrumentation and Space Products. The Company's Telemetry,
Instrumentation and Space Products operations develop and manufacture
commercial off-the-shelf, real-time data collection and transmission products
and components for missile, aircraft and space-based electronic systems.
These products are used to gather flight parameter data and other critical
information and transmit it from air or space to the ground. Telemetry
products are also used for range safety and training applications to simulate
battlefield situations. L-3 is also a leading global satellite communications
systems and services provider offering systems and services used in satellite
transmission of voice, video and data.
EMERGING COMMERCIAL PRODUCTS. Building upon its core technical expertise
and capabilities, the Company is seeking to expand into several closely
aligned commercial business areas and applications. Emerging Commercial
Products currently include the following three niche markets: (i) medical
archiving and simulation systems; (ii) local wireless loop telecommunications
equipment; and (iii) airport security equipment. These commercial products
were developed based on technology used in the Company's military businesses
with relatively small incremental financial investments. The Company is
applying its technical capabilities in high data rate communications and
archiving technology developed in its Secure Communication Systems business
area to the medical image archiving market jointly with GE Medical Systems.
Based on secure, high data rate communications technology also developed in
its Secure Communication Systems business area, the Company has developed
local wireless loop telecommunications equipment that is primarily designed
for emerging market countries and rural areas where voice and data
communication infrastructure is inadequate or non-existent. L-3 has completed
the development phase for the local wireless loop telecommunications
equipment and made its initial shipment in January 1998. In addition, the FAA
has awarded the Company a development contract for next generation airport
security equipment for explosive detection. L-3 has shipped two prototype
test units and FAA certification testing commenced in the first quarter of
1998. To date, revenues generated from L-3's Emerging Commercial Products
have not been, in the aggregate, material to the Company.
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<PAGE>
The Company's systems and products are summarized in the following tables:
SECURE COMMUNICATION SYSTEMS (1997 PRO FORMA SALES: $456.0 MILLION)
<TABLE>
<CAPTION>
SYSTEMS SELECTED APPLICATIONS SELECTED PLATFORMS/END USES
- ------------------------------------- --------------------------------------- ----------------------------------------
<S> <C> <C>
SECURE HIGH DATA RATE COMMUNICATIONS
o Wideband data links o High performance, secure o Used on aircraft and naval ships and
communication links for interoperable unmanned aerial vehicles with military
tactical communication and and commercial satellites
reconnaissance
SATELLITE COMMUNICATION TERMINALS
o Ground-based satellite o Interoperable, transportable ground o Provide remote personnel with
communication terminals terminals for remote data links to communication links to distant forces
distant segments via commercial or
military satellites
SPACE COMMUNICATION AND SATELLITE CONTROL
o Satellite communication and o On-board satellite external o International Space Station; Earth
tracking systems communications, video systems, solid Observing Satellite; Landsat-7; Space
state recorders and ground support Shuttle; and National Oceanic and
equipment Atmospheric Administration weather
satellites
o Satellite command and control o Software integration, test and o Air Force satellite control network
sustainment and support maintenance support for Air Force and Titan IV launch system
satellite control network;
engineering support for satellite
launch systems
MILITARY COMMUNICATIONS
o Shipboard communication systems o Shipboard and ship-to-ship o Shipboard voice communications systems
communications for Aegis cruisers and destroyers and
fully automated Integrated Radio Room
(IRR) for ship-to-ship communications
on Trident submarines
o Digital battlefield communications o Communications on the move for o Communication systems for U.S. Army
tactical battlefield C(2)V
o Communication software support o Value added, critical software o ASAS, JSTARS, and GUARDRAIL
services support for C(3)I systems
INFORMATION SECURITY SYSTEMS
o Secure Telephone Unit (STU o Secure and non-secure voice, data and o Office and battlefield secure and
III)/Secure Terminal Equipment video communication utilizing ISDN non-secure communication for armed
(STE) and ATM commercial network services, intelligence and security
technologies agencies
o Local management device/key o Provides electronic key material o User authorization and recognition and
processor (LMD/KP) accounting, system management and message encryption for secure
audit support functions for secure communication
data communication
o Information processing systems o Custom designed strategic and o Classified military and national
tactical signal intelligence systems agency intelligence efforts
that detect, collect, identify,
analyze and disseminate information
and related support contracts
- ------------------------------------- --------------------------------------- ----------------------------------------
</TABLE>
44
<PAGE>
SPECIALIZED COMMUNICATION PRODUCTS (1997 PRO FORMA SALES: $438.0 MILLION)
<TABLE>
<CAPTION>
PRODUCTS SELECTED APPLICATIONS SELECTED PLATFORMS/END USES
- ---------------------------------------- --------------------------------------- ----------------------------------------
<S> <C> <C>
MICROWAVE COMPONENTS
o Passive components, mechanical o Radio transmission, switching and o Broad-band and narrow-band commercial
switches and wireless assemblies conditioning; antenna and base applications (PCS, cellular, SMR, and
station testing and monitoring paging infrastructure) sold under the
Narda brand name; and broad-
band military applications
o Safety products o Radio frequency (RF) monitoring and o Monitor cellular base station and
measurement industrial RF emissions frequency
monitoring
o Semiconductors (diodes, capacitors) o Radio frequency switches, limiters, o Various industrial and military end
voltage control, oscillators, uses, including commercial satellites,
harmonic generators avionics and specialty communication
products
o Satellite and wireless components o Satellite transponder control, o China Sat, PanAmSat, Telstar, Sirius,
(channel amplifiers, transceivers, channel and frequency separation Tempo, Tiros, Milstar, GPS and LandSat
converters, filters and multiplexers)
AVIONICS AND OCEAN SYSTEMS
Aviation Recorders
o Solid state cockpit voice and flight o Voice recorders continuously record o Installed on business and commercial
data recorders most recent 30-120 minutes of voice aircraft and certain military
and sounds from cockpit and aircraft transport aircraft; sold to both
inter-communications. Flight data aircraft OEMs and airlines under the
recorders record the last 25 hours of Fairchild brand name
flight parameters
Antenna Systems
o Ultra-wide frequency and advanced o Surveillance; radar detection o F-15, F-16, F-18, E-2C, P-3, C-130,
radar antenna systems and rotary B-2, AWACS, Apache, Cobra, Mirage
joints (France), Maritime Patrol (U.K.) and
Tornado (U.K.)
Display Systems
o Cockpit and mission display systems o High performance, ruggedized flat o E-2C, V-22, F-14, F-117, E-6B, C-130,
panel and cathode ray tube displays AWACS and JSTARS
Ocean Systems
o Airborne dipping sonar systems o Submarine detection and localization o SH-60, SH-2/3, AB-212, EH-101 and Lynx
Helicopters
o Submarine and surface ship towed o Submarine and surface ship detection o SSN, SSBN, DDG-963, and FFG-7
arrays and localization
o Torpedo defense systems o Torpedo detection and jamming o SSN, SSBN and DDG-963
o Mine countermeasure systems o Coastal and route survey o MCDV (Canada)
TELEMETRY, INSTRUMENTATION AND SPACE PRODUCTS
Airborne, Ground and Space Telemetry
o Aircraft, missile and satellite o Real time data acquisition, o JSF, F-15, F-18, F-22, Comanche,
telemetry systems measurement, processing, simulation, Nimrod (U.K.), Tactical Hellfire,
distribution, display and storage for Titan, EELV, A2100 and ATHENA
flight testing
o Training range telemetry systems o Battlefield simulation o Combat simulation
Space Products
o Global satellite communications o Satellite transmission of voice, o Rural telephony or private networks,
systems supplier video and data direct to home uplinks, satellite news
gathering and wideband applications
- ---------------------------------------- --------------------------------------- ----------------------------------------
</TABLE>
45
<PAGE>
INDUSTRY OVERVIEW
The defense industry has recently undergone significant changes
precipitated by ongoing federal budget pressures and new roles and missions
to reflect changing strategic and tactical threats. Since the mid-1980's, the
overall U.S. defense budget has declined in real dollars. In response, the
DoD has focused its resources on enhancing its military readiness, joint
operations and digital command and control communications by incorporating
advanced electronics to improve the performance, reduce operating cost and
extend the life expectancy of its existing and future platforms. The emphasis
on system interoperability, force multipliers and providing battlefield
commanders with real-time data is increasing the electronics content of
nearly all of the major military procurement and research programs. As a
result, the DoD's budget for communications and defense electronics is
expected to grow. According to Federal Sources, an independent private
consulting group, the defense budget for C(3)I is expected to increase from
$31.0 billion in the fiscal year ended September 30, 1997 to $42.0 billion in
the fiscal year ended September 30, 2002, a compound annual growth rate of
6.3%.
The industry has also undergone dramatic consolidation resulting in the
emergence of three dominant prime system contractors (Boeing, Lockheed Martin
and Raytheon). One outgrowth of this consolidation among the remaining major
prime contractors is their desire to limit purchases of products and
sub-systems from one another. However, there are numerous essential products,
components and systems that are not economical for the major prime
contractors to design, develop or manufacture for their own internal use
which creates opportunities for merchant suppliers such as L-3. As the prime
contractors continue to evaluate their core competencies and competitive
position, focusing their resources on larger programs and platforms, the
Company expects the prime contractors to continue to exit non-strategic
business areas and procure these needed elements on more favorable terms from
independent, commercially oriented merchant suppliers. Recent examples of
this trend include divestitures of certain non-core businesses by
AlliedSignal, Ceridian, Lockheed Martin and Raytheon.
The prime contractors' focus on cost control is also driving increased use
of commercial off-the-shelf products for upgrades of existing systems and in
new systems. The Company believes the prime contractors will continue to be
under pressure to reduce their costs and will increasingly seek to focus
their resources and capabilities on major systems, turning to commercially
oriented merchant suppliers to produce sub-systems, components and products.
Going forward, successful merchant suppliers will use their resources to
complement and support, rather than compete with the prime contractors. L-3
anticipates the relationship between the major prime contractors and their
primary suppliers will, as in the automotive and commercial aircraft
industry, develop into critical partnerships encompassing increasingly
greater outsourcing of non-core products and systems by the prime contractors
to their key merchant suppliers and increasing supplier participation in the
development of future programs. Early involvement in the upgrading of
existing systems and the design and engineering of new systems incorporating
these outsourced products will provide merchant suppliers, including the
Company, with a competitive advantage in securing new business and provide
the prime contractors with significant cost reduction opportunities through
coordination of the design, development and manufacturing processes.
BUSINESS STRATEGY
In 1997, management successfully integrated the business units of Lockheed
Martin it acquired in the L-3 Acquisition and enhanced the Company's
operating efficiency through reduced overhead expenses and facility
rationalization. These efforts resulted in improvements in sales,
profitability and competitive contract award win rates. Going forward, L-3
intends to leverage its market position, diverse program base and favorable
mix of cost plus to fixed price contracts to enhance its profitability and to
establish itself as the premier merchant supplier of communication systems
and products to the major prime contractors in the aerospace/defense industry
as well as the Government. The Company's strategy to continue to achieve its
objectives includes:
o EXPAND MERCHANT SUPPLIER RELATIONSHIPS. Management has developed
strong relationships with virtually all of the prime contractors, the DoD
and other major government agencies, enabling L-3 to identify business
opportunities and anticipate customer needs. As an independent merchant
supplier, the Company anticipates its growth will be driven by expanding
its share of existing
46
<PAGE>
programs and by participating in new programs. Management identifies
opportunities where it believes it will be able to use its strong
relationships to increase its business presence and allow its customers to
reduce their costs. The Company also expects to benefit from increased
outsourcing by prime contractors who in the past may have limited their
purchases to captive suppliers and who are now expected to view L-3's
capabilities on a more favorable basis given its status as an independent
company. L-3's independent status positions it to be the desired merchant
supplier to multiple bidders on prime contract bids. As an example of the
Company's merchant supplier strategy, L-3 equipment is included in all
three prime contractor bids for the ASTOR program in the United Kingdom
and both prime contractor bids for the DoD's JASSM program.
o SUPPORT CUSTOMER REQUIREMENTS. A significant portion of L-3's sales
are derived from high-priority, long-term programs and from programs for
which the Company has been the incumbent supplier, and in many cases acted
as the sole provider, over many years. Approximately 65% of the Company's
total pro forma 1997 sales were generated from sole source contracts.
L-3's customer satisfaction and excellent performance record are evidenced
by its performance-based award fees exceeding 90% on average over the past
two years. Management believes prime contractors will increasingly award
long-term, sole source, outsourcing contracts to the merchant supplier
they believe is most capable on the basis of quality, responsiveness,
design, engineering and program management support as well as cost.
Reflecting L-3's strong competitive position, the Company (excluding the
1998 Acquisitions) has experienced a contract award win rate in 1997 in
excess of 60% on new competitive contracts for which it competes and in
excess of 90% on contracts for which it is the incumbent. The Company
intends to continue to align its research and development, manufacturing
and new business efforts to complement its customers' requirements and
provide state-of-the-art products.
o ENHANCE OPERATING MARGINS. Since the L-3 Acquisition in April 1997,
management has reduced corporate administrative and facilities expenses,
increased sales and improved competitive contract award win rates.
Enhancement of operating margins was primarily due to efficient management
and elimination of significant corporate expense allocations which existed
prior to the L-3 Acquisition. Pro forma EBITDA (excluding the 1998
Acquisitions) as a percentage of sales improved from 12.5% in 1996 to
13.4% in 1997. Management intends to continue to enhance its operating
performance by reducing overhead expenses, continuing consolidation and
increasing productivity.
o LEVERAGE TECHNICAL AND MARKET LEADERSHIP POSITIONS. L-3 has developed
strong, proprietary technical capabilities that have enabled it to capture
a number one or two market position in most of its key business areas,
including secure, high data rate communications systems, solid state
aviation recorders, telemetry, instrumentation and space products,
advanced antenna systems and high performance microwave components. Over
the past three years, the Company, on a pro forma basis, has invested over
$150.0 million in Company-sponsored independent research and development,
including bid and proposal costs, in addition to making substantial
investments in its technical and manufacturing resources. Further, the
Company has a highly skilled workforce including approximately 2,000
engineers. Management is applying the Company's technical expertise and
capabilities into several closely aligned commercial business areas and
applications, such as medical imaging archive management, wireless
telephony and airport security equipment and will continue to explore
other similar commercial opportunities.
o MAINTAIN DIVERSIFIED BUSINESS MIX. The Company enjoys a diverse
business mix with a limited program exposure, a favorable balance of cost
plus and fixed price contracts, a significant sole source follow-on
business and an attractive customer profile. The Company's largest
program, representing 13% of 1997 pro forma sales, is a long-term, sole
source, cost plus contract for the U-2 Program. No other program
represented more than 7% of 1997 sales on a pro forma basis, assuming the
L-3 Acquisition had occurred on January 1, 1997. Further, the Company's
pro forma sales mix of contracts in 1997 was 36% cost plus and 64% fixed
price, providing the Company with a favorable mix of predictable
profitability (cost plus) and higher margin (fixed price) business. L-3
also enjoys an
47
<PAGE>
attractive customer mix of defense and commercial business, with DoD
related sales accounting for 62% and commercial and federal (non-DoD)
sales accounting for 38% of 1997 pro forma sales. The Company intends to
leverage this favorable business profile to expand its merchant supplier
business base.
o CAPITALIZE ON STRATEGIC ACQUISITION OPPORTUNITIES. Recent industry
consolidation has essentially eliminated traditional middle-tier
aerospace/defense companies. This level of consolidation is now beginning
to draw the concern of the DoD and federal anti-trust regulators. In 1997,
a number of merchant supplier companies were sold: Computing Devices
International division of Ceridian to General Dynamics, Kaman Sciences to
ITT, BDM to TRW and TASC Inc., a subsidiary of Primark Corporation, to
Litton. As a result, the Company anticipates that the consolidation of the
smaller participants in the defense industry will create attractive
complementary acquisition candidates for L-3 in the future as these
companies continue to evaluate their core competencies and competitive
position. L-3 intends to enhance its existing product base through
internal research and development efforts as well as selective
acquisitions and add new products to its product base through acquisitions
in areas synergistic with L-3's present technology. The Company seeks to
acquire potential targets with the following criteria: (i) significant
market position in its business area, (ii) product offerings which
complement and/or extend those of L-3 and (iii) positive future growth and
earnings prospects.
RECENT DEVELOPMENTS
Since the formation of the Company in April 1997, the Company has actively
pursued its acquisition strategy. The Company recently purchased the assets
and liabilities of STS, ILEX and Ocean Systems. The combined purchase price
for the 1998 Acquisitions was $146.4 million of cash, subject to certain
post-closing adjustments, and in one case certain additional consideration
based on post-closing performance. The Company has financed these
acquisitions through the use of its existing cash balances as well as through
borrowings under the $375.0 million Senior Credit Facilities. These three
businesses complement and extend L-3's product offerings.
Ocean Systems
On March 30, 1998, L-3 Communications purchased the assets of Ocean
Systems for $67.5 million in cash. In 1997, Ocean Systems had sales of $73.0
million. Ocean Systems is one of the world's leading products suppliers of
acoustic undersea warfare systems, having designed, manufactured and
supported a broad range of compact, lightweight, high performance acoustic
systems for navies around the world for over 40 years. Ocean Systems is the
leading products supplier of airborne dipping sonar systems in the world with
substantial market share of the sector and systems in service with the U.S.
and 20 foreign navies. Ocean Systems also produces several sea systems
products including towed array sonar, integrated side-looking sonar, acoustic
jammers, mine detection and torpedo defense systems and supplies commercial
navigation and hydrographic survey systems worldwide. Ocean Systems is
further supported by ELAC located in Kiel, Germany. ELAC manufactures a broad
range of naval defense products including submarine, torpedo and navigation
sonars as well as survey and navigation systems for the commercial nautical
products industry. Ocean Systems expands L-3's leading products and
capabilities into the undersea and anti-submarine warfare market place.
ILEX Systems
On March 4, 1998, L-3 Communications purchased the assets of ILEX for
$51.9 million in cash, subject to adjustment based on closing net assets,
plus additional consideration based on post-closing performance of ILEX which
could include the issuance of up to 540,000 shares of Common Stock over the
next three years. In 1997, ILEX had sales of $63.5 million. ILEX is a leading
supplier of communication software support services to military and related
government intelligence markets. ILEX also provides environmental consulting,
software and systems engineering services and complementary products to
several commercial markets. ILEX complements L-3's Secure Communication
Systems business area by adding software expertise in critical C(3)I programs
and increasing the number of the Company's skilled workforce by adding
approximately 500 software system engineers and scientists.
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Satellite Transmission Systems
On February 5, 1998, L-3 Communications purchased the assets of STS of
California Microwave, Inc. for $27.0 million, subject to adjustment based on
closing net assets. For the fiscal year ended June 30, 1997, STS had sales of
$68.0 million. STS is a leading global satellite communications systems and
services provider. Its customers include foreign post, telephone and
telegraph administrations, domestic and international prime communications
infrastructure contractors, telecommunications and satellite service
providers, broadcasters and media-related companies, government agencies and
large corporations. STS expands L-3's ability to apply its products and
provides networking capability to L-3's wireless communications products
business. STS also opens new opportunities in broader, international markets.
The Company considers and executes strategic acquisitions on an ongoing
basis and may be evaluating acquisitions or engaged in acquisition
negotiations at any given time. As of the date hereof, the Company has
completed, has reached agreement on or is in discussions regarding certain
acquisitions, in addition to the 1998 Acquisitions, that are either
individually or in the aggregate not material to the financial condition or
results of operations of the Company.
HISTORY
Holdings and L-3 Communications were formed in April 1997 by Mr. Frank C.
Lanza, the former President and Chief Operating Officer of Loral, Mr. Robert
V. LaPenta, the former Senior Vice President and Controller of Loral
(collectively, "Senior Management"), Lehman Brothers Capital Partners III,
L.P. and its affiliates (the "Lehman Partnership") and Lockheed Martin to
acquire (the "L-3 Acquisition") substantially all of the assets and certain
liabilities of (i) nine business units previously purchased by Lockheed
Martin as part of its acquisition of Loral in April 1996 (the "Loral Acquired
Businesses") and (ii) one business unit, Communication Systems -- East,
purchased by Lockheed Martin as part of its acquisition of GE Aerospace in
April 1993 (collectively, the "Businesses"). L-3 Communications is a
wholly-owned subsidiary of Holdings. At March 31, 1998, Messrs. Lanza and
LaPenta and certain other members of management collectively owned 17.8%; the
Lehman Partnership owned 49.0%; and Lockheed Martin owned 33.2% of the
outstanding capital stock of Holdings.
The Company's executive offices are located at 600 Third Avenue, New York,
New York, 10016, and the telephone number at that address is 212-697-1111.
PRODUCTS AND SERVICES
SECURE COMMUNICATION SYSTEMS
L-3 is a leader in communication systems for high performance intelligence
collection, imagery processing and ground, air, sea and satellite
communications for the DoD and other government agencies. The Salt Lake City
operation provides secure, high data rate, real-time communication systems
for surveillance, reconnaissance and other intelligence collection systems.
The Camden operation designs, develops, produces and integrates communication
systems and support equipment for space, ground and naval applications. The
Shrewsbury operation provides communication software support services to
military and related government intelligence markets. Product lines of the
Secure Communication Systems business include high data rate communications
links, satellite communications ("SATCOM") terminals, Navy vessel
communication systems, space communications and satellite control systems,
signal intelligence information processing systems, information security
systems, tactical battlefield sensor systems and commercial communication
systems.
O HIGH DATA RATE COMMUNICATIONS
The Company is a technology leader in high data rate, covert,
jam-resistant microwave communications in support of military and other
national agency reconnaissance and surveillance applications. L-3's product
line covers a full range of tactical and strategic secure point-to-point and
relay data transmission systems, products and support services that conform
to military and intelligence specifications. The Company's systems and
products are capable of providing battlefield commanders with real time,
secure surveillance and targeting information and were used extensively by
U.S. armed forces in the Persian Gulf war.
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During the 1980s, largely based on its prior experience with command and
control guidance systems for remotely-piloted vehicles, L-3 developed its
current family of strategic and tactical data links, including its Modular
Interoperable Data Link ("MIDL") systems and Modular Interoperable Surface
Terminals ("MIST"). MIDL and MIST technologies are considered virtual DoD
standards in terms of data link hardware. The Company's primary focus is
spread spectrum communication (based on CDMA technology), which involves
transmitting a data signal with a high rate noise signal so as to make it
difficult to detect by others, and then re-capturing the signal and removing
the noise. The Company's data links are capable of providing information at
over 200 Mb/s.
L-3 provides these secure high band width products to the U.S. Air Force,
Navy, Army and various Government agencies, many through long-term sole
source programs. The scope of these programs include air-to-ground,
air-to-air, ground-to-air and satellite communications. Government programs
include: U-2 Support Program, Common High-Band Width Data Link ("CHBDL"),
Battle Group Passive Horizon Extension System ("BGPHES"), Light Airborne
Multi-Purpose System (LAMPS), TriBand SATCOM Subsystem ("TSS"), major
unmanned aerial vehicle ("UAV") programs and Direct Air-Satellite Relay
("DASR").
O SATELLITE COMMUNICATION TERMINALS
L-3 provides ground-to-satellite, high availability, real-time global
communications capability through a family of transportable field terminals
to communicate with commercial, military and international satellites. These
terminals provide remote personnel with anywhere, anytime effective
communication capability and provide communications links to distant forces.
The Company's TriBand SATCOM Subsystem ("TSS") employs a 6.25 meter tactical
dish with a single point feed that provides C, Ku and X band communication to
support the U.S. Army. The Company also offers an 11.3 meter dish which is
transportable on two C-130 aircraft. The SHF Portable Terminal System ("PTS")
is a lightweight (28 lbs.), manportable terminal, which communicates through
DSCS, NATO or SKYNET satellites and brings unprecedented connectivity to
small military tactical units and mobile command posts. L-3 delivered 14 of
these terminals for use by NATO forces in Bosnia.
O SPACE COMMUNICATIONS AND SATELLITE CONTROL
Continuing L-3's tradition of providing communications for every manned
U.S. space flight since Mercury, the Company is currently designing and
testing three communication subsystems for the International Space Station
("ISS"). These systems will control all ISS radio frequency ("RF")
communications and external video activities. The Company also provides
solid-state recorders and memory units for data capture, storage, transfer
and retrieval for space applications. The standard NASA tape recorder, which
was developed and produced by the Company, has completed over four million
hours of service without a mission failure. Current programs include
recorders for the National Oceanic & Atmospheric Administration ("NOAA")
weather satellites, the Earth Observing Satellite ("EOS"), AM spacecraft and
Landsat-7 Earth-monitoring spacecraft. The Company also provides space and
satellite system simulation, satellite operations and computer system
training, depot support, network engineering, resource scheduling, launch
system engineering, support, software integration and test through cost-plus
contracts with the U.S. Air Force.
O MILITARY COMMUNICATIONS
The Company provides integrated, computer controlled switching systems for
the interior and exterior voice and data needs of today's Navy military
vessels. The Company's products include Integrated Voice Communication
Systems ("IVCS") for Aegis cruisers and destroyers and the Integrated Radio
Room ("IRR") for Trident class submarines, the first computer controlled
communications center in a submarine. These products integrate the intercom,
tactical and administrative communications network into one system accessing
various types of communication terminals throughout the ship. The Company's
MarCom 2000 secure digital switching system is in development for the Los
Angeles class attack submarine and provides an integrated approach to the
specialized voice and data communications needs of a shipboard environment
for internal and external communications, command and control and air
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traffic control. The Company also offers on-board, high data rate
communications systems which provide a data link for carrier battle groups
which are interoperable with the U.S. Air Force's surveillance/
reconnaissance terminal platforms. The Company provides the US Army's Command
and Control Vehicle ("C(2)V") Mission Module Systems ("MMS"). MMS provides
the "communications on the move" capability needed for the digital
battlefield by packaging advanced communications into a modified Bradley
Fighting Vehicle. The Company is a proven supplier of superior technological
expertise to the DoD, including its contractors and related government
intelligence agencies.
O INFORMATION SECURITY SYSTEMS
The Company has produced more than 100,000 secure telephone units ("STU
III") which are in use today by the U.S. Armed Forces to provide secure
telephone capabilities for classified confidential communication over public
commercial telephone networks. The Company has begun producing the
next-generation digital, ISDN-compatible STE. STE provides clearer voice and
thirteen-times faster data/fax transmission capability than the STU III. STE
also supports secure conference calls and secure video teleconferencing. STE
uses a CryptoCard security system which consists of a small, portable,
cryptographic module mounted on a PCMCIA card holding the algorithms, keys
and personalized credentials to identify its user for secure communications
access. The Company also provides LMD/KP which is the workstation component
of the Government's Electronic Key Management System ("EKMS"), the next
generation of information security systems. EKMS is the Government system to
replace current "paper" secret keys used to secure government communications
with "electronic" secret keys. LMD/KP is the component of the EKMS which
produces and distributes the electronic keys. L-3 also develops specialized
strategic and tactical SIGINT systems to detect, acquire, collect, and
process information derived from electronic sources. These systems are used
by classified customers for intelligence gathering and require high speed
digital signal processing and high density custom hardware designs.
O TACTICAL SECURITY SYSTEMS
The Company manufactures the IREMBASS, an unattended ground sensor system
which uses sensors placed along likely avenues of enemy approach or intrusion
in a battlefield environment. The sensors respond to seismic and acoustic
disturbances, infrared energy and magnetic field changes and thus detect
enemy activities. IREMBASS is currently in use by U.S. Special Operations
Forces, the U.S. Army's Light Divisions and several foreign governments. The
Company also provides the Intrusion Detection Early Warning System ("IDEWS"),
a sensor system designed for platoon-level physical security applications.
Weighing less than two pounds, this sensor system is ideal for covert
perimeter intrusion detection, border protection and airfield or military
installation security.
SPECIALIZED COMMUNICATION PRODUCTS
MICROWAVE COMPONENTS
L-3 is the preeminent worldwide supplier of commercial off-the-shelf, high
performance radio frequency ("RF") microwave components, assemblies and
instruments supplying the wireless communications, industrial and military
markets. The Company is also a leading provider of state-of-the-art
space-qualified commercial satellite and strategic military RF products. L-3
sells many of these components under the well-recognized Narda brand name and
through the world's most comprehensive catalog of standard, stocked hardware.
L-3 also sells its products through a direct sales force and an extensive
network of premier market representatives. Specific catalog offerings include
wireless products, electro-mechanical switches, power dividers and hybrids,
couplers/detectors, attenuators, terminations and phase shifters, isolators
and circulators, adapters, control products, sources, mixers, waveguide
components, RF safety products, power meters/monitors and custom passive
products. The Company operates from two sites, Hauppauge, New York ("Narda
East"), and Sacramento, California ("Narda West").
Narda East represents approximately 65% of L-3's microwave sales volume,
offering high performance microwave components, networks and instruments to
the wireless, industrial and military communications markets. Narda East's
products can be divided into three major categories: passive components,
higher level wireless assemblies/monitoring systems and safety instruments.
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Passive components are generally purchased in narrow frequency
configurations by wireless OEM equipment manufacturers and service providers.
Similar components are purchased in wide frequency configurations by first
tier military equipment suppliers. Commercial applications for Narda
components are primarily in cellular or PCS base stations. Narda also
manufactures higher level assemblies for wireless base stations and the
paging industry. These products include communication antenna test sets,
devices that monitor reflected power to determine if a cellular base station
antenna is working and whether the base station radios are operating at peak
power levels. Military applications include general procurement for test
equipment or electronic surveillance and countermeasure systems. RF safety
products are instruments which are used to measure the level of non-ionizing
radiation in a given area, i.e., from an antenna, test set or other emitting
source, and determine whether human exposure limits are within federal
standards.
Narda West designs and manufactures state-of-the-art space-qualified and
wireless components. Space qualified components include channel amplifiers
for satellite transponder control and diplexers/ multiplexers, which are used
to separate various signals and direct them to the appropriate other sections
of the payload. Narda West's primary areas of focus are communications
satellite payload products. Channel amplifiers constitute Narda West's main
satellite product. These components amplify the weak signals received from
earth stations by a factor of 1 million, and then drive the power amplifier
tubes that broadcast the signal back to earth. These products are sold to
satellite manufacturers and offer lower cost, lower weight and improved
performance versus in-house alternatives. On a typical satellite, for which
there are 20 to 50 channel amps, Narda West's channel amps offer cost savings
of up to 60% (up to $1 million per satellite) and decrease launch weight by
up to 25 kilograms.
Narda West products include wireless microwave components for cellular and
PCS base station applications. These products include filters used to
transmit and receive channel separation as well as ferrite components, which
isolate certain microwave functions, thereby preventing undesired signal
interaction. Other products include a wide variety of high-reliability power
splitters, combiners and filters for spacecraft and launch vehicles, such as
LLV, Tiros, THAAD, Mars Surveyor, Peacekeeper, Galileo, Skynet, Cassini,
Milstar, Space Shuttle, LandSat, FltSatCom, GPS, GPS Block IIR, IUS, ACE,
SMEX and certain classified programs. The balance of the operation's business
is of an historical nature and involves wideband filters used for electronic
warfare applications.
AVIONICS AND OCEAN SYSTEMS
O AVIATION RECORDERS
L-3 manufactures commercial solid-state crash-protected aviation recorders
("black boxes") under the Fairchild brand name, and has delivered over 40,000
flight recorders to airplane manufacturers and airlines around the world.
Recorders are mandated and regulated by various worldwide agencies for
commercial airlines and a large portion of business aviation aircraft.
Management anticipates growth opportunities in Aviation Recorders as a result
of the current high level of orders for new commercial aircraft. Expansion
into the military market shows continued growth opportunities. L-3 Recorders
were recently selected for installation on the fleet of the Royal Australian
Air Force and Royal Australian Army transport aircraft and are currently
being installed on the U.S. Navy C-9 aircraft. There are two types of
recorders: (i) the Cockpit Voice Recorder ("CVR") which records the last 30
to 120 minutes of crew conversation and ambient sounds from the cockpit and
(ii) the Flight Data Recorder ("FDR") which records the last 25 hours of
aircraft flight parameters such as speed, altitude, acceleration, thrust from
each engine and direction of the flight in its final moments. Recorders are
highly ruggedized instruments, designed to absorb the shock equivalent to
that of an object traveling at 268 knots stopping in 18 inches, fire
resistant to 1,100 degrees centigrade and pressure resistant to 20,000 feet
undersea for 30 days. Management believes that the Company has the leading
worldwide market position for CVR's and FDR's.
O ANTENNA SYSTEMS
Under the Randtron brand name, L-3 produces high performance antennas
designed for surveillance, high-resolution, ultra-wide frequency bands,
detection of low radar cross section ("LRCS") targets, LRCS
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installations, severe environmental applications and polarization diversity.
L-3's main antenna product is a sophisticated 24-foot diameter antenna
operational on all E-2C aircraft. This airborne antenna consists of a 24-foot
rotating aerodynamic radome containing a UHF surveillance radar antenna, IFF
antenna and forward and aft auxiliary antennas. Production of this antenna
began in the early 1980s, and production is planned beyond 2000 for the E-2C,
P-3 and C-130 AEW aircraft. The replacement for this antenna is a very
adaptive radar currently under development for introduction early in the next
decade. L-3 also produces broad-band antennas for a variety of tactical
aircraft and rotary joints for the AWAC's and E-2C's antenna. Randtron has
delivered over 2,000 aircraft sets of antennas and has a current backlog
through 1999.
O DISPLAY SYSTEMS
L-3 specializes in the design, development and manufacture of ruggedized
display system solutions for military and high-end commercial applications.
L-3's current product lines include cathode ray tubes ("CRTs"), the Actiview
family of active matrix liquid crystal displays ("AMLCD"), and a family of
high performance Display Processing systems. L-3 manufactures flat-panel
displays that are used on platforms such as E-2C, F-117, and the LCAC
(Landing Craft Air Cushion) vehicle. Recent new contracts for flat-panel
displays include the SH-60J helicopter and the C-130 Senior Scout. L-3 also
manufactures CRT displays for the E-2C Hawkeye, V-22 Osprey, and F-14 Tomcat
and electronics used in aircraft anti-lock braking systems.
O OCEAN SYSTEMS
The Company is one of the world's leading suppliers of acoustic undersea
warfare systems, having designed, manufactured and supported a broad range of
compact, lightweight, high performance acoustic systems for navies around the
world for over forty years. This experience spans a wide range of platforms,
including helicopters, submarines and surface ships, that employ the
Company's sonar systems and countermeasures.
TELEMETRY, INSTRUMENTATION AND SPACE
The Company is a leader in component products and systems used in
telemetry and instrumentation for airborne applications such as satellites,
aircraft, UAVs, launch vehicles, guided missiles, projectiles and targets.
Telemetry involves the collection of data from these platforms, its
transmission to ground stations for analysis, and its further dissemination
or transportation to another platform. A principal use of this telemetry data
is to measure as many as 1,000 different parameters of the platform's
operation (in much the same way as a flight data recorder on an airplane
measures various flight parameters) and transmit this data to the ground.
Additionally, for satellite platforms, the equipment also acquires the
command uplink that controls the satellite and transmits the necessary data
for ground processing. In these applications, high reliability of components
is crucial because of the high cost of satellite repair and the length of
uninterrupted service required. Telemetry also provides the data to terminate
the flight of missiles and rockets under errant conditions and/or at the end
of a mission. Telemetry and command/control products are currently provided
on missile programs such as AMRAAM, ASRAAM, AIM-9X, JASSM, JDAM, FOTT, ATACMS
and PAC-3, as well as satellite programs such as GPS BLK IIF, GLOBALSTAR,
EARTHWATCH, SBIRS, LUNAR PROSPECTOR and MTSAT.
O AIRBORNE, GROUND AND SPACE TELEMETRY
The Company provides airborne equipment and data link systems to gather
critical information and to process, format and transmit it to the ground
through communication data links from a communications satellite, spacecraft,
aircraft and/or missile. These products are available in both COTS and custom
configurations. Major customers are the major defense contractors who
manufacture aircraft, missiles, warheads, launch vehicles, munitions and
bombs. Ground instrumentation activity occurs at the ground station where the
serial stream of combined data is received and decoded in real-time, as it is
received
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from the airborne platform. Data can be encrypted and decrypted during this
process, an additional expertise that the Company offers. The Company
recently introduced the NeTstar satellite ground station, which collapses
racks of satellite RF receivers, demodulators and related units into a PC.
O SPACE PRODUCTS
L-3 offers value-added solutions that require complex product integration,
rich software content and comprehensive support to its customers. The Company
focuses on the following niches within the satellite ground segment equipment
market: telephony, video broadcasting and multimedia. The Company's customers
include foreign PTT's, domestic and international prime communications
infrastructure contractors, telecommunications or satellite service
providers, broadcasters and media-related companies.
EMERGING COMMERCIAL PRODUCTS
O MEDICAL ARCHIVING AND SIMULATION SYSTEMS
The Company markets jointly with GE Medical Systems GEMnet(Trademark), a
cardiac image management and archive system through an exclusive reseller
arrangement with GE Medical Systems. GEMnet(Trademark) eliminates the use of
cinefilm in a cardiac catheterization laboratory by providing a direct
digital connection to the laboratory. The system provides for acquisition,
display, analysis and short-and long-term archive of cardiac patient studies,
providing significant cost savings and process improvements to the hospital.
The Company is an exclusive reseller of EchoNet(Trademark) pursuant to a
reseller arrangement with Heartlab, Inc. EchoNet(Trademark) is a digital
archive management and review system designed specifically for the
echocardiology profession. The system accepts digital echocardiology studies
from a variety of currently available ultrasound systems, manages the
studies, making them available on a network, and allows the physicians and
technicians to become more productive. EchoNet(Trademark) is a trademark of
Heartlab, Inc. GEMnet(Trademark) is a trademark of GE.
The Company has approximately a one-third equity ownership interest in
Medical Education Technologies, Inc. ("METI"). METI is a medical technology
company engaged in the development, manufacture and sale of Human Patient
Simulators ("HPS"). The HPS is a computerized system with a life-like
mannequin that reacts to medical treatments and interventions similar to a
human being. Originally oriented to the anesthesiology training and education
domain, METI has expanded into cardiology, critical care, trauma care, allied
health care, military medicine and continuing medical education. METI's
target customers for its HPS include medical schools throughout the world,
colleges with registered nursing programs, community colleges and state,
local and volunteer emergency medical service organizations.
O WIRELESS LOOP TELECOMMUNICATIONS EQUIPMENT
The Company is applying its wireless communication expertise to introduce
local wireless loop telecommunications equipment using a synchronous Code
Division Multiple Access technology ("CDMA") supporting terrestrial and space
based, fixed and mobile communication services. The system's principal
targeted customer base is emerging market countries and rural areas where
existing telecommunications infrastructure is inadequate or non-existent. The
Company's system will have the potential to interface with low earth orbit
("LEO") PCS systems such as Globalstar, Iridium and/or any local public
telephone network. The Company expects to manufacture for sale certain of the
infrastructure equipment. The Company intends to pursue joint ventures with
third parties for service and distribution capabilities. The Company has
entered into product distribution agreements with Granger Telecom Ltd. for
distribution in parts of Africa, the Middle East and the United Kingdom, and
with Unisys for distribution in parts of Mexico and South America. This same
technology is also being introduced into the Ellipso "big LEO" program to
provide the key communications capability in the ground and user segments. In
this program, the Company will provide the CDMA processing equipment in the
Ground Control Segment and the Ellipso user terminals, both fixed and mobile.
O AIRPORT SECURITY EQUIPMENT
The FAA has awarded the Company a development contract for next generation
airport security equipment for explosive detection. L-3 has teamed with
Analogic Corporation and GE to design and
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produce an explosive detection system ("EDS") utilizing a dual energy
computer tomography ("CT") X-ray system. L-3's EDS system, the eXaminer
3DX(Trademark) 6000, will analyze the contents of checked baggage at airports
for a wide-range of explosive material as specified by the FAA. The eXaminer
3DX(Trademark) 6000 will inspect baggage at an average of 675 bags per hour,
which will allow screening of passenger-checked baggage for a large body
aircraft, such as a Boeing 747, in approximately 40 minutes. It can be
installed as a stand-alone unit in a conveyor system or in a mobile van. L-3
has shipped two prototype test units and FAA certification testing commenced
in the first quarter of 1998.
MAJOR CUSTOMERS
The Company's sales are predominantly derived from contracts with agencies
of, and prime contractors to, the Government. Various Government customers
exercise independent purchasing decisions. Sales to the Government generally
are not regarded as constituting sales to one customer. Instead, each
contracting entity is considered to be a separate customer. In 1997, the
Company performed under approximately 150 contracts with value exceeding $1
million for the Government. Pro forma 1997 sales to the Government, including
sales through prime contractors, were $651.1 million. Pro forma sales to
Lockheed Martin were $81.6 million in 1997. The Company's largest program is
a long-term, sole source cost plus support contract for the U-2 Program which
contributed sales on a pro forma basis assuming the L-3 Acquisition had
occurred on January 1, 1995, of 13%, 14% and 14%, respectively, for 1997,
1996 and 1995. No other program represented more than 7% of such pro forma
sales for 1997, 1996 and 1995.
RESEARCH AND DEVELOPMENT
The Company employs scientific, engineering and other personnel to improve
its existing product lines and to develop new products and technologies in
the same or related fields. As of December 31, 1997, the Company employed
approximately 2,000 engineers (of whom over 20% hold advanced degrees). The
pro forma amounts of research and development performed under customer-funded
contracts and Company-sponsored research projects, including bid and proposal
costs, for 1997 were $150.2 million and $46.2 million, respectively.
COMPETITION
The Company's ability to compete for defense contracts depends to a large
extent on the effectiveness and innovativeness of its research and
development programs, its ability to offer better program performance than
its competitors at a lower cost to the Government customer, and its readiness
in facilities, equipment and personnel to undertake the programs for which it
competes. In some instances, programs are sole source or work directed by the
Government to a single supplier. In such cases, there may be other suppliers
who have the capability to compete for the programs involved, but they can
only enter or reenter the market if the Government should choose to reopen
the particular program to competition. Approximately 65% of the Company's
1997 pro forma sales related to sole source contracts.
The Company experiences competition from industrial firms and U.S.
government agencies, some of which have substantially greater resources than
the Company. These competitors include: AlliedSignal, AMP, Inc., Aydin
Corporation, Cubic Corporation, GTE Corporation, Harris Corporation, Hughes,
Motorola and Titan Corporation. A majority of the sales of the Company is
derived from contracts with the Government and its prime contractors, and
such contracts are awarded on the basis of negotiations or competitive bids.
Management does not believe any one competitor or a small number of
competitors is dominant in any of the business areas of the Company.
Management believes the Company will continue to be able to compete
successfully based upon the quality and cost competitiveness of its products
and services.
PATENTS AND LICENSES
Although the Company owns some patents and has filed applications for
additional patents, it does not believe that its operations depend upon its
patents. In addition, the Company's Government contracts
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generally license it to use patents owned by others. Similar provisions in
the Government contracts awarded to other companies make it impossible for
the Company to prevent the use by other companies of its patents in most
domestic work.
BACKLOG
As of December 31, 1997, the Company's pro forma funded backlog was
approximately $638.1 million. This backlog provides management with a useful
tool to project sales and plan its business on an on-going basis; however, no
assurance can be given that the Company's backlog will become revenues in any
particular period or at all. Funded backlog does not include the total
contract value of multi-year, cost-plus reimbursable contracts, which are
funded as costs are incurred by the Company. Funded backlog also does not
include unexercised contract options which represent the amount of revenue
which would be recognized from the performance of contract options that may
be exercised by customers under existing contracts and from purchase orders
to be issued under indefinite quantity contracts or basic ordering
agreements. Backlog is a more relevant predictor of future sales in the
Secure Communication Systems business area. Current funded backlog in Secure
Communication Systems as of December 31, 1997 was $306.0 million, of which
approximately 93% is expected to be shipped in 1998. The Company believes
backlog is a less relevant factor in the Specialized Communication Products
business area given the nature of its catalog and commercial oriented
business. Overall, approximately 85% of the Company's December 31, 1997
funded backlog is expected to be shipped in 1998.
<TABLE>
<CAPTION>
PRO FORMA
FUNDED BACKLOG AS OF
DECEMBER 31, 1997
--------------------
($ IN MILLIONS)
<S> <C>
Secure Communication Systems ..... $306.0
Specialized Communication
Products.......................... 332.1
--------------------
$638.1
====================
</TABLE>
GOVERNMENT CONTRACTS
Approximately 73% of the Company's 1997 pro forma sales were made to
agencies of the Government or to prime contractors or subcontractors of the
Government.
Approximately 64% of the Company's pro forma 1997 sales mix of contracts
were firm fixed price contracts under which the Company agrees to perform for
a predetermined price. Although the Company's fixed price contracts generally
permit the Company to keep profits if costs are less than projected, the
Company does bear the risk that increased or unexpected costs may reduce
profit or cause the Company to sustain losses on the contract. Generally,
firm fixed price contracts offer higher margin than cost plus type contracts.
All domestic defense contracts and subcontracts to which the Company is a
party are subject to audit, various profit and cost controls and standard
provisions for termination at the convenience of the Government. Upon
termination, other than for a contractor's default, the contractor will
normally be entitled to reimbursement for allowable costs and to an allowance
for profit. Foreign defense contracts generally contain comparable provisions
relating to termination at the convenience of the government. To date, no
significant fixed price contract of the Company has been terminated.
Companies supplying defense-related equipment to the Government are
subject to certain additional business risks peculiar to that industry. Among
these risks are the ability of the Government to unilaterally suspend the
Company from new contracts pending resolution of alleged violations of
procurement laws or regulations. Other risks include a dependence on
appropriations by the Government, changes in the Government's procurement
policies (such as greater emphasis on competitive procurements) and the need
to bid on programs in advance of design completion. A reduction in
expenditures by the Government for products of the type manufactured by the
Company, lower margins resulting from increasingly competitive procurement
policies, a reduction in the volume of contracts or subcontracts awarded to
the Company or substantial cost overruns would have an adverse effect on the
Company's cash flow.
56
<PAGE>
PROPERTIES
The table below sets forth certain information with respect to
manufacturing facilities and properties of the Company, excluding
non-operating properties held for sale.
<TABLE>
<CAPTION>
LOCATION OWNED LEASED
- ----------------------------------- ------- --------
(THOUSANDS OF
SQUARE FEET)
<S> <C> <C>
L-3 Headquarters, NY ............... -- 58.7
SECURE COMMUNICATION SYSTEMS:
Camden, NJ......................... -- 588.7
Salt Lake City, UT................. -- 457.6
Sierra Vista, AZ................... -- 18.8
Camarillo, CA...................... -- 2.4
El Segundo, CA .................... -- 1.4
Milpitas, CA....................... -- 21.4
Oakland, CA........................ -- 5.2
Santa Ana, CA...................... -- 5.0
Santa Clara, CA ................... -- 6.2
Santa Maria, CA ................... -- 9.8
Colorado Springs, CO .............. -- 5.8
Hartford, CT....................... -- 1.8
Chicago, IL........................ -- 7.3
Boston, MA......................... -- 25.6
Annapolis Junction, MD ............ -- 6.6
Wheaton, MD........................ -- 0.5
Moorestown, NJ..................... -- 2.8
Shrewsbury, NJ..................... -- 22.5
New York, NY....................... -- 5.9
Cleveland, OH...................... -- 1.4
Fairfax, VA........................ -- 1.6
Warrentown, VA .................... -- 0.8
SPECIALIZED COMMUNICATION PRODUCTS:
Folsom, CA ........................ -- 57.5
Lancaster, CA ..................... -- 5.4
Menlo Park, CA .................... -- 98.3
San Diego, CA ..................... 196.0 68.9
San Mateo, CA ..................... -- 14.8
Santa Clara, CA ................... -- 2.0
Sylmar, CA......................... -- 240.0
Sarasota, FL....................... -- 143.7
Merritt Island, FL ................ -- 1.2
Atlanta, GA ....................... -- 52.1
Alpharetta, GA .................... 40.0 --
Norcross, GA ...................... -- 4.8
Lowell, MA......................... -- 47.0
Hauppauge, NY ..................... 240.0 --
Warminster, PA .................... 44.7 --
Hampshire (U.K.)................... -- 1.2
Kiel, Germany...................... -- 143.0
------- --------
Total............................... 520.7 2,137.7
======= ========
</TABLE>
LEGAL PROCEEDINGS
From time to time the Company is involved in legal proceedings arising in
the ordinary course of its business. Management believes it is adequately
reserved for these liabilities and that there is no litigation pending that
could have a material adverse effect on the Company's financial condition and
its results of operations.
57
<PAGE>
ENVIRONMENTAL MATTERS
The Company's operations are subject to various federal, state and local
environmental laws and regulations relating to the discharge, storage,
treatment, handling, disposal and remediation of certain materials,
substances and wastes used in its operations. The Company continually
assesses its obligations and compliance with respect to these requirements.
Management believes that the Company's current operations are in substantial
compliance with all existing applicable environmental laws and permits. The
Company does not believe that its environmental compliance expenditures will
have a material adverse effect on its financial condition or the results of
its operations.
Pursuant to the L-3 Acquisition Agreement, the Company has agreed to
assume certain on-site and off-site environmental liabilities related to
events or activities occurring prior to the L-3 Acquisition. Lockheed Martin
has agreed to retain all environmental liabilities for all facilities no
longer used by the Businesses and to indemnify fully the Company for such
prior site environmental liabilities. Lockheed Martin has also agreed, for
the first eight years following April 1997, to pay 50% of all costs incurred
by the Company above those reserved for on the Company's balance sheet at
April 1997 relating to certain Company-assumed environmental liabilities and,
for the seven years thereafter, to pay 40% of certain reasonable operation
and maintenance costs relating to any environmental remediation projects
undertaken in the first eight years. The Company is aware of environmental
contamination at two of the facilities acquired from Lockheed Martin that
will require ongoing remediation. In November 1997, the Company sold one such
facility located in Sarasota, Florida, while retaining a leasehold interest
in a portion of that facility, to DMB in a transaction in which DMB
contractually agreed to assume responsibility for further remediation of the
Sarasota site. Management believes that the Company has established adequate
reserves for the potential costs associated with the assumed environmental
liabilities. However, there can be no assurance that any costs incurred will
be reimbursable from the Government or covered by Lockheed Martin under the
terms of the L-3 Acquisition Agreement or that the Company's environmental
reserves will be sufficient.
In connection with the acquisition of Ocean Systems, the Company has
acquired the stock of ELAC. The premises currently leased by ELAC have
environmental contamination consisting of chlorinated solvents in the
groundwater beneath and adjoining the site. However, Honeywell Inc.
("Honeywell"), the previous owner of ELAC and the current owner of the
property, has retained the liability for remediating the ELAC site and has
contractually agreed to indemnify AlliedSignal and ELAC. Management believes
that any necessary remediation will be covered by the Honeywell
indemnification.
PENSION PLANS
Pursuant to the L-3 Acquisition Agreement, Holdings and L-3 Communications
assumed certain liabilities relating to defined benefit pension plans for
present and former employees and retirees of certain businesses which were
transferred from Lockheed Martin to Holdings and L-3 Communications. Prior to
the consummation of the L-3 Acquisition, Lockheed Martin received a letter
from the PBGC which requested information regarding the transfer of such
pension plans and indicated that the PBGC believed certain of such pension
plans were underfunded using the PBGC's actuarial assumptions (which
assumptions result in a larger liability for accrued benefits than the
assumptions used for financial reporting under FASB 87.) The PBGC
underfunding is related to the Subject Plans. As of December 31, 1997, the
Company calculated the net funding position of the Subject Plans and believes
them to be overfunded by approximately $5.9 million under ERISA assumptions,
underfunded by approximately $10.2 million under FASB 87 assumptions and, on
a termination basis, underfunded by as much as $57.5 million under PBGC
assumptions.
With respect to the Subject Plans, Lockheed Martin entered into an
agreement (the "Lockheed Martin Commitment Agreement") among Lockheed Martin,
L-3 and the PBGC dated as of April 30, 1997. The material terms and
conditions of the Lockheed Martin Commitment Agreement include a commitment
by Lockheed Martin to, under certain circumstances, assume sponsorship of the
Subject Plans or provide another form of financial support for the Subject
Plans. The Lockheed Martin Commitment Agreement will continue with respect to
any Subject Plan until such time as such Subject Plan is no longer
underfunded on a PBGC basis for two consecutive years or, at any time after
May 31,
58
<PAGE>
2002, the Company achieves investment grade credit ratings. Pursuant to the
Lockheed Martin Commitment Agreement, the PBGC agreed that it would take no
further action in connection with the L-3 Acquisition.
In return for the Lockheed Martin Commitment, the Company entered into an
agreement with Lockheed Martin, dated as of April 30, 1997, pursuant to which
the Company provided certain assurances to Lockheed Martin including, but not
necessarily limited to, (i) continuing to fund the Subject Plans consistent
with prior practices and to the extent deductible for tax purposes and, where
appropriate, recoverable under Government contracts, (ii) agreeing to not
increase benefits under the Subject Plans without the consent of Lockheed
Martin, (iii) restricting the Company from a sale of any businesses employing
individuals covered by the Subject Plans if such sale would not result in
reduction or elimination of the Lockheed Martin Commitment with regard to the
specific plan and (iv) if the Subject Plans were returned to Lockheed Martin,
granting Lockheed Martin the right to seek recovery from the Company of those
amounts actually paid, if any, by Lockheed Martin with regard to the Subject
Plans after their return. In addition, upon the occurrence of certain events,
Lockheed Martin, at its option, will have the right to decide whether to
assume sponsorship of any or all of the Subject Plans, even if the PBGC has
not sought to terminate the Subject Plans. The Company has performed its
obligations under the letter agreement with Lockheed Martin and the Lockheed
Martin Commitment and has not received any communications from the PBGC
concerning actions which the PBGC contemplates taking in respect of the
Subject Plans.
EMPLOYEES
As of December 31, 1997, the Company employed approximately 6,100
full-time and part-time employees. The Company believes that its relations
with its employees are good.
Approximately 540 of the Company's employees at its Communication
Systems--East operation in Camden, New Jersey are represented by four unions,
the Association of Scientists and Professional Engineering Personnel, the
International Federation of Professional and Technical Engineers, the
International Union of Electronic, Electrical, Salaried, Machine and
Furniture Workers and an affiliate of the International Brotherhood of
Teamsters. Three of the four collective bargaining agreements expire in
mid-1998. While the Company has not yet initiated discussions with
representatives of these unions, management believes it will be able to
negotiate, without material disruption to its business, satisfactory new
collective bargaining agreements with these employees. However, there can be
no assurance that a satisfactory agreement will be reached with the covered
employees or that a material disruption to the Company's Camden operations
will not occur.
Approximately 200 employees of Ocean Systems are represented by the United
Auto Workers. The collective bargaining agreement expires in mid-1999.
Approximately 140 of the employees at Ocean Systems' ELAC subsidiary in Kiel,
Germany are represented by the Metal Trade Industrial Workers of the Hamburg
Region and ELAC is represented by the Association of Metal Industry Employers
for Schleswig-Holstein. The labor contract expires in mid-1998. While the
Company has not yet initiated discussions with representatives of these
unions, management believes it will be able to negotiate, without material
disruption to its business, a satisfactory new labor contract with these
employees. However, there can be no assurance that a satisfactory agreement
will be reached with the covered employees or that a material disruption to
operations of ELAC or Ocean Systems will not occur.
59
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Under the L-3 Acquisition Agreement, Lockheed Martin has agreed to
indemnify L-3, subject to certain limitations, for Lockheed Martin's breach
of representations and warranties and L-3 has assumed certain obligations
relating to environmental matters and benefits plans. These obligations
include certain on-site and off-site environmental liabilities related to
events or activities of the Businesses occurring prior to the L-3
Acquisition. Lockheed Martin has agreed to indemnify Holdings, subject to
certain limitations, for its breach of (i) non-environmental representations
and warranties up to $50 million (subject to a $5 million threshold) and (ii)
for the first eight years following April 1997, to pay 50% of all costs
incurred by the Company above those reserved for on the Company's balance
sheet at April 1997 relating to certain Company-assumed environmental
liabilities and, for the seven years thereafter, 40% of certain reasonable
operation and maintenance costs relating to any environmental remediation
projects undertaken in the first eight years (subject to a $6 million
threshold).
Lockheed Martin provides to certain divisions of the Company certain
management information systems services at Lockheed Martin's fully-burdened
cost but without profit. Holdings, L-3 Communications and Lockheed Martin
have entered into certain subleases of real property and cross-licenses of
intellectual property.
In addition, Holdings and Lockheed Martin have entered into a Limited
Noncompetition Agreement (the "Noncompetition Agreement") which, for up to
three years from April 1997, in certain circumstances, precludes Lockheed
Martin from engaging in the sale of any products that compete with the
products of the Company that are set forth in the Noncompetition Agreement
for specifically identified application of the products. Under the
Noncompetition Agreement, Lockheed Martin is prohibited, with certain
exceptions, from acquiring any business engaged in the sale of the specified
products referred to in the preceding sentence, although Lockheed Martin may
acquire such a business under circumstances where the exceptions do not apply
provided that it offers to sell such business to L-3 within 90 days of its
acquisition. The Noncompetition Agreement does not, among other exceptions,
(i) apply to businesses operated and managed by Lockheed Martin on behalf of
the Government, (ii) prohibit Lockheed Martin from engaging in any existing
businesses and planned businesses as of the closing of the L-3 Acquisition or
businesses that are reasonably related to existing or planned businesses or
(iii) apply to selling competing products where such products are part of a
larger system sold by Lockheed Martin.
In the ordinary course of business L-3 sells products to Lockheed Martin
and its affiliates. Pro forma and aggregated sales to Lockheed Martin were
$81.6 million, $70.7 million and $25.9 million for the years ended December
31, 1997, 1996 and 1995, respectively. See Note 19 to the Consolidated
(Combined) Financial Statements.
Sales of products to Lockheed Martin, excluding those under existing
intercompany work transfer agreements, are made on terms no less favorable
than those which would be available from non-affiliated third party
customers. A significant portion of L-3's sales to Lockheed Martin are either
based on competitive bidding or catalog prices.
STOCKHOLDERS AGREEMENT
Holdings, Lockheed Martin, the Lehman Partnership and Messrs. Lanza and
LaPenta entered into a stockholders agreement (the "Stockholders Agreement")
which, except for the terms relating to (i) the registration rights, (ii)
provision of services by Lehman Brothers Inc. and (iii) the standstill
agreement by Lockheed Martin, terminates upon the consummation of the Common
Stock Offering. Prior to the consummation of the Common Stock Offering, the
Lehman Partnership is entitled to designate a majority of the members of the
Board of Directors provided that it holds at least 35% of the capital stock
of Holdings and remains the single largest shareholder.
Pursuant to the Stockholders Agreement, certain of the existing
stockholders have the right, from time to time on or after the 180-day period
following the completion of the initial public offering and subject to
certain conditions, to require the Company to register under the Securities
Act shares of Common Stock held by them. Lockheed Martin, the Lehman
Partnership and each of the Senior Management has three, four and one demand
registration rights, respectively. In addition, the Stockholders
60
<PAGE>
Agreement also provides certain existing stockholders with certain piggyback
registration rights. The Stockholders Agreement provides, among other things,
that the Company will pay expenses in connection with (i) up to two demand
registrations requested by Lockheed Martin, up to three demand registrations
requested by the Lehman Partnership and the two demand registrations
requested by the Senior Management and (ii) any registration in which the
existing stockholders participate through piggyback registration rights
granted under such agreement.
The Stockholders Agreement also provides that Lehman Brothers Inc. has the
exclusive right to provide investment banking services to Holdings for the
five-year period after the closing of the L-3 Acquisition (except that the
exclusivity period is three years as to cash acquisitions undertaken by L-3)
so long as the Lehman Partnership owns at least 10% of the outstanding Common
Stock. In the event that Lehman Brothers Inc. agrees to provide any
investment banking services to L-3, it will be paid fees that are mutually
agreed upon based on similar transactions and practices in the investment
banking industry.
Under the Stockholders Agreement Lockheed Martin is subject to a
standstill arrangement which generally prohibits any increase in its share
ownership percentage over 34.9%.
61
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table provides information concerning the directors and
executive officers of Holdings and L-3 Communications.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------- ----- -----------------------------------------------
<S> <C> <C>
Frank C. Lanza ........... 66 Chairman, Chief Executive Officer and Director
Robert V. LaPenta ........ 52 President, Chief Financial Officer and Director
Michael T. Strianese .... 42 Vice President--Finance and Controller
Christopher C. Cambria .. 39 Vice President--General Counsel and Secretary
Vice President--Planning and Assistant
Robert F. Mehmel ......... 35 Secretary
Lawrence H. Schwartz .... 60 Vice President--Business Development
Jimmie V. Adams .......... 61 Vice President--Washington D.C. Operations
Robert RisCassi .......... 62 Vice President--Washington D.C. Operations
David J. Brand(a) ........ 36 Director
Alberto M. Finali ........ 43 Director
Eliot M. Fried(a) ........ 65 Director
Robert B. Millard(b) .... 47 Director
Alan H. Washkowitz(b) ... 57 Director
Thomas A. Corcoran ....... 53 Director
Frank H. Menaker, Jr.(a) 57 Director
John E. Montague(b) ..... 44 Director
</TABLE>
[FN]
- ------------
(a) Member of the Audit Committee.
(b) Member of the Compensation Committee.
Frank C. Lanza, Chairman and CEO. Mr. Lanza joined the Company in April
1997. From April 1996, when Loral was acquired by Lockheed Martin, until
April 1997, Mr. Lanza was Executive Vice President of Lockheed Martin, a
member of Lockheed Martin's Executive Council and Board of Directors and
President and COO of Lockheed Martin's C(3)I and Systems Integration Sector,
which comprised many of the businesses acquired by Lockheed Martin from
Loral. Prior to the April 1996 acquisition of Loral, Mr. Lanza was President
and COO of Loral, a position he held since 1981. He joined Loral in 1972 as
President of its largest division, Electronic Systems. His earlier experience
was with Dalmo Victor and Philco Western Development Laboratory.
Robert V. LaPenta, President and Chief Financial Officer. Mr. LaPenta
joined the Company in April 1997. From April 1996, when Loral was acquired by
Lockheed Martin, until April 1997, Mr. LaPenta was a Vice President of
Lockheed Martin and was Vice President and Chief Financial Officer of
Lockheed's C(3)I and Systems Integration Sector. Prior to the April 1996
acquisition of Loral, he was Loral's Senior Vice President and Controller, a
position he held since 1981. He joined Loral in 1972 and was named Vice
President and Controller of its largest division in 1974. He became Corporate
Controller in 1978 and was named Vice President in 1979.
Michael T. Strianese, Vice President-Finance and Controller. Mr. Strianese
joined the Company in April 1997. From April 1996, when Loral was acquired by
Lockheed Martin, until April 1997, Mr. Strianese was Vice President and
Controller of Lockheed Martin's C(3)I and Systems Integration Sector. From
1991 to the April 1996 acquisition of Loral, he was Director of Special
Projects at Loral. Prior to joining Loral, he spent 11 years with Ernst &
Young. Mr. Strianese is a Certified Public Accountant.
Christopher C. Cambria, Vice President-General Counsel and Secretary. Mr.
Cambria joined the Company in June 1997. From 1994 until joining the Company,
Mr. Cambria was an associate with Fried, Frank, Harris, Shriver & Jacobson.
From 1986 until 1993, he was an associate with Cravath, Swaine & Moore.
62
<PAGE>
Robert F. Mehmel, Vice President-Planning and Assistant Secretary. Mr.
Mehmel joined the Company in April 1997. From April 1996, when Loral was
acquired by Lockheed Martin, until April 1997, Mr. Mehmel was the Director of
Financial Planning and Capital Review for Lockheed Martin's C(3)I and Systems
Integration Sector. From 1984 to 1996, Mr. Mehmel held several accounting and
financial analysis positions at Loral Electronic Systems and Loral. At the
time of Lockheed Martin's acquisition of Loral, he was Corporate Manager of
Business Analysis.
Lawrence H. Schwartz, Vice President-Business Development. Mr. Schwartz
joined the Company in May 1997. From April 1996 until May 1997, Mr. Schwartz
was Vice President of Technology for the C(3)I and System Integration Sector
of Lockheed Martin. Prior to the April 1996 acquisition of Loral, he was
Corporate Vice President of Technology for Loral, a position he held since
1987. Between 1976 and 1987, Mr Schwartz was Vice President of Engineering,
Senior Vice President of Business Development, Senior Vice President of the
Rapport Program and Senior Vice President of Development Programs at Loral
Electronic Systems.
Jimmie V. Adams, Vice President-Washington, D.C. Operations. General
Jimmie V. Adams (U.S.A.F.-ret.) joined the Company in April 1997. From April
1996 until April 1997, he was Vice President of Lockheed Martin's Washington
Operations for the C(3)I and Systems Integration Sector. Prior to the April
1996 acquisition of Loral, he had held the same position at Loral since 1993.
Before joining Loral in 1993, he was Commander in Chief, Pacific Air Forces,
Hickam Air Force Base, Hawaii, capping a 35-year career with the U.S. Air
Force. He was also Deputy Chief of Staff for plans and operation for U.S. Air
Force headquarters and Vice Commander of Headquarters Tactical Air Command
and Vice Commander in Chief of the U.S. Air Forces Atlantic at Langley Air
Force Base. He is a command pilot with more than 141 combat missions.
Robert RisCassi, Vice President-Washington, D.C. Operations. General
Robert W. RisCassi (U.S. Army-ret.) joined the Company in April 1997. From
April 1996 until April 1997, he was Vice President of Land Systems for
Lockheed Martin's C(3)I and Systems Integration Sector. Prior to the April
1996 acquisition of Loral, he had held the same position for Loral since
1993. He joined Loral in 1993 after retiring as U.S. Army Commander in Chief,
United Nations Command/Korea. His 35-year military career included posts as
Army Vice Chief of Staff; Director, Joint Staff, Joint Chiefs of Staff;
Deputy Chief of Staff for Operations and Plans; and Commander of the Combined
Arms Center.
David J. Brand, Director. Mr. Brand has served as a director since April
1997 and is a Managing Director of Lehman Brothers and a principal in the
Global Mergers & Acquisitions Group, leading Lehman Brothers' Technology
Mergers and Acquisitions business. Mr. Brand joined Lehman Brothers in 1987
and has been responsible for merger and corporate finance advisory services
for many of Lehman Brothers' technology and defense industry clients. Mr.
Brand is currently a director of K&F Industries, Inc. Mr. Brand holds an
M.B.A. from Stanford University's Graduate School of Business and a B.S. in
Mechanical Engineering from Boston University.
Alberto M. Finali, Director. Mr. Finali has served as a director since
April 1997 and is a Managing Director of Lehman Brothers and principal of the
Merchant Banking Group, based in New York. Prior to joining the Merchant
Banking Group, Mr. Finali spent four years in Lehman Brothers' London office
as a senior member of the M&A Group. Mr. Finali joined Lehman Brothers in
1987 as a member of the M&A Group in New York and became a Managing Director
in 1997. Prior to joining Lehman Brothers, Mr. Finali worked in the Pipelines
and Production Technology Group of Bechtel, Inc. in San Francisco. Mr. Finali
holds an M.E. and an M.B.A. from the University of California at Berkeley,
and a Laurea Degree in Civil Engineering from the Polytechnic School in
Milan, Italy.
Eliot M. Fried, Director. Mr. Fried has served as a director since April
1997 and is a Managing Director of Lehman Brothers. Mr. Fried joined
Shearson, Hayden Stone, a predecessor firm, in 1976 and became a Managing
Director in 1982. Mr. Fried has extensive experience in portfolio management
and equity research. Mr. Fried is currently a director of Bridgeport
Machines, Inc., Energy Ventures, Inc., SunSource L.P., Vernitron Corporation
and Walter Industries, Inc. Mr. Fried holds an M.B.A. from Columbia
University and a B.A. from Hobart College.
63
<PAGE>
Robert B. Millard, Director. Mr. Millard has served as a director since
April 1997 and is a Managing Director of Lehman Brothers, Head of Lehman
Brothers' Principal Trading & Investments Group and principal of the Merchant
Banking Group. Mr. Millard joined Kuhn Loeb & Co. in 1976 and became a
Managing Director of Lehman Brothers in 1983. Mr. Millard is currently a
director of GulfMark International, Inc. and Energy Ventures, Inc. Mr.
Millard holds an M.B.A. from Harvard University and a B.S. from the
Massachusetts Institute of Technology.
Alan H. Washkowitz, Director. Mr. Washkowitz has served as a director
since April 1997 and is a Managing Director of Lehman Brothers and head of
the Merchant Banking Group, and is responsible for the oversight of Lehman
Brothers Merchant Banking Portfolio Partnership L.P. Mr. Washkowitz joined
Lehman Brothers in 1978 when Kuhn Loeb & Co. was acquired by Lehman Brothers.
Mr. Washkowitz is currently a director of Illinois Central Corporation, K&F
Industries, Inc. and McBride plc. Mr. Washkowitz holds an M.B.A. from Harvard
University, a J.D. from Columbia University and an A.B. from Brooklyn
College.
Thomas A. Corcoran, Director. Mr. Corcoran has served as a director since
July 1997 and has been the President and Chief Operating Officer of the
Electronic Systems Sector of Lockheed Martin Corporation since March 1995.
From 1993 to 1995, Mr. Corcoran was President of the Electronics Group of
Martin Marietta Corporation. Prior to that he worked for General Electric for
26 years and from 1983 to 1993 he held various management positions with GE
Aerospace; he was a company officer from 1990 to 1993. Mr. Corcoran is a
member of the Board of Trustees of Worcester Polytechnic Institute, the Board
of Trustees of Stevens Institute of Technology, the Board of Governors of the
Electronic Industries Association, a Director of the U.S. Navy Submarine
League and a Director of REMEC Corporation.
Frank H. Menaker, Jr., Director. Mr. Menaker has served as a director
since April 1997 and has served as Senior Vice President and General Counsel
of Lockheed Martin since July 1996. He served as Vice President and General
Counsel of Lockheed Martin from March 1995 to July 1996, as Vice President of
Martin Marietta Corporation from 1982 until 1995 and as General Counsel of
Martin Marietta Corporation from 1981 until 1995. He is a director of Martin
Marietta Materials, Inc., a member of the American Bar Association and has
been admitted to practice before the United States Supreme Court. Mr. Menaker
is a graduate of Wilkes University and the Washington College of Law at
American University.
John E. Montague, Director. Mr. Montague has served as a director since
April 1997 and has been Vice President, Financial Strategies at Lockheed
Martin responsible for mergers, acquisitions and divestiture activities and
shareholder value strategies since March 1995. Previously, he was Vice
President, Corporate Development and Investor Relations at Martin Marietta
Corporation from 1991 to 1995. From 1988 to 1991, he was Director of
Corporate Development at Martin Marietta Corporation, which he joined in 1977
as a member of the engineering staff. Mr. Montague is a director of Rational
Software Corporation. Mr. Montague received his B.S. from the Georgia
Institute of Technology and an M.S. in engineering from the University of
Colorado.
The Board of Directors intends to appoint two additional directors who are
not affiliated with the Company promptly following the Common Stock Offering.
The additional directors have not yet been identified.
Upon closing of the Common Stock Offering, the Company's certificate of
incorporation will provide for a classified Board of Directors divided into
three classes. Class I will expire at the annual meeting of the stockholders
to be held in 1999; Class II will expire at the annual meeting of the
stockholders to be held in 2000; and Class III will expire at the annual
meeting of the stockholders to be held in 2001. At each annual meeting of the
stockholders, beginning with the 1999 annual meeting, the successors to
directors whose terms will then expire will be elected to serve from the time
of election and qualification until the third annual meeting following
election and until their successors have been duly elected and qualified, or
until their earlier resignation or removal, if any. To the extent there is an
increase or reduction in the number of directors, increase or decrease in
directorships resulting therefrom will be distributed among the three classes
so that, as nearly as possible, each class will consist of an equal number of
directors.
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<PAGE>
Each executive officer and key employee serves at the discretion of the
Board of Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has two standing committees: an Audit Committee and
a Compensation Committee. Currently, the Audit Committee consists of Messrs.
Brand, Fried and Menaker. The Company intends to appoint to the Audit
Committee only persons who qualify as an "independent" director for purposes
of the rules and regulations of the NYSE. The Audit Committee will select and
engage, on behalf of the Company, the independent public accountants to audit
the Company's annual financial statements, and will review and approve the
planned scope of the annual audit. Currently, Messrs. Millard, Montague and
Washkowitz serve as members of the Compensation Committee. The Compensation
Committee establishes remuneration levels for certain officers of the
Company, performs such functions as provided under the Company's employee
benefit programs and executive compensation programs and administers the 1997
Option Plan for Key Employees of Holdings.
COMPENSATION OF DIRECTORS
The current directors of the Company do not receive compensation for their
services as directors. Any non-affiliated directors will receive directors'
fees and reimbursements for their reasonable out-of-pocket expenses in
connection with their travel to and attendance at meetings of the board of
directors or committees thereof.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS
The Company's Certificate of Incorporation provides that to the fullest
extent permitted by the Delaware General Corporation Law (the "DGCL"), a
director of the Company shall not be liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director.
Under the DGCL, liability of a director may not be limited (i) for any breach
of the director's duty of loyalty to the Company or its stockholders, (ii)
for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) in respect of certain
unlawful dividend payments or stock redemptions or repurchases and (iv) for
any transaction from which the director derives an improper personal benefit.
The effect of the provisions of the Company's Certificate of Incorporation is
to eliminate the rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to recover monetary
damages against a director for breach of the fiduciary duty of care as a
director (including breaches resulting from negligent or grossly negligent
behavior), except in the situations described in clauses (i) through (iv)
above. This provision does not limit or eliminate the rights of the Company
or any stockholder to seek nonmonetary relief such as an injunction or
rescission in the event of a breach of a director's duty of care. In
addition, the Company's Bylaws provide that the Company shall indemnify its
directors, officers, employees and agents against losses incurred by any such
person by reason of the fact that such person was acting in such capacity.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.
65
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table provides certain summary
information concerning compensation paid or accrued by the Company to or on
behalf of the Company's Chief Executive Officer and each of the four other
most highly compensated executive officers of the Company (the "Named
Executive Officers") during the nine months ended December 31, 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
-------------------------------
ANNUAL
COMPENSATION SECURITIES
--------------------- RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS STOCK AWARDS STOCK OPTIONS COMPENSATION(1)
- -------------------------------------- ---------- --------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Frank C. Lanza (Chairman and Chief
Executive Officer)(2)................. $542,654 -- 1,142,857 --
Robert V. LaPenta (President and Chief
Financial Officer)(2)................. 356,538 -- 1,142,857 --
Lawrence H. Schwartz (Vice President) . 145,327 $80,000 17,000 --
Jimmie V. Adams (Vice President) ...... 157,854 70,000 15,000 $ 61
Robert RisCassi (Vice President) ...... 125,704 60,000 15,000 611
</TABLE>
- ------------
(1) Represents Company match under savings plan.
(2) On March 2, 1998, each of Mr. Lanza and Mr. LaPenta exercised 228,571
options.
Stock Options Granted in 1997. The following table sets forth information
concerning individual grants of stock options to purchase Holdings' Common
Stock made in 1997 to each of the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION GRANT-DATE
NAME AND PRINCIPAL POSITION GRANTED (#) FISCAL YEAR ($/SH) DATE VALUE(1)
- -------------------------------------- -------------- --------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Frank C. Lanza (Chairman and Chief
Executive Officer).................... 1,142,857(2) 38.2% $6.47 April 30, 2007 $2,326,731
Robert V. LaPenta (President and Chief
Financial Officer) ................... 1,142,857(2) 38.2% $6.47 April 30, 2007 $2,326,731
Lawrence H. Schwartz (Vice President) 17,000 0.6% $6.47 July 1, 2007 $ 17,571
Jimmie V. Adams (Vice President) ...... 15,000 0.5% $6.47 July 1, 2007 $ 15,504
Robert RisCassi (Vice President) ...... 15,000 0.5% $6.47 July 1, 2007 $ 15,504
</TABLE>
- ------------
(1) The grant-date valuation of the options was calculated using the
minimum value method described in SFAS No. 123. The minimum value is
computed as the current price of stock at grant date reduced to exclude
the present value of any expected dividends during the option's
expected life minus the present value of the exercise price, and does
not consider the expected volatility of the price of the stock
underlying the option. The material assumptions underlying the
computations are: an average discount rate 6.3%; a dividend yield of 0%
and a weighted average expected option life of 5.49 years, with the
option lives ranging from 2 years to 10 years.
(2) Half of the options granted consists of Time Options and half consists
of Performance Options. See "--Employment Agreements" for description
of the terms of these options.
66
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
SHARES VALUE AT FY-END(1) FY-END(2)
ACQUIRED ON REALIZED ------------------------------ -----------------------------
NAME AND PRINCIPAL POSITION EXERCISES (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- ------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank C. Lanza (Chairman and
Chief Executive Officer)(3) .... -- -- -- 1,142,857 -- $1,748,571
Robert V. LaPenta (President and
Chief Financial Officer)(3) .... -- -- -- 1,142,857 -- 1,748,571
Lawrence H. Schwartz (Vice
President)...................... -- -- -- 17,000 -- 26,010
Jimmie V. Adams (Vice
President)...................... -- -- -- 15,000 -- 22,950
Robert RisCassi (Vice
President)...................... -- -- -- 15,000 -- 22,950
</TABLE>
[FN]
- ------------
(1) At December 31, 1997, none of the outstanding options were exercised.
(2) The fair value of Holdings' Common Stock was estimated by the Company
using an independent appraisal of such Common Stock performed as of
January 31, 1998.
(3) On March 2, 1998, each of Mr. Lanza and Mr. LaPenta exercised 228,571
options.
PENSION PLAN
The following table shows the estimated annual pension benefits payable
under the L-3 Communications Corporation Pension Plan and Supplemental
Employee Retirement Plan to a covered participant upon retirement at normal
retirement age, based on the career average compensation (salary and bonus)
and years of credited service with the Company.
<TABLE>
<CAPTION>
CAREER AVERAGE COMPENSATION YEARS OF CREDITED SERVICE
- --------------------------- ----------------------------------------------------
15 20 25 30 35
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$125,000.................... $ 18,981 $ 24,937 $ 29,833 $ 33,856 $ 37,164
150,000.................... 23,172 30,408 36,355 41,243 45,260
175,000.................... 27,364 35,879 42,877 48,629 53,357
200,000.................... 31,556 41,349 49,399 56,015 61,454
225,000.................... 35,747 46,820 55,921 63,402 69,550
250,000.................... 39,939 52,291 62,444 70,788 77,647
300,000.................... 48,322 63,233 75,488 85,561 93,840
400,000.................... 65,089 85,116 101,577 115,106 126,226
450,000.................... 73,472 96,057 114,621 129,879 142,420
500,000.................... 81,855 106,999 127,665 144,651 158,613
750,000.................... 123,772 161,707 192,887 218,515 239,579
</TABLE>
As of December 31, 1997, the current annual compensation and current years
of credited service (including for Messrs. LaPenta, Adams and RisCassi, years
of credited service as an employee of Loral and Lockheed Martin) for each of
the following persons were: Mr. Lanza, $750,000 and one year; Mr. LaPenta,
$500,000 and 26 years; Mr. Adams, $216,011 and 5 years; Mr. RisCassi,
$172,016 and 4 years; and Mr. Schwartz, $229,000 and one year. Compensation
covered under the pension plans includes amounts reported as salary and bonus
in the Summary Compensation Table.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of Holdings established a Compensation Committee in
June 1997. During the 1997 fiscal year, Messrs. Robert Millard, Steven Berger
and John Montague served as members of the Compensation Committee. None of
these individuals has served at any time as an officer or employee of
67
<PAGE>
Holdings or L-3 Communications. Mr. Berger resigned from Holdings' Board of
Directors and the Compensation Committee in January 1998 and Mr. Washkowitz
was appointed to the Compensation Committee in March 1998. Prior to the
establishment of the Compensation Committee, all decisions relating to
executive compensation were made by Holdings' Board of Directors. Messrs.
Millard and Montague are affiiliated with the Lehman Partnership which,
assuming the consummation of the Common Stock Offering and full exercise of
the over-allotment option, holds 37.4% of the Common Stock and is a party to
the Stockholders Agreement. Pursuant to the Stockholders Agreement, the
Lehman Partnership has the right, from time to time on or after the 180-day
period following that completion of the initial public offering and subject
to certain conditions, to require the Company to register under the
Securities Act shares of Common Stock held by them. The Lehman Partnership
has the right to request up to four demand registrations and also has
piggyback registration rights. The Company has agreed in the Stockholders
Agreement to pay expenses in connection with, among other things, (i) up to
three demand registrations requested by the Lehman Partnership and (ii) any
registration in which the existing stockholders participate through piggyback
registration rights granted under such agreement. The Stockholders Agreement
also provides that Lehman Brothers Inc. has the exclusive right to provide
investment banking services to Holdings for the five-year period after the
closing of the L-3 Acquisition (except that the exclusivity period is three
years as to cash acquisitions undertaken by L-3) so long as the Lehman
Partnership owns at least 10% of the outstanding Common Stock. In the event
that Lehman Brothers Inc. agrees to provide any investment banking services
to L-3, it will be paid fees that are mutually agreed upon based on similar
transactions and practices in the investment banking industry.
No executive officer of Holdings or L-3 Communications serves as a member
of the board of directors or compensation committee of any entity which has
one or more executive officers serving as a member of Holdings' Board of
Directors or Compensation Committee.
1997 STOCK OPTION PLAN
In April 1997, Holdings adopted the 1997 Option Plan for Key Employees of
Holdings (the "1997 Stock Option Plan") which authorizes the Compensation
Committee to grant options to key employees of Holdings and its subsidiaries.
On March 10, 1998, the 1997 Stock Option Plan was amended to increase the
shares available for option grants to 4,255,815 shares of Common Stock, of
which 3,246,084 had been granted as of March 31, 1998. The Compensation
Committee of the Board of Directors of Holdings, in its sole discretion,
determines the terms of option agreements, including without limitation the
treatment of option grants in the event of a change of control. The 1997
Stock Option Plan remains in effect for 10 years following the date of
approval.
On April 30, 1997, Holdings granted each of Messrs. Lanza and LaPenta
options to purchase 1,142,857 shares of Common Stock. See "--Employment
Agreements" for a description of the terms of these grants. On July 1, 1997
and November 11, 1997, the Compensation Committee authorized grants of
options to employees of Holdings and its subsidiaries, other than Messrs.
Lanza and LaPenta, to acquire an aggregate of 689,500 shares of Common Stock
at an exercise price of $6.47 per share (the "Employee Options"). Each
Employee Option was granted pursuant to an individual agreement that provides
(i) 20% of shares underlying the option will become exercisable on the first
anniversary of the grant date, 50% will become exercisable on the second
anniversary of the grant date and 30% will become exercisable on the third
anniversary of the grant date; provided that, in the event of an initial
public offering of Common Stock, 15% of the shares underlying the option
(which would otherwise become exercisable on the second anniversary of the
grant date) will become exercisable on the earlier to occur of (A) the
completion of the initial public offering of the Common Stock and (B) the
first anniversary of the grant date; (ii) all shares underlying the option
will become exercisable upon certain events constituting a change of control;
and (iii) the option will expire upon the earliest to occur of (A) the tenth
anniversary of the grant date, (B) one year after termination of employment
due to the optionee's death or permanent disability, (C) immediately upon
termination of the optionee's employment for cause and (D) three months after
termination of optionee's employment for any other reason. On March 2, 1998,
each of Mr. Lanza and Mr. LaPenta exercised options to acquire 228,571 shares
of Common Stock.
68
<PAGE>
EMPLOYMENT AGREEMENTS
Holdings entered into an employment agreement (the "Employment
Agreements") effective on April 30, 1997 with each of Mr. Lanza, Chairman and
Chief Executive Officer of Holdings and L-3 Communications, who will receive
a base salary of $750,000 per annum and appropriate executive level benefits,
and Mr. LaPenta, President and Chief Financial Officer of Holdings and L-3
Communications, who will receive a base salary of $500,000 per annum and
appropriate executive level benefits. The Employment Agreements provide for
an initial term of five years, which will automatically renew for one-year
periods thereafter, unless a party thereto gives notice of its intent to
terminate at least 90 days prior to the expiration of the term.
Upon a termination without cause or resignation for good reason, Holdings
will be obligated, through the end of the term, to (i) continue to pay the
base salary and (ii) continue to provide life insurance and medical and
hospitalization benefits comparable to those provided to other senior
executives; provided, however, that any such coverage shall terminate to the
extent that Mr. Lanza or Mr. LaPenta, as the case may be, is offered or
obtains comparable benefits coverage from any other employer. The Employment
Agreements provide for confidentiality during employment and at all times
thereafter. There is also a noncompetition and non-solicitation covenant
which is effective during the employment term and for one year thereafter;
provided, however, that if the employment terminates following the expiration
of the initial term, the noncompetition covenant will only be effective
during the period, if any, that Holdings pays the severance described above.
Holdings has granted each of Messrs. Lanza and LaPenta (collectively, the
"Equity Executives") nonqualified options to purchase, at $6.47 per share of
Common Stock, 1,142,857 shares of Holdings' initial fully-diluted common
stock. In each case, half of the options will be "Time Options" and half will
be "Performance Options" (collectively, the "Options"). The Time Options will
become exercisable with respect to 20% of the shares subject to the Time
Options on March 2, 1998 and each of the second through fifth anniversaries
of the closing of the L-3 Acquisition (the "Closing") if employment continues
through and including such date. The Performance Options will become
exercisable nine years after the Closing, but will become exercisable earlier
with respect to up to 20% of the shares subject to the Performance Options on
March 2, 1998 and each of the second through fifth anniversaries of the
Closing, to the extent certain EBITDA targets are achieved. The Options will
become fully exercisable under certain circumstances, including a change in
control. The Option term is ten years from the Closing; except that (i) if
the Equity Executive is fired for cause or resigns without good reason, the
Options expire upon termination of employment; (ii) if the Equity Executive
is fired without cause, resigns for good reason, dies, becomes disabled or
retires, the Options expire one year after termination of employment.
Unexercisable Options will terminate upon termination of employment, unless
acceleration is expressly provided for. Upon a change of control, Holdings
may terminate the Options, so long as the Equity Executives are cashed out or
permitted to exercise their Options prior to such change of control.
69
<PAGE>
OWNERSHIP OF CAPITAL STOCK
Following the consummation of the Common Stock Offering, the existing
2,944,000 shares of Class B Common Stock of Holdings will convert to Common
Stock. Assuming such conversion, as of March 31, 1998, there were 20,457,142
shares of Common Stock outstanding. The following table sets forth certain
information regarding the beneficial ownership of the shares of the Common
Stock of Holdings, as of March 31, 1998, by each person who beneficially owns
more than five percent of the outstanding shares of Common Stock of Holdings
and by the directors and certain executive officers of Holdings, individually
and as a group.
<TABLE>
<CAPTION>
PERCENTAGE OWNERSHIP
------------------------------
BEFORE AFTER
COMMON STOCK COMMON STOCK
NAME OF BENEFICIAL OWNER COMMON STOCK OFFERING OFFERING(1)
- ----------------------------------------------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Lehman Brothers Capital Partners III, L.P. and
affiliates(2)
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285 .................................. 10,020,000 49.0% 38.6%
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817-1877 ............................. 6,800,000 33.2 26.2
Frank C. Lanza
c/o L-3 Communications Holdings, Inc.
600 Third Avenue, 34th Floor
New York, New York, 10016 ................................. 1,700,571 8.3 6.6
Robert V. LaPenta
c/o L-3 Communications Holdings, Inc.
600 Third Avenue, 34th Floor
New York, New York 10016 .................................. 1,700,571 8.3 6.6
All directors and executive officers as group (23 persons) 3,637,142 17.8 14.0
</TABLE>
- ------------
(1) Assumes no exercise of the over-allotment option by the Underwriters.
(2) David J. Brand, Alberto M. Finali, Eliot M. Fried, Robert B. Millard
and Alan H. Washkowitz, each of whom is director of Holdings, are each
Managing Directors of Lehman Brothers Inc. As limited partners of
Lehman Brothers Capital Partners III, L.P. or other affiliated
partnerships sponsored by Lehman Brothers, all such individuals may be
deemed to have shared beneficial ownership of shares of Common Stock
held by Lehman Brothers Capital Partners III, L.P. and such affiliated
partnerships. Such individuals disclaim any such beneficial ownership.
70
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
SENIOR CREDIT FACILITIES
The Senior Credit Facilities have been provided by a syndicate of banks
and other financial institutions led by Lehman Commercial Paper Inc., as
Arranger and Syndication Agent. The Senior Credit Facilities provide for
$175.0 million in term loans (the "Term Loan Facilities") and for $200.0
million in revolving credit loans (the "Revolving Credit Facility" and,
together with the Term Loan Facilities, the "Senior Credit Facilities"). The
Revolving Credit Facility includes borrowing capacity available for letters
of credit and for borrowings on same-day notice (the "Swingline Loans"). The
Term Loans, originally funded on April 30, 1997, comprised of a Tranche A
Term Loan ($100.0 million), which had an initial maturity of six years, a
Tranche B Term Loan ($45.0 million), which had an initial maturity of eight
years, and a Tranche C Term Loan ($30.0 million), which had an initial
maturity of nine years. The Revolving Loan Termination Date (as defined
therein) is March 31, 2003.
All borrowings under the Senior Credit Facilities bear interest, at L-3
Communications' option, at either: (A) a "base rate" equal to, for any day,
the higher of: (a) 0.50% per annum above the latest Federal Funds Rate; and
(b) the rate of interest in effect for such day as publicly announced from
time to time by Bank of America NT&SA, as Administrative Agent, in San
Francisco, California, as its "reference rate" plus (i) in the case of the
Tranche A Term Loan, the Revolving Credit Facility and the Swingline Loans, a
debt to EBITDA-dependent rate ranging from 0.50% to 1.25% per annum, (ii) in
the case of the Tranche B Term Loan, a rate of 1.50% per annum or (iii) in
the case of the Tranche C Term Loan, a rate of 1.75% per annum or (B) a
"LIBOR rate" equal to, for any Interest Period (as defined in the Senior
Credit Facilities), with respect to LIBOR Loans comprising part of the same
borrowing, the London interbank offered rate of interest per annum for such
Interest Period as determined by the Administrative Agent, plus (i) in the
case of the Tranche A Term Loan and the Revolving Credit Facility, a debt to
EBITDA-dependent rate ranging from 1.50% to 2.25% per annum, (ii) in the case
of the Tranche B Term Loan, a rate of 2.50% per annum or (iii) in the case of
the Tranche C Term Loan, a rate of 2.75% per annum.
L-3 Communications will pay a commitment fee calculated at a debt to
EBITDA-dependent rate ranging from 0.375% to 0.50% per annum of the available
unused commitment under the Revolving Credit Facility, in each case in effect
on each day. Such fee will be payable quarterly in arrears and upon
termination of the Revolving Credit Facility.
L-3 Communications will pay a letter of credit fee calculated at a debt to
EBITDA-dependent rate ranging from 1.50% to 2.25% per annum of the face
amount of each letter of credit and a fronting fee calculated at a rate equal
to 0.125% per annum of the face amount of each letter of credit. Such fees
will be payable quarterly in arrears and upon the termination of the
Revolving Credit Facility. In addition, L-3 Communications will pay customary
transaction charges in connection with any letters of credit.
The foregoing debt to EBITDA-dependent rates range from the low rate
specified if the ratio of debt to EBITDA is less than 3.75 to 1.0 to the high
rate specified if such ratio is at least equal to 4.75 to 1.0.
The Term Loans are subject to the following amortization schedule:
<TABLE>
<CAPTION>
TRANCHE A TERM LOAN TRANCHE B TERM LOAN TRANCHE C TERM LOAN
------------------- ------------------- -------------------
<S> <C> <C> <C>
Year 1 ... $ 4,000,000 $ 500,000 $ 500,000
Year 2 ... 5,000,000 500,000 500,000
Year 3 ... 15,000,000 500,000 500,000
Year 4 ... 21,000,000 500,000 500,000
Year 5 ... 27,000,000 500,000 500,000
Year 6 ... 28,000,000 500,000 500,000
Year 7 ... -- 20,000,000 500,000
Year 8 ... -- 22,000,000 500,000
Year 9 ... -- -- 26,000,000
</TABLE>
71
<PAGE>
Borrowings under the Senior Credit Facilities are subject to mandatory
prepayment (i) with the net proceeds of any incurrence of indebtedness with
certain exceptions to be agreed, (ii) with the proceeds of certain asset
sales and (iii) on an annual basis with (A) 75% of the Company's excess cash
flow (as defined in the Senior Credit Facilities) if the ratio of the
Company's debt to EBITDA is greater than 3.5 to 1.0 or (B) 50% of such excess
cash flow if the ratio is less than 3.5 to 1.0.
L-3 Communications' obligations under the Senior Credit Facilities are
secured by a lien on substantially all of the tangible and intangible assets
of the Company, including: (i) a pledge by Holdings of the stock of L-3
Communications and (ii) a pledge by L-3 Communications and its direct and
indirect subsidiaries of all of the stock of their respective domestic
subsidiaries and 65% of the stock of L-3 Communications' first-tier foreign
subsidiaries. In addition, indebtedness under the Senior Credit Facilities is
guaranteed by Holdings and by all of L-3 Communications' direct and indirect
domestic subsidiaries.
The Senior Credit Facilities contain customary covenants and restrictions
on L-3 Communications' ability to engage in certain activities. In addition,
the Senior Credit Facilities provide that L-3 Communications must meet or
exceed certain interest coverage ratios and must not exceed a leverage ratio.
The Senior Credit Facilities also include customary events of default.
10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
L-3 Communications has outstanding $225.0 million in aggregate principal
amount of its 10 3/8% Senior Subordinated Notes due 2007 (the "1997 Notes").
The 1997 Notes are subject to the terms and conditions of an Indenture (the
"1997 Indenture") dated as of April 30, 1997 between L-3 Communications and
The Bank of New York, as trustee, a copy of which was filed as an exhibit to
L-3 Communications' Registration Statement on Form S-4 relating to the 1997
Notes. The 1997 Notes are subject to all of the terms and conditions of the
1997 Indenture. The following summary of the material provisions of the 1997
Indenture does not purport to be complete, and is subject to, and qualified
in its entirety by reference to, all of the provisions of the 1997 Indenture
and those terms made a part of the 1997 Indenture by the Trust Indenture Act
of 1939, as amended. All terms defined in the 1997 Indenture and not
otherwise defined herein are used below with the meanings set forth in the
1997 Indenture.
General. The 1997 Notes will mature on May 1, 2007 and bear interest at
10 3/8% per annum, payable semi-annually on May 1 and November 1 of each year.
The 1997 Notes are general unsecured obligations of L-3 Communications and
are subordinated in right of payment to all existing and future Senior Debt
of L-3 Communications and rank on a parity or pari passu with the Notes. The
1997 Notes will be unconditionally guaranteed, on an unsecured senior
subordinated basis, jointly and severally, by all of L-3 Communications'
future Restricted Subsidiaries other than Foreign Subsidiaries.
Optional Redemption. The 1997 Notes are subject to redemption at any time,
at the option of L-3 Communications, in whole or in part, on or after May 1,
2002 at redemption prices (plus accrued and unpaid interest) starting at
105.188% of principal (plus accrued and unpaid interest) during the 12-month
period beginning May 1, 2002 and declining annually to 100% of principal
(plus accrued and unpaid interest) on May 1, 2005 and thereafter.
In addition, prior to May 1, 2000, L-3 Communications may redeem up to 35%
of the aggregate principal amount of the 1997 Notes with the net proceeds of
one or more Equity Offerings (as defined in the Indentures), to the extent
such proceeds are contributed (within 120 days of any such offering) to L-3
Communications as common equity, at a price equal to 109.375% of the
principal (plus accrued and unpaid interest) provided that at least 65% of
the original aggregate principal amount of the 1997 Notes remains outstanding
thereafter.
Change of Control. Upon the occurrence of a Change of Control, each holder
of the 1997 Notes may require L-3 Communications to repurchase all or a
portion of such holder's 1997 Notes at a purchase price equal to 101% of the
principal amount thereof (plus accrued and unpaid interest). Generally, a
Change of Control, means the occurrence of any of the following: (i) the
disposition of all or substantially all of L-3 Communications' assets to any
person, (ii) the adoption of a plan relating to the liquidation or
dissolution of L-3 Communications, (iii) the consummation of any transaction
in which a person other
72
<PAGE>
than the Principals and their Related Parties becomes the beneficial owner of
more than 50% of the voting stock of L-3 Communications, or (iv) the first
day on which a majority of the members of the Board of Directors of L-3
Communications are not Continuing Directors.
Subordination. The 1997 Notes are general unsecured obligations of L-3
Communications and are subordinate to all existing and future Senior Debt of
L-3 Communications. The 1997 Notes will rank senior in right of payment to
all subordinated Indebtedness of L-3 Communications. Any Subsidiary
Guarantees would be general unsecured obligations of the Guarantors and are
subordinated to the Senior Debt and to the guarantees of Senior Debt of such
Guarantors. The Subsidiary Guarantees rank senior in right of payment to all
subordinated Indebtedness of the Guarantors.
Certain Covenants. The 1997 Indenture contains a number of covenants
restricting the operations of L-3 Communications, which, among other things,
limit the ability of L-3 Communications to incur additional Indebtedness, pay
dividends or make distributions, sell assets, issue subsidiary stock,
restrict distributions from Subsidiaries, create certain liens, enter into
certain consolidations or mergers and enter into certain transactions with
affiliates.
Events of Default. Events of Default under the 1997 Indenture include the
following: (i) a default for 30 days in the payment when due of interest on
the 1997 Notes; (ii) default in payment when due of the principal of or
premium, if any, on the 1997 Notes; (iii) failure by L-3 Communications to
comply with certain provisions of the 1997 Indenture (subject, in some but
not all cases, to notice and cure periods); (iv) default under Indebtedness
for money borrowed by L-3 Communications or any of its Restricted
Subsidiaries in excess of $10.0 million; (v) failure by L-3 Communications or
any Restricted Subsidiary that would be a Significant Subsidiary to pay final
judgments aggregating in excess of $10.0 million, which judgments are not
paid, discharged or stayed for a period of 60 days; (vi) except as permitted
by the Indenture, any Subsidiary Guarantee shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be
in full force and effect or any Guarantor, or any Person acting on behalf of
any Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; or (vii) certain events of bankruptcy or insolvency with respect
to L-3 Communications or any of its Restricted Subsidiaries.
Upon the occurrence of an Event of Default, with certain exceptions, the
Trustee or the holders of at least 25% in principal amount of the then
outstanding 1997 Notes may accelerate the maturity of all the 1997 Notes as
provided in the 1997 Indenture.
% SENIOR SUBORDINATED NOTES DUE 2008
Pursuant to a Registration Statement on Form S-1 filed with the Commission
on February 27, 1998 (as amended, the "Notes Registration Statement"), L-3
Communications is concurrently offering $150.0 million in aggregate principal
amount of % Senior Subordinated Notes due 2008 (the "Notes"). The Notes
will be subject to the terms and conditions of an Indenture (the "Indenture",
and, together with the 1997 Indenture, the "Indentures") to be dated as of
, 1998, between L-3 Communications and The Bank of New York, as
trustee, a form of which was filed as an exhibit to the Notes Registration
Statement. The Notes will be subject to all of the terms and conditions of
the Indenture. The following summary of the material provisions of the
Indenture does not purport to be complete, and is subject to, and qualified
in its entirety by reference to, all of the provisions of the Indenture and
those terms made a part of the Indenture by the Trust Indenture Act of 1939,
as amended. All terms defined in the Indenture and not otherwise defined
herein are used below with the meanings set forth in the Indenture.
General. The Notes will mature on , 2008 and bear interest at %
per annum, payable semi-annually on and of each year. The Notes
are general unsecured obligations of L-3 Communications and are subordinated
in right of payment to all existing and future Senior Debt of L-3
Communications and will rank pari passu with the 1997 Notes. The Notes will
be unconditionally guaranteed, on an unsecured senior subordinated basis,
jointly and severally, by all of L-3 Communications' future Restricted
Subsidiaries other than Foreign Subsidiaries.
Optional Redemption. The Notes will be subject to redemption at any time,
at the option of L-3 Communications, in whole or in part, on or after
, 2003 at redemption prices (plus accrued and
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unpaid interest) starting at % of principal (plus accrued and unpaid
interest) during the 12-month period beginning , 2003 and declining
annually to 100% of principal (plus accrued and unpaid interest) on ,
2006 and thereafter.
In addition, prior to , 2001, L-3 Communications may redeem up to 35%
of the aggregate principal amount of Notes with the net proceeds of one or
more Equity Offerings, to the extent such proceeds are contributed (within
120 days of any such offering) to L-3 Communications as common equity, at a
price equal to % of the principal (plus accrued and unpaid interest)
provided that at least 65% of the original aggregate principal amount of the
Notes remains outstanding thereafter.
Change of Control. Upon the occurrence of a Change of Control, each holder
of the Notes may require L-3 Communications to repurchase all or a portion of
such holder's Notes at a purchase price equal to 101% of the principal amount
thereof (plus accrued and unpaid interest). Generally, a Change of Control,
means the occurrence of any of the following: (i) the disposition of all or
substantially all of L-3 Communications' assets to any person, (ii) the
adoption of a plan relating to the liquidation or dissolution of L-3
Communications, (iii) the consummation of any transaction in which a person
other than the Principals and their Related Parties becomes the beneficial
owner of more than 50% of the voting stock of L-3 Communications, or (iv) the
first day on which a majority of the members of the Board of Directors of L-3
Communications are not Continuing Directors.
Subordination. The Notes will be general unsecured obligations of L-3
Communications and will be subordinate to all existing and future Senior Debt
of L-3 Communications. The Notes will rank senior in right of payment to all
subordinated Indebtedness of L-3 Communications. Any Subsidiary Guarantees
would be general unsecured obligations of the Guarantors and are subordinated
to the Senior Debt and to the guarantees of Senior Debt of such Guarantors.
The Subsidiary Guarantees rank senior in right of payment to all subordinated
Indebtedness of the Guarantors.
Certain Covenants. The Indenture will contain a number of covenants
restricting the operations of L-3 Communications, which, among other things,
limit the ability of L-3 Communications to incur additional Indebtedness, pay
dividends or make distributions, sell assets, issue subsidiary stock,
restrict distributions from Subsidiaries, create certain liens, enter into
certain consolidations or mergers and enter into certain transactions with
affiliates.
Events of Default. Events of Default under the Indenture will include the
following: (i) a default for 30 days in the payment when due of interest on
the Notes; (ii) default in payment when due of the principal of or premium,
if any, on the Notes; (iii) failure by L-3 Communications to comply with
certain provisions of the Indenture (subject, in some but not all cases, to
notice and cure periods); (iv) default under Indebtedness for money borrowed
by L-3 Communications or any of its Restricted Subsidiaries in excess of
$10.0 million; (v) failure by L-3 Communications or any Restricted Subsidiary
that would be a Significant Subsidiary to pay final judgments aggregating in
excess of $10.0 million, which judgments are not paid, discharged or stayed
for a period of 60 days; (vi) except as permitted by the Indenture, any
Subsidiary Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Guarantor, or any Person acting on behalf of any Guarantor,
shall deny or disaffirm its obligations under its Subsidiary Guarantee; or
(vii) certain events of bankruptcy or insolvency with respect to L-3
Communications or any of its Restricted Subsidiaries.
Upon the occurrence of an Event of Default, with certain exceptions, the
Trustee or the holders of at least 25% in principal amount of the then
outstanding Notes may accelerate the maturity of all the Notes as provided in
the Indenture.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
As of the date of this Prospectus, the Amended and Restated Certificate of
Incorporation of Holdings authorizes 25,000,000 shares of Class A Common
Stock, par value $0.01 per share, 3,000,000 shares of Class B Common Stock,
par value $0.01 per share, and 3,000,000 shares of Class C Common Stock, par
value $0.01 per share. Immediately prior to the consummation of the Common
Stock Offering, Holdings intends to amend its Certificate of Incorporation to
convert the different classes of common stock into one class, the Common
Stock, with each outstanding share of Class A and Class B Common Stock being
converted into one share of Common Stock, and to increase the authorized
shares to 100,000,000 shares of Common Stock. Unless the context otherwise
requires, this Prospectus assumes the completion of such conversion of Class
A and Class B Common Stock into the Common Stock. As of March 31, 1998, the
outstanding capital stock of Holdings consisted of 20,457,142 shares of
Common Stock held by 26 stockholders of record. The following summaries of
certain provisions of the Common Stock do not purport to be complete and are
subject to, and qualified in their entirety by, the provisions of the Amended
and Restated Certificate of Incorporation and Bylaws of Holdings, which are
included as exhibits to the Registration Statement of which this Prospectus
forms a part, and by applicable law.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all matters
to be voted upon by the stockholders of Holdings, and do not have cumulative
voting rights. The holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available for that purpose, subject to
preferences that may be applicable to any outstanding preferred stock and any
other provisions of Holdings' Certificate of Incorporation. Holdings does
not, however, anticipate paying any cash dividends in the foreseeable future.
Holders of Common Stock have no preemptive or other rights to subscribe for
additional shares. No shares of Common Stock are subject to redemption or a
sinking fund. In the event of any liquidation, dissolution or winding up of
Holdings, after payment of the debts and other liabilities of Holdings, and
subject to the rights of holders of shares of preferred stock, holders of
Common Stock are entitled to share pro rata in any distribution to the
stockholders. All of the outstanding shares of Common Stock are, and the
shares offered hereby will be, fully paid and nonassessable. See "Risk
Factors -- Ownership of Holdings and L-3 Communications", "Dividend Policy",
"Dilution" and "Shares Eligible for Future Sale".
PREFERRED STOCK
The Board of Directors is authorized, without further vote or action by
holders of Common Stock, to issue 25,000,000 shares of Preferred Stock in one
or more series and to designate the rights, preferences, limitations,
restrictions of and upon shares of each series, including voting, redemption
and conversion rights. The Board of Directors may also designate dividend
rights and preferences in liquidation. It is not possible to state the effect
of the authorization and issuance of any series of Preferred Stock upon the
rights of the holders of Common Stock until the Board of Directors determines
the specific terms, rights and preferences of such a series of Preferred
Stock. However, such effects might include, among other things, restricting
dividends on the Common Stock, diluting the voting power of the Common Stock
or impairing the liquidation rights of such shares without further action by
holders of Common Stock. In addition, under certain circumstances, the
issuance of Preferred Stock may render more difficult or tend to discourage a
merger, tender offer or proxy contest, the assumption of control by a holder
of a large block of Holdings' securities or the removal of incumbent
management, which could thereby depress the market price of Holdings' Common
Stock.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is a Delaware corporation subject to Section 203 of the DGCL
("Section 203"). Section 203 provides in general that a stockholder acquiring
more than 15% of the outstanding voting stock of a corporation subject to
Section 203 (an "Interested Stockholder") but less than 85% of such stock may
not engage in certain Business Combinations (as defined in Section 203) with
the corporation for a period of three years subsequent to the date on which
the stockholder became an Interested
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Stockholder unless (i) prior to such date the corporation's board of
directors approved either the Business Combination or the transaction in
which the stockholder became an Interested Stockholder or (ii) the Business
Combination is approved by the corporation's board of directors and
authorized by a vote of at least 66 2/3% of the outstanding voting stock of
the corporation not owned by the Interested Stockholder. A "Business
Combination" includes mergers, asset sales and other transactions resulting
in financial benefit to a stockholder. Section 203 could prohibit or delay
mergers or other takeover or change of control attempts with respect to the
Company and, accordingly, may discourage attempts that might result in a
premium over the market price for the shares held by stockholders.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is First Chicago
Trust Company of New York.
SHARES ELIGIBLE FOR FUTURE SALE
GENERAL
Prior to completion of the Common Stock Offering, there has been no public
market for the Common Stock. Sales of substantial amounts of Common Stock in
the public market, or the perception that such sales may occur, could
adversely affect the market price of the Common Stock.
Upon the consummation of the Common Stock Offering, Holdings will have
25,957,142 shares of Common Stock issued and outstanding. All of the
5,500,000 shares of Common Stock to be sold in the Common Stock Offering (and
any shares sold upon exercise of the U.S. Underwriters' over-allotment
option) will be freely tradable without restrictions or further registration
under the Securities Act, except for any shares purchased by an "affiliate"
of Holdings (as that term is defined in Rule 144 under the Securities Act
("Rule 144")), which will be subject to the resale limitations of Rule 144.
The remaining shares of Common Stock outstanding are "restricted securities"
as that term is defined in Rule 144 and are also subject to certain
restrictions on disposition. Restricted securities may be sold in the public
market only if registered or if they qualify for an exemption from
registration under Rule 144 or Rule 701 under the Securities Act. Sales of
restricted securities in the public market, or the availability of such
shares for sale, could have an adverse effect on the price of the Common
Stock. See "Risk Factors -- Absence of Public Market; Possible Volatility of
Stock Price", "Risk Factors -- Substantial and Immediate Dilution", "Risk
Factors -- Shares Eligible for Future Sale" and "Dilution".
RULE 144
In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated) who has beneficially owned shares
of Common Stock for at least one year, including a person who may be deemed
an "affiliate" of Holdings, is entitled to sell, within any three-month
period, a number of shares that does not exceed the greater of 1% of the
total number of shares of the class of stock sold or the average weekly
reported trading volume of the class of stock being sold during the four
calendar weeks preceding such sale. A person who is not deemed an "affiliate"
of Holdings at any time during the three months preceding a sale and who has
beneficially owned shares for at least two years is entitled to sell such
shares under Rule 144 without regard to the volume limitations described
above. As defined in Rule 144, an "affiliate" of an issuer is a person that
directly or indirectly through the use of one or more intermediaries
controls, is controlled by, or is under common control with, such issuer. The
foregoing summary of Rule 144 is not intended to be a complete description
thereof.
All executive officers and directors and the existing stockholders of
Holdings who, after the Common Stock Offering, will hold in the aggregate
20,457,142 shares of Common Stock have agreed, pursuant to lock-up
agreements, that they will not, without the prior written consent of Lehman
Brothers Inc., offer, sell, contract to sell or otherwise dispose of any
shares of Common Stock or securities exercisable or exchangeable for Common
Stock or enter into any derivative transaction with similar effect as a sale
of Common Stock for a period of 180 days after the date of this Prospectus.
The restrictions described in this paragraph do not apply to (i) the sale of
Common Stock to the Underwriters, (ii) the issuance by Holdings
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of shares of Common Stock upon the exercise of an option or a warrant or the
conversion of a security outstanding on the date of this Prospectus or (iii)
transactions by any person other than Holdings relating to shares of Common
Stock or other securities acquired in open market transactions after the
completion of the offering of the Common Stock.
The Company intends to file registration statements under the Securities
Act to register all shares of Common Stock issuable pursuant to the 1997
Stock Option Plan. Subject to the completion of the 180-day period described
above, shares of Common Stock issued under, or issued upon the exercise of
awards issued under such plans and after the effective date of such
registration statements, generally will be eligible for sale in the public
market. See "Management -- Executive Compensation".
REGISTRATION RIGHTS
Pursuant to the Stockholders Agreement, certain of the existing
stockholders have the right, under certain circumstances and subject to
certain conditions, to require the Company to register under the Securities
Act shares of Common Stock held by them. Lockheed Martin, the Lehman
Partnership and each of the Senior Management has three, four and one demand
registration rights, respectively. In addition, the Stockholders Agreement
also provides all of the existing stockholders with certain piggyback
registration rights. The Stockholders Agreement provides, among other things,
that the Company will pay expenses in connection with (i) up to two demand
registrations requested by Lockheed Martin, up to three demand registrations
requested by the Lehman Partnership and the two demand registrations
requested by the Senior Management and (ii) any registration in which the
existing stockholders participate through piggyback registration rights
granted under such agreement.
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UNITED STATES FEDERAL TAX CONSIDERATIONS
In the opinion of Simpson Thacher & Bartlett, the following summary
accurately describes the material United States federal income and estate tax
consequences that may be relevant to the purchase, ownership and disposition
of Common Stock by a Non-U.S. Holder. For this purpose, a "Non-U.S. Holder"
is any person who is, for United States federal income tax purposes, a
foreign corporation, a non-resident alien individual, a foreign partnership
or a foreign estate or trust. This discussion does not address all aspects of
United States federal income and estate taxes and does not deal with foreign,
state and local consequences that may be relevant to such Non-U.S. Holders in
light of their personal circumstances. Furthermore, this discussion is based
on provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed regulations promulgated thereunder and administrative
and judicial interpretations thereof, as of the date hereof, all of which are
subject to change. EACH PROSPECTIVE PURCHASER OF COMMON STOCK IS ADVISED TO
CONSULT A TAX ADVISOR WITH RESPECT TO CURRENT AND POSSIBLE FUTURE TAX
CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF COMMON STOCK AS WELL AS
ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY U.S. STATE,
MUNICIPALITY OR OTHER TAXING JURISDICTION.
DIVIDENDS
Dividends paid to a Non-U.S. Holder of Common Stock generally will be
subject to withholding of United States federal income tax at a 30% rate or
such lower rate as may be specified by an applicable income tax treaty.
However, dividends that are effectively connected with the conduct of a trade
or business by the Non-U.S. Holder within the United States and, where a tax
treaty applies, are attributable to a United States permanent establishment
of the Non-U.S. Holder, are not subject to the withholding tax, but instead
are subject to United States federal income tax on a net income basis at
applicable graduated individual or corporate rates. Certain certification and
disclosure requirements must be complied with in order to be exempt from
withholding under such effectively connected income exemption. Any such
effectively connected dividends received by a foreign corporation may, under
certain circumstances, be subject to an additional "branch profits tax" at a
30% rate or such lower rate as may be specified by an applicable income tax
treaty.
Under current law, dividends paid to an address outside the United States
are presumed to be paid to a resident of such country (unless the payer has
knowledge to the contrary) for purposes of the withholding tax discussed
above and, under the current interpretation of United States Treasury
regulations, for purposes of determining the applicability of a tax treaty
rate. Under recently finalized United States Treasury regulations (the "Final
Regulations"), a Non-U.S. Holder of Common Stock who wishes to claim the
benefit of an applicable treaty rate (and avoid back-up withholding as
discussed below) for dividends paid after December 31, 1999, will be required
to satisfy applicable certification and other requirements.
A Non-U.S. Holder of Common Stock eligible for a reduced rate of United
States withholding tax pursuant to an income tax treaty may obtain a refund
of any excess amounts withheld by filing an appropriate claim for refund with
the Internal Revenue Service (the "IRS").
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to United States federal
income tax with respect to gain recognized on a sale or other disposition of
Common Stock unless (i) the gain is effectively connected with a trade or
business of the Non-U.S. Holder in the United States, and, where a tax treaty
applies, is attributable to a United States permanent establishment of the
Non-U.S. Holder, (ii) in the case of a Non-U.S. Holder who is an individual
and holds the Common Stock as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year of the sale or other
disposition and certain other conditions are met, or (iii) the Company is or
has been a "U.S. real property holding corporation" for United States federal
income tax purposes.
An individual Non-U.S. Holder described in clause (i) above will be
subject to tax on the net gain derived from the sale under regular graduated
United States federal income tax rates. An individual Non-U.S. Holder
described in clause (ii) above will be subject to a flat 30% tax on the gain
derived from
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the sale, which may be offset by United States source capital losses (even
though the individual is not considered a resident of the United States). If
a Non-U.S. Holder that is a foreign corporation falls under clause (i) above,
it will be subject to tax on its gain under regular graduated United States
federal income tax rates and, in addition, may be subject to the branch
profits tax equal to 30% of its effectively connected earnings and profits
within the meaning of the Code for the taxable year, as adjusted for certain
items, unless it qualifies for a lower rate under an applicable income tax
treaty. The Company is not and does not anticipate becoming a "U.S. real
property holding corporation" for United States federal income tax purposes.
FEDERAL ESTATE TAX
Common Stock held by an individual Non-U.S. Holder at the time of death
will be included in such holder's gross estate for United States federal
estate tax purposes, unless an applicable estate tax treaty provides
otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the IRS and to each Non-U.S. Holder
the amount of dividends paid to such holder and the tax withheld with respect
to such dividends, regardless of whether withholding was required. Copies of
the information returns reporting such dividends and withholding may also be
made available to the tax authorities in the country in which the Non-U.S.
Holder resides under the provisions of an applicable income tax treaty.
Under current law, backup withholding at the rate of 31% generally will
not apply to dividends paid to a Non-U.S. Holder at an address outside the
United States (unless the payer has knowledge that the payee is a U.S.
person). Under the Final Regulations, however, a Non-U.S. Holder will be
subject to back-up withholding unless applicable certification requirements
are met.
Payment of the proceeds of a sale of Common Stock by or through a United
States office of a broker is subject to both backup withholding and
information reporting unless the beneficial owner certifies under penalties
of perjury that it is a Non-U.S. Holder or otherwise establishes an
exemption. In general, backup withholding and information reporting will not
apply to a payment of the proceeds of a sale of Common Stock by or through a
foreign office of a broker. If, however, such broker is, for United States
federal income tax purposes a U.S. person, a controlled foreign corporation,
or a foreign person that derives 50% or more of its gross income for a
certain period from the conduct of a trade or business in the United States
or for taxable years beginning after December 31, 1999, a foreign
partnership, in which one or more U.S. persons, in the aggregate, own more
than 50% of the income or capital interests in the partnership or which is
engaged in a trade or business in the United States, such payments will be
subject to information reporting, but not backup withholding, unless (i) such
broker has documentary evidence in its records that the beneficial owner is a
Non-U.S. Holder and certain other conditions are met, or (ii) the beneficial
owner otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules may be allowed as
a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
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UNDERWRITING
Under the terms of, and subject to the conditions contained in, the U.S.
Underwriting Agreement, the form of which is filed as an Exhibit to the
Registration Statement, the underwriters named below (the "U.S.
Underwriters"), for whom Lehman Brothers Inc., Bear, Stearns & Co. Inc.,
Credit Suisse First Boston Corporation, Morgan Stanley & Co. Incorporated and
C.E. Unterberg, Towbin are acting as representatives (the "U.S.
Representatives"), have severally agreed, subject to the terms and conditions
of the U.S. Underwriting Agreement, to purchase from Holdings, and Holdings
has agreed to sell to each U.S. Underwriter, the aggregate number of shares
of Common Stock set forth opposite the name of each such U.S. Underwriter
below:
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
---------------------------------------- ----------
<S> <C>
Lehman Brothers Inc. .......................
Bear, Stearns & Co. Inc. ...................
Credit Suisse First Boston Corporation ....
Morgan Stanley & Co. Incorporated ..........
C.E. Unterberg, Towbin .....................
-------------
Total .................................... 4,400,000
=============
</TABLE>
Under the terms of, and subject to the conditions contained in, the
International Underwriting Agreement, the form of which is filed as an
Exhibit to the Registration Statement, the managers named below of the
concurrent offering of the shares of Common Stock outside the U.S. and Canada
(the "International Managers"), for whom Lehman Brothers International
(Europe), Bear, Stearns International Limited, Credit Suisse First Boston
(Europe) Limited, Morgan Stanley & Co. International Limited and C.E.
Unterberg, Towbin are acting as lead managers (the "Lead Managers" and,
together with the U.S. Representatives, the "Representatives"), have
severally agreed, subject to the terms and conditions of the International
Underwriting Agreement, to purchase from Holdings, and Holdings has agreed to
sell to each International Manager, the aggregate number of shares of Common
Stock set forth opposite the name of each International Manager below:
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
--------------------------------------------- ----------
<S> <C>
Lehman Brothers International (Europe) .........
Bear, Stearns International Limited .............
Credit Suisse First Boston (Europe) Limited ....
Morgan Stanley & Co. International Limited .....
C.E. Unterberg, Towbin...........................
-------------
Total ......................................... 1,100,000
=============
</TABLE>
The U.S. Underwriting Agreement and the International Underwriting
Agreement (collectively, the "Underwriting Agreements") provide that the
obligations of the U.S. Underwriters and the International Managers to
purchase shares of Common Stock are subject to certain conditions, and that
if any of the foregoing shares of Common Stock are purchased by the U.S.
Underwriters pursuant to the U.S. Underwriting Agreement or by the
International Managers pursuant to the International Underwriting Agreement,
then all the shares of Common Stock agreed to be purchased by the U.S.
Underwriters and the International Managers, as the case may be, pursuant to
their respective Underwriting Agreements,
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must be so purchased. The offering price and underwriting discounts and
commissions per share for the U.S. Offering and the International Offering
are identical. The closing of the U.S. Offering is a condition to the closing
of the International Offering and the closing of the International Offering
is a condition to the closing of the U.S. Offering.
Holdings has been advised by the Representatives that the U.S.
Underwriters and the International Managers propose to offer the shares of
Common Stock directly to the public at the public offering price set forth on
the cover page of this Prospectus, and to certain selected dealers (who may
include the U.S. Underwriters and the International Managers) at such public
offering price less a selling concession not in excess of $ per share.
The selected dealers may reallow a concession not in excess of $ per
share to certain brokers and dealers. After the Common Stock Offering, the
public offering price, the concession to selected dealers and the reallowance
may be changed by the U.S. Underwriters and the International Managers.
Holdings has agreed to indemnify, under certain circumstances, the U.S.
Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act, and to contribute, under
certain circumstances, to payments that the U.S. Underwriters and the
International Managers may be required to make in respect thereof.
Holdings has granted to the U.S. Underwriters options to purchase up to an
aggregate of 825,000 additional shares of Common Stock, exercisable solely to
cover over-allotments, at the public offering price less the underwriting
discounts and commissions shown on the cover page of this Prospectus. Such
options may be exercised at any time until 30 days after the date of the U.S.
Underwriting Agreement. To the extent that the over-allotment option is
exercised, each U.S. Underwriter or International Manager, as the case may
be, will be committed, subject to certain conditions, to purchase a number of
additional shares of Common Stock proportionate to such U.S. Underwriter's or
International Manager's initial commitment as indicated in the preceding
tables.
Prior to the Common Stock Offering, there has been no public market for
the shares of Common Stock. The initial public offering price was negotiated
between Holdings and the Representatives. Among the factors considered in
determining the initial public offering price of the shares of Common Stock,
in addition to prevailing market conditions, were the Company's historical
performance and capital structure, estimates of business potential and
earning prospects of the Company, an overall assessment of the Company, an
assessment of the Company's management and the consideration of the above
factors in relation to market valuation of companies in related businesses.
The U.S. Underwriters and the International Managers have entered into an
Agreement Between U.S. Underwriters and International Managers pursuant to
which each U.S. Underwriter has agreed that, as part of the distribution of
the shares of Common Stock offered in the U.S. Offering, (i) it is not
purchasing any such shares for the account of anyone other than a U.S. Person
(as defined below), and (ii) it has not offered or sold, will not offer,
sell, resell or deliver, directly or indirectly, any such shares or
distribute any prospectus relating to the U.S. Offering to anyone other than
a U.S. Person. In addition, pursuant to such Agreement, each International
Manager has agreed that, as part of the distribution of the shares of Common
Stock offered in the International Offering, (i) it is not purchasing any
such shares for the account of a U.S. Person, and (ii) it has not offered or
sold, and will not offer, sell, resell or deliver, directly or indirectly,
any of such shares or distribute any prospectus relating to the International
Offering to any U.S. Person.
The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Underwriting Agreements and the
Agreement Between U.S. Underwriters and International Managers, including (i)
certain purchases and sales between U.S. Underwriters and the International
Managers, (ii) certain offers, sales, resales, deliveries or distributions to
or through investment advisors or other persons exercising investment
discretion, (iii) purchases, offers or sales by a U.S. Underwriter who is
also acting as an International Manager or by an International Manager who is
also acting as a U.S. Underwriter and (iv) other transactions specifically
approved by the U.S. Representatives and the Lead Managers. As used herein,
the term "U.S. Person" means any resident or national of the United States or
Canada and its provinces, any corporation, partnership or other entity
created or organized in or under the laws of the United States or Canada and
its provinces, or any estate
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or trust the income of which is subject to United States or Canadian federal
income taxation regardless of the source, and the term "United States" means
the United States of America (including the District of Columbia) and its
territories, its possessions and other areas subject to its jurisdiction.
Pursuant to the Agreement Between the U.S. Underwriters and the
International Managers, sales may be made between the U.S. Underwriters and
the International Managers of such a number of shares of Common Stock as may
be mutually agreed. The price of any shares so sold shall be the public
offering price as then in effect for the shares of Common Stock being sold by
the U.S. Underwriters and the International Managers less an amount equal to
the selling concession allocable to such shares of Common Stock, unless
otherwise determined by mutual agreement. To the extent that there are sales
between the U.S. Underwriters and the International Managers pursuant to the
Agreement Between the U.S. Underwriters and the International Managers the
number of shares of Common Stock available for sale by the U.S. Underwriters
or by the International Managers may be more or less than the amount
specified on the cover page of the Prospectus.
Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the U.S. Underwriters and certain selling
group members to bid for and purchase shares of Common Stock. As an exception
to these rules, the Representatives are permitted to engage in certain
transactions that stabilize the price of the Common Stock. Such transactions
may consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Stock.
If the U.S. Underwriters create a short position in the Common Stock in
connection with the Common Stock Offering (i.e., if they sell more shares of
Common Stock than are set forth on the cover page of this Prospectus), the
U.S. Representatives may reduce that short position by purchasing Common
Stock in the open market. The U.S. Representatives also may elect to reduce
any short position by exercising all or part of the over-allotment options
described herein.
The U.S. Representatives may also impose a penalty bid on certain U.S.
Underwriters and selling group members. This means that, if the U.S.
Representatives purchase shares of Common Stock in the open market to reduce
the U.S. Underwriters' short position or to stabilize the price of the Common
Stock, they may reclaim the amount of the selling concession from the U.S.
Underwriters and selling group members who sold those shares as part of the
Common Stock Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security
to the extent that it were to discourage resales of the security by
purchasers in the Common Stock Offering.
Neither the Company nor any of the U.S. Underwriters makes any
representation or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of the Common
Stock. In addition, neither the Company nor any of the U.S. Underwriters
makes any representation that the U.S. Representatives will engage in such
transactions or that such transactions, once commenced, will not be
discontinued without notice.
Each International Manager has represented and agreed that (i) it has not
offered or sold and, prior to the date six months after the date of issue of
the shares of Common Stock, will not offer or sell any shares of Common Stock
to persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995, (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the shares of Common Stock in, from or
otherwise involving the United Kingdom, and (iii) it has only issued or
passed on, and will only issue or pass on to any person in the United Kingdom
any document received by it in connection with the issue of the shares of
Common Stock if that person is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1995.
82
<PAGE>
The Common Stock has been approved for listing, subject to notice of
issuance, on the NYSE under the symbol .
Holdings, all executive officer and director of Holdings and existing
stockholders of Holdings have agreed that they will not, subject to certain
limited exceptions, for a period of 180 days from the date of this
Prospectus, directly or indirectly, offer, sell or otherwise dispose of any
shares of Common Stock or any securities convertible into or exchangeable or
exercisable for any such shares of Common Stock or enter into any derivative
transaction with similar effect as a sale of Common Stock, without the prior
written consent of Lehman Brothers Inc. The restrictions described in this
paragraph do not apply to (i) the sale of Common Stock to the Underwriters,
(ii) the issuance by Holdings of shares of Common Stock upon the exercise of
an option or a warrant or the conversion of a security outstanding on the
date of this Prospectus or (iii) transactions by any person other than
Holdings relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Common Stock Offering.
At the request of Holdings, the Underwriters have reserved for sale, at
the initial offering price, up to 500,000 shares of Common Stock offered
hereby for directors, officers, employees, business associates, and related
persons of the Company. The number of shares of Common Stock available for
sale to the general public will be reduced to the extent such persons
purchase such reserved shares. Any reserved shares which are not so purchased
will be offered by the Underwriters to the general public on the same basis
as the other shares offered hereby.
Any offer of the shares of Common Stock in Canada will be made only
pursuant to an exemption from the prospectus filing requirement and an
exemption from the dealer registration requirement (where such an exemption
is not available, offers shall be made only by a registered dealer) in the
relevant Canadian jurisdiction where such offer is made.
Purchasers of the shares of Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practices
of the country of purchase, in addition to the offering price set forth on
the cover hereof.
The U.S. Underwriters and the International Managers have informed
Holdings that they do not intend to sell to, and therefore will not confirm
the sales of shares of Common Stock offered hereby to any accounts over which
they exercise discretionary authority without prior written approval of the
customer.
Lehman Brothers Inc. has provided investment banking, financial advisor
and other services to the Company, for which services Lehman Brothers Inc.
has received fees. In addition, Lehman Brothers Inc. is acting as lead
underwriter for the concurrent Notes Offering, and Lehman Brothers Commercial
Paper Inc., an affiliate of Lehman Brothers Inc., is the Arranger and
Syndication Agent under the Senior Credit Facilities, a substantial portion
of which will be refinanced with net proceeds of the Offerings. Lehman
Brothers Commercial Paper Inc. will receive a portion of the net proceeds of
the Offerings in repayment of indebtedness outstanding under the Senior
Credit Facilities. After the completion of the Common Stock Offering and
assuming that the Underwriters' over-allotment option is exercised, the
Lehman Partnership will beneficially own 37.4% of the outstanding capital
stock of Holdings and will be able to significantly influence the business
and the affairs of the Company with respect to matters requiring stockholder
approval. See "Management--Directors and Executive Officer" and "Ownership of
Capital Stock".
Under Rule 2720 ("Rule 2720") of the Conduct Rules of the National
Association of Securities Dealers, Inc. ("NASD"), the Company is considered
an affiliate of Lehman Brothers Inc. This Common Stock Offering is being
conducted in accordance with Rule 2720, which provides that, among other
things, when an NASD member participates in the underwriting of an
affiliate's equity securities, the public offering price per share can be no
higher than that recommended by a "qualified independent underwriter" meeting
certain standards ("QIU"). In accordance with this requirement, C.E.
Unterberg, Towbin has assumed the responsibilities of acting as QIU and will
recommend a public offering price for the Common Stock in compliance with the
requirements of Rule 2720. In connection with the Common
83
<PAGE>
Stock Offering, C.E. Unterberg, Towbin is performing due diligence
investigations and reviewing and participating in the preparation of this
Prospectus and the Registration Statement of which this Prospectus forms a
part. C.E. Unterberg, Towbin will receive no compensation for its services as
QIU.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Simpson Thacher & Bartlett, New York, New York and for the
Underwriters by Latham & Watkins, New York, New York.
EXPERTS
The (i) consolidated balance sheet of the Company as of December 31, 1997
and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for the nine months then ended, (ii)
combined statements of operations, changes in invested equity and cash flows
of the Predecessor Company for the three months ended March 31, 1997, (iii)
combined balance sheet of the Predecessor Company as of December 31, 1996 and
the related combined statements of operations, changes in invested equity and
cash flows for the year then ended, (iv) combined statement of operations and
cash flows of the Loral Acquired Businesses for the three months ended March
31, 1996 and for the year ended December 31, 1995 and (v) the combined
balance sheet of AlliedSignal Ocean Systems (a wholly-owned operation of
AlliedSignal, Inc.) and the related combined statements of operations, cash
flows and equity for the year then ended, included in this Prospectus, have
been included herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent auditors, given on the authority of that firm as experts in
accounting and auditing. The report on the combined financial statements of
the Predecessor Company for the year ended December 31, 1996 indicates that
Coopers & Lybrand L.L.P.'s opinion, insofar as it relates to the financial
statements of the Lockheed Martin Communications Systems Division included in
such combined financial statements, is based solely on the report of other
auditors.
The combined financial statements of Lockheed Martin Communications
Systems Division as of and for the years ended December 31, 1996 (not
presented separately herein) and 1995, and the financial statements of the
Satellite Transmission Systems Division of California Microwave, Inc. as of
June 30, 1997 and 1996 and for each of the three years in the period ended
June 30, 1997, appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
The consolidated financial statements of ILEX Systems, Inc. as of December
31, 1997, and for the year then ended have been included in this Prospectus
and the Registration Statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
84
<PAGE>
INDEX TO FINANCIAL STATEMENTS
L-3 COMMUNICATIONS HOLDINGS, INC.
(AND THE PREDECESSOR COMPANY)
<TABLE>
<CAPTION>
<S> <C>
Unaudited Condensed (Combined) Consolidated Financial Statements as of March 31, 1998 and
December 31, 1997 and for the three months ended March 31, 1998 and 1997 ................. F-3
Condensed Consolidated Balance Sheets as of March 31, 1998 (Unaudited) and
December 31, 1997 ....................................................................... F-4
Condensed Consolidated (Combined) Statements of Operations for the three months ended
March 31, 1998 (Unaudited) and 1997 ..................................................... F-5
Condensed Consolidated (Combined) Statements of Cash Flows for the three months ended
March 31, 1998 (Unaudited) and 1997 ..................................................... F-6
Notes to Unaudited Condensed Consolidated (Combined) Financial Statements .............. F-7
Consolidated (Combined) Financial Statements as of December 31, 1997 and 1996 and for the
nine months ended December 31, 1997, the three months ended March 31, 1997, and the years
ended December 31, 1996 and 1995 .......................................................... F-12
Report of Coopers & Lybrand L.L.P. ..................................................... F-13
Report of Ernst & Young LLP on the financial statements of Lockheed Martin
Communications Systems Division as of December 31, 1996 and for the two years ended
December 31, 1996 ..................................................................... F-14
Consolidated (Combined) Balance Sheets as of December 31, 1997 and December 31, 1996... F-15
Consolidated (Combined) Statements of Operations for the nine months ended December 31,
1997, for the three months ended March 31, 1997 and for the years ended December 31,
1996 and 1995.......................................................................... F-16
Consolidated (Combined) Statements of Changes in Shareholders' Equity and Invested
Equity for the nine months ended December 31, 1997, for three months ended March 31,
1997 and for the years ended December 31, 1996 and 1995 ............................... F-17
Consolidated (Combined) Statements of Cash Flows for the nine months ended December 31,
1997, for the three months ended March 31, 1997 and for the years ended December 31,
1996 and 1995 ......................................................................... F-18
Notes to Consolidated (Combined) Financial Statements................................... F-19
LORAL ACQUIRED BUSINESSES
Combined Financial Statements for the three months ended March 31, 1996 and the year ended
December 31, 1995 ......................................................................... F-38
Report of Coopers & Lybrand L.L.P....................................................... F-39
Combined Statements of Operations for three months ended March 31, 1996 and the year
ended December 31, 1995................................................................ F-40
Combined Statements of Cash Flows for three months ended March 31, 1996 and the year
ended December 31, 1995................................................................ F-41
Notes to Combined Financial Statements.................................................. F-42
SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC.
Unaudited Condensed Financial Statements as of December 31, 1997 and for the
six months ended December 31, 1997 and 1996 ............................................... F-48
Condensed Balance Sheet (Unaudited) as of December 31, 1997 ............................ F-49
F-1
<PAGE>
Condensed Statements of Operations (Unaudited) for the six months ended December 31,
1997 and 1996 ......................................................................... F-50
Condensed Statements of Cash Flows (Unaudited) for the six months ended December 31,
1997 and 1996 ......................................................................... F-51
Notes to the Condensed Financial Statements ............................................ F-52
Financial Statements as of June 30, 1997 and 1996 and for the years ended June 30, 1997,
1996 and 1995 ............................................................................. F-55
Report of Ernst & Young LLP ............................................................ F-56
Balance Sheets as of June 30, 1997 and 1996 ............................................ F-57
Statements of Operations for the years ended June 30, 1997, 1996 and 1995 .............. F-58
Statements of Cash Flows for the years ended June 30, 1997, 1996 and 1995 .............. F-59
Notes to the Financial Statements ...................................................... F-60
ILEX SYSTEMS, INC. AND SUBSIDIARY
Consolidated Financial Statements as of December 31, 1997 and for the year ended December
31, 1997 .................................................................................. F-66
Report of KPMG Peat Marwick LLP ........................................................ F-67
Consolidated Balance Sheet as of December 31, 1997 ..................................... F-68
Consolidated Statement of Income for the year ended December 31, 1997 .................. F-69
Consolidated Statement of Shareholders' Equity for the year ended December 31, 1997..... F-70
Consolidated Statement of Cash Flows for the year ended December 31, 1997 .............. F-71
Notes to the Consolidated Financial Statements ......................................... F-72
ALLIEDSIGNAL OCEAN SYSTEMS (A WHOLLY-OWNED OPERATION OF ALLIEDSIGNAL, INC.)
Combined Financial Statements as of December 31, 1997 and for the year ended December 31,
1997 ...................................................................................... F-76
Report of Coopers & Lybrand L.L.P....................................................... F-77
Combined Balance Sheet as of December 31, 1997.......................................... F-78
Combined Statement of Operations for the year ended December 31, 1997 .................. F-79
Combined Statement of Equity for the year ended December 31, 1997 ...................... F-80
Combined Statement of Cash Flows for the year ended December 31, 1997 .................. F-81
Notes to the Combined Financial Statements ............................................. F-82
</TABLE>
F-2
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
(AND THE PREDECESSOR COMPANY)
UNAUDITED CONDENSED CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS AS OF MARCH
31, 1998 AND DECEMBER 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1997
F-3
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, 1998 1997
-------------- ----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ...................................... $ 9,058 $ 77,474
Contracts in process ........................................... 287,584 167,202
Net assets held for sale ....................................... 1,868 6,653
Deferred income taxes .......................................... 12,079 13,298
Other current assets ........................................... 5,369 2,750
-------------- ----------------
Total current assets ......................................... 315,958 267,377
-------------- ----------------
Property, plant and equipment ................................... 124,059 95,034
Less, accumulated depreciation and amortization ................ 16,418 12,025
-------------- ----------------
107,641 83,009
-------------- ----------------
Intangibles, primarily cost in excess of net assets acquired,
net of amortization ............................................ 387,616 297,503
Deferred income taxes ........................................... 36,216 24,217
Other assets .................................................... 32,980 31,298
-------------- ----------------
Total assets ................................................. $880,411 $703,404
============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt .............................. $ 5,700 $ 5,000
Accounts payable, trade ........................................ 48,604 33,052
Accrued employment costs ....................................... 41,003 31,162
Customer advances .............................................. 56,707 15,989
Amounts in excess of costs incurred ............................ 29,098 18,469
Accrued interest ............................................... 10,526 4,419
Other current liabilities ...................................... 31,691 27,476
-------------- ----------------
Total current liabilities .................................... 223,329 135,567
-------------- ----------------
Pension and postretirement benefits ............................. 52,528 38,113
Other liabilities ............................................... 6,187 5,009
Revolving Credit Facility ....................................... 67,800 --
Long-term debt .................................................. 391,830 392,000
Commitments and contingencies
Common stock subject to repurchase agreement, $.01 par value,
authorized 3,000,000 shares, issued and outstanding 2,944,000
shares and 2,944,000 shares .................................... 14,638 14,638
Shareholders' equity
Class A Common Stock, $.01 par value; authorized 25,000,000
shares, issued and outstanding 17,513,142 shares and
17,056,000 shares ............................................. 176 171
Additional paid-in capital ..................................... 113,595 110,191
Retained earnings .............................................. 19,328 16,715
Deemed distribution ............................................ (9,000) (9,000)
-------------- ----------------
Total shareholders' equity ...................................... 124,099 118,077
-------------- ----------------
Total liabilities and shareholders' equity ................... $880,411 $703,404
============== ================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
F-4
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
CONDENSED CONSOLIDATED (COMBINED) STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY COMPANY
CONSOLIDATED COMBINED
-------------- ---------------
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
Sales ...................................... $186,564 $158,873
Costs and expenses.......................... 172,472 150,937
-------------- ---------------
Operating income ........................... 14,093 7,936
Interest income ............................ 796 --
Interest expense ........................... 10,605 8,441
-------------- ---------------
Income (loss) before income taxes .......... 4,284 (505)
Income tax expense (benefit) ............... 1,671 (247)
-------------- ---------------
Net income (loss) .......................... $ 2,613 $ (258)
============== ===============
Earnings per common share:
basic ..................................... $ 0.13
==============
Diluted ................................... $ 0.13
==============
Weighted average common shares outstanding:
basic ..................................... 20,152,381
==============
Diluted ................................... 20,803,576
==============
</TABLE>
See notes to unaudited condensed consolidated (combined) financial statements.
F-5
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
CONDENSED CONSOLIDATED (COMBINED) STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY COMPANY
CONSOLIDATED COMBINED
-------------- ---------------
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- ---------------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
net income (loss).......................................... $2,613 $(258)
Depreciation and amortization ............................. 7,490 7,790
Amortization of deferred debt issue costs ................. 502 --
Deferred income taxes ..................................... 1,671 --
Changes in operating assets and liabilities, net of
amounts acquired:
contracts in process ..................................... (21,349) (17,475)
Other current assets ..................................... (752) (481)
Other assets ............................................. (72) (765)
Accounts payable ......................................... 5,207 (207)
Accrued employment costs ................................. 2,285 (625)
Customer advances ........................................ (229) 1,146
Amounts in excess of costs incurred ...................... 3,363 (3,037)
Accrued interest ......................................... 6,104 --
Other current liabilities ................................ 134 (1,867)
Pension and postretirement benefits ...................... 2,956 --
Other liabilities ........................................ 1,159 (500)
-------------- ---------------
Net cash from (used in) operating activities .............. 11,082 (16,279)
-------------- ---------------
INVESTING ACTIVITIES:
acquisition of businesses, net of cash acquired .......... (151,428) --
Proceeds from sale of property ............................ 4,785 --
Capital expenditures ...................................... (2,273) (4,300)
Disposition of property, plant and equipment .............. 220 --
-------------- ---------------
Net cash (used in) investing activities ................... (148,696) (4,300)
-------------- ---------------
FINANCING ACTIVITIES:
borrowings under revolving credit facility................. 67,800 --
Proceeds from issuance of common stock .................... 2,958 --
Debt issuance costs ....................................... (560) --
Payment of debt ........................................... (1,000) --
Advances from lockheed martin ............................. -- 20,579
-------------- ---------------
Net cash from financing activities ........................ 69,198 20,579
-------------- ---------------
Net change in cash ........................................ (68,416) --
Cash and cash equivalents, beginning of the period ....... 77,474 --
-------------- ---------------
Cash and cash equivalents, end of the period............... $ 9,058 --
============== ===============
</TABLE>
See notes to unaudited condensed consolidated (combined) financial statements.
F-6
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
(COMBINED) FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated (combined) financial statements
include the assets, liabilities and results of operations of L-3
Communications Holdings, Inc., the successor company ("Holdings" and,
together with its subsidiaries, "L-3" or the "Company") following the change
in ownership (see Note 2) effective as of April 1, 1997. Prior to April 1,
1997, the statements comprise substantially all of the assets and certain
liabilities of (i) nine business units previously purchased by Lockheed
Martin Corporation ("Lockheed Martin") as part of its acquisition of Loral
Corporation ("Loral") in April 1996 and (ii) one business unit,
Communications Systems--East purchased by Lockheed Martin as part of its
acquisition of the aerospace business of GE in April 1993 (collectively, the
"Businesses" or the "Predecessor Company"). The combined financial statements
of the Predecessor Company reflect the Businesses' results of operations and
cash flows included in Lockheed Martin's historical financial statements.
Significant inter-company and inter-business transactions and balances have
been eliminated.
The accompanying unaudited condensed consolidated (combined) financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulations S-X of the Securities
and Exchange Commission ("SEC"); accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. All significant intercompany
balances and transactions have been eliminated. The combined statement of
operations for the three months ended March 31, 1997 has been derived from
the audited financial statements of the Predecessor Company for such period.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the results for the
interim periods presented have been included. The results of operations for
the interim periods are not necessarily indicative of results for the full
year. For further information, the interim financial statements should be
read in conjunction with the notes to these Unaudited Condensed Consolidated
Financial Statements as of March 31, 1998 and Company's Consolidated
(Combined) Financial Statements as of December 31, 1997 and notes thereto.
2. CHANGE IN OWNERSHIP TRANSACTION
L-3 Communications Corporation ("L-3 Communications") was formed on April
8, 1997, and is a wholly-owned subsidiary of Holdings. Holdings and L-3 were
formed by Mr. Frank C. Lanza, the former President and Chief Operating
Officer of Loral, Mr. Robert V. LaPenta, the former Senior Vice President and
Controller of Loral (collectively, the "Equity Executives"), Lehman Brothers
Capital Partners III, L.P. and its affiliates (the "Lehman Partnership") and
Lockheed Martin to acquire the Businesses. The Company was capitalized with
an equity contribution from Holdings of $125,000.
The Company has no assets or liabilities and conducts no operations other
than through its investment in its wholly-owned subsidiary, L-3
Communications Corporation.
On March 28, 1997, Lanza, LaPenta, the Lehman Partnership, Holdings, and
Lockheed Martin entered into a Transaction Agreement (the "L-3 Acquisition
Agreement") whereby Holdings would acquire the Businesses from Lockheed
Martin (the "L-3 Acquisition"). Pursuant to the L-3 Acquisition Agreement on
April 30, 1997 (closing date), Holdings acquired the Businesses from Lockheed
Martin for $525,000, comprised of $458,779 of cash after a $21,221 reduction
related to a purchase price adjustment, and $45,000 of common equity,
representing a 34.9% interest in Holdings retained by Lockheed Martin, plus
acquisition costs of $8,000. Also pursuant to the Transaction Agreement,
Lockheed Martin, on behalf and at the direction of Holdings, transferred the
Businesses to the Company. The Acquisition was financed with the debt
proceeds of $400,000 (see Note 5) and capital contributions of $125,000 from
Holdings, including the $45,000 retained by Lockheed Martin.
F-7
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
(COMBINED) FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
The Company and Lockheed Martin finalized the purchase price adjustment
pursuant to an amendment to the L-3 Acquisition Agreement dated November 5,
1997, which also included the assumption by the Company of Lockheed Martin's
rights and obligations under a contract for the production of mission
communication systems for track vehicles, for which the Company received a
cash payment of $12,176. The assets and liabilities recorded in connection
with the L-3 Acquisition purchase price allocation were $664,800 and
$164,400, respectively. The excess of the purchase price over the fair value
of net assets acquired of $303,200 was recorded as goodwill, and is being
amortized on a straight-line basis over a period of 40 years. As a result of
the 34.9% ownership interest retained by Lockheed Martin, the provisions of
EITF 88-16 were applied in connection with the purchase price allocation,
which resulted in recording net assets acquired at 34.9% of Lockheed Martin's
carrying values in the Businesses and 65.1% at fair value, and the
recognition of a deemed distribution of $9,000.
3. ACQUISITIONS
On March 30, 1998, the Company purchased the assets of the Ocean Systems
business ("Ocean Systems") of Allied Signal, Inc. for $67,500 of cash. On
March 4, 1998, the Company purchased the assets of ILEX Systems ("ILEX") for
$51,900 of cash, subject to adjustment based on closing net assets, and
additional consideration based on post-acquisition performance of ILEX. On
February 5, 1998, the Company purchased the assets of Satellite Transmission
Systems ("STS") of California Microwave, Inc. for $27,000 in cash, subject to
adjustment based upon closing net assets. On January 13, 1998, the Company
purchased all of the stock of Southern California Microwave, Inc. ("SCM") for
$4,600 subject to adjustment based on closing net assets, and additional
consideration based on post-acquisition performance of SCM.
The Company has financed the acquisitions using its cash on hand and
available borrowings under its Revolving Credit Facility. The Ocean Systems,
ILEX, STS and SCM acquisitions have been accounted for as purchase business
combinations and are included in the Company's results of operation from
their effective dates of March 31, 1998, February 1, 1998, February 1, 1998
and January 1, 1998, respectively.
The assets and liabilities recorded in connection with the purchase price
allocations for the acquisitions of Ocean Systems, ILEX, STS and SCM are
based upon preliminary estimates. Actual adjustments will be based on final
appraisals and other analyses of fair values which are in process and the
final purchase prices. Management does not expect that differences between
the preliminary and final allocations will have a material impact on the
Company's financial position or results of operations. The assets and
liabilities recorded in connection with the preliminary purchase price
allocations for the acquisitions of Ocean Systems, ILEX, STS and SCM were
$139,901 and $72,093, $58,349 and $4,238, $33,956 and $6,624, and $5,088 and
$251, respectively.
Had the L-3 Acquisition and the Ocean Systems, ILEX and STS acquisitions
occurred on January 1, 1997, the unaudited pro forma sales, net loss and loss
per share for the three months ended March 31, 1998 and 1997 would have been
$207,300, $(100) and $(0.00) and $189,200, $(7,300) and $(0.29),
respectively. The pro forma results are based on various assumptions and are
not necessarily indicative of what would have occurred had the acquisitions
been consummated on January 1, 1997.
F-8
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
(COMBINED) FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
4. CONTRACTS IN PROGRESS
Billings and accumulated costs and profits on long-term contracts,
principally with the U.S. Government, comprise the following:
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, 1998 1997
--------------- ----------------
<S> <C> <C>
Billed contract receivables..................... $ 43,583 $ 39,029
Unbilled contract receivables................... 42,914 33,136
Other billed receivables, principally
commercial and affiliates...................... 83,022 31,253
Inventoried costs............................... 138,190 82,954
--------------- ----------------
307,709 186,372
Less, unliquidated progress payments............ (20,125) (19,170)
--------------- ----------------
Net contracts in process........................ $287,584 $167,202
=============== ================
</TABLE>
5. DEBT
The Company's long-term debt consists of the following:
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
--------------- -----------------
<S> <C> <C>
Borrowings under Revolving Credit
Facility................................. $ 67,800 --
Term Loan Facilities...................... 171,000 $172,000
10 3/8% Senior Subordinated Notes due
2007..................................... 225,000 225,000
Industrial Development Bonds.............. 1,530 --
--------------- -----------------
Total debt............................... 465,330 397,000
Less current portion...................... 5,700 5,000
--------------- -----------------
Total long-term debt..................... $459,630 $392,000
=============== =================
</TABLE>
In connection with the L-3 Acquisition, the Company entered into a credit
facility (the "Senior Credit Facilities") with a syndicate of banks and
financial institutions for $275,000 consisting of $175,000 of term loans (the
"Term Loan Facilities") and a $100,000 revolving credit facility (the
"Revolving Credit Facility"). The Revolving Credit Facility expires in 2003
and is available for ongoing working capital and letter of credit needs.
Approximately $114,400 of the Revolving Credit is available at March 31, 1998
reflecting $67,800 of borrowings and letters of credit of $17,800 drawn
against the Revolving Credit Facility of $200,000. In February 1998, the
Senior Credit Facilities were amended to, among other things, increase the
Revolving Credit Facility to $200,000, waive certain excess cash flow
prepayments, as defined in the Senior Credit Facilities, otherwise required,
and permit the incurrence of up to an additional $150,000 of subordinated
debt.
The Senior Credit Facilities and the 1997 Notes agreement contain
financial and restrictive covenants that limit, among other things, the
ability of the Company to borrow additional funds, dispose of assets, or pay
cash dividends. At March 31, 1998, none of the Company's retained earnings
were available to pay dividends. The Senior Credit Facilities contain
financial covenants, which remain in effect so long as any amount is owed by
the Company thereunder. These financial covenants require that (i) the
Company's debt ratio, as defined, be less than or equal to 5.50 for the
quarter ended March 31, 1998, and that the maximum allowable debt ratio, as
defined therein, thereafter be further reduced to less than or equal to 3.1
for the quarters ending after June 30, 2002, and (ii) the Company's interest
coverage ratio, as defined therein, be at least 1.85 for the quarter ended
March 31, 1998, and thereafter increasing the interest coverage ratio, as
defined therein, to at least 3.10 for any fiscal quarters ended after June
30, 2002. At March 31, 1998, the Company was in compliance with these
covenants.
F-9
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
(COMBINED) FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
The aggregate principal payments for debt, excluding borrowings under the
Revolving Credit Facility, for the five years ending December 31, 1998
through 2002 are: $5,000, $11,000, $19,000, $25,000 and $33,200,
respectively.
In February 1998, Holdings filed a registration statement with the
Securities and Exchange Commission ("SEC") for the sale of 5.5 million shares
of Common Stock (the "Common Stock Offering"), and concurrently with the
Common Stock Offering, L-3 Communications filed a registration statement with
the SEC for the sale of $150,000 aggregate principal amount of Senior
Subordinated Notes due 2008 (the "Notes Offering").
6. STOCK OPTIONS
On March 2, 1998, Messrs. Lanza and LaPenta each exercised options to
purchase 228,571 shares of Class A Common Stock. The options were granted on
April 30, 1997 at an exercise price of $6.47. Accordingly, the Company
received aggregate proceeds of $2,958 for such exercise and issued 457,124
shares of Class A Common Stock.
7. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosures to the Condensed Consolidated (Combined)
Statement of Cash Flows are as follows:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
-------------- -------------------
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- -------------------
<S> <C> <C>
Cash paid for interest
expense .................... $3,495 --
Cash paid for income taxes . $ 18 --
</TABLE>
During the quarter ended March 31, 1998, the Company credited a current
income tax benefit of $451 directly to shareholders' equity related to the
tax benefit from the exercise of stock options.
8. ACCOUNTING POLICIES
On January 1, 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130
establishes standards for reporting and display of comprehensive income and
its components (revenues, expenses, gains and losses) in a full set of
general purpose financial statements. For the three months ended March 31,
1998 and 1997, there were no differences between net income and comprehensive
income.
9. CONTINGENCIES
Management is continually assessing the Company's obligations with respect
to applicable environmental protection laws. While it is difficult to
determine the timing and ultimate cost to be incurred by the Company in order
to comply with these laws, based upon available internal and external
assessments with respect to those environmental loss contingencies of which
management of the Company is aware, the Company believes that even without
considering potential insurance recoveries, if any, there are no
environmental loss contingencies that, individually or in the aggregate,
would be material to the Company's results of operations. The Company accrues
for these contingencies when it is probable that a liability has been
incurred and the amount of the loss can be reasonably estimated.
The Company is engaged in providing products and services under contracts
with the U.S. Government and to a lesser degree, under foreign government
contracts, some of which are funded by the U.S. Government. All such
contracts are subject to extensive legal and regulatory requirements, and,
F-10
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
(COMBINED) FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
periodically, agencies of the U.S. Government investigate whether such
contracts were and are being conducted in accordance with these requirements.
Under government procurement regulations, an indictment of the Company by a
federal grand jury could result in the Company being suspended for a period
of time from eligibility for awards of new government contracts. A conviction
could result in debarment from contracting with the federal government for a
specified term.
The Company is periodically subject to litigation, claims or assessments
and various contingent liabilities (including environmental matters)
incidental to its business. With respect to those investigative actions,
items of litigation, claims or assessments of which they are aware,
management of the Company believes that, after taking into account certain
provisions that have been made with respect to these matters, the ultimate
resolution of any such investigate actions, items of litigation, claims or
assessments would not have a material adverse effect on the financial
position or result of operations of the Company.
F-11
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
(AND THE PREDECESSOR COMPANY)
Consolidated (Combined) Financial Statements as of December 31, 1997 and
1996 and for the nine months ended December 31, 1997, the three months ended
March 31, 1997 and the years ended December 31, 1996 and 1995.
F-12
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of
L-3 Communications Holdings, Inc.
We have audited the accompanying (i) consolidated balance sheet of L-3
Communications Holdings, Inc. and subsidiaries (the "Company") as of December
31, 1997, and the related consolidated statements of operations, changes in
shareholders' equity, and cash flows for the nine months then ended, (ii) the
combined statements of operations and cash flows of the Predecessor Company,
as defined in Note 1 to the Company's financial statements, for the three
months ended March 31, 1997 and (iii) combined balance sheet of the
Predecessor Company as of December 31, 1996 and the related combined
statements of operations, changes in invested equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the 1996 financial
statements of the Lockheed Martin Communications Systems Division, which
statements reflect total assets and sales constituting 35 percent and 30
percent of the related combined totals. Those statements were audited by
other auditors whose report has been furnished to us, and our opinion,
insofar as it relates to the amounts included for the Lockheed Martin
Communications Systems Division for 1996, is based solely on the report of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the report
of the other auditors provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above (i) present
fairly in all material respects the consolidated financial position of the
Company and subsidiaries as of December 31, 1997 and their consolidated
results of operations and cash flows for the nine months then ended, and (ii)
based on our audit and the report of other auditors for 1996, present fairly
in all material respects the combined financial position of the Predecessor
Company as of December 31, 1996 and their combined results of operations and
cash flows for the year then ended and the three months ended March 31, 1997,
in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, New York 10019
February 2, 1998
F-13
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Lockheed Martin Corporation:
We have audited the combined balance sheet of Lockheed Martin
Communications Systems Division, as defined in Note 1 to the financial
statements, as of December 31, 1996, and the related combined statements of
operations, changes in shareholders' equity and invested equity, and cash
flows for the two years in the period ended December 31, 1996. These
financial statements are the responsibility of the Division's and Lockheed
Martin Corporation's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of
Lockheed Martin Communications Systems Division at December 31, 1996 (not
presented separately herein), and the combined results of its operations and
its cash flows for the year ended December 31, 1996 (not presented separately
herein), and the results of its operations and its cash flows for the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Washington, D.C.
March 7, 1997
F-14
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
CONSOLIDATED (COMBINED) BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
CONSOLIDATED COMBINED
----------------- -------------------
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- -------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ...................................... $ 77,474 --
Contracts in process ........................................... 167,202 $198,073
Net assets held for sale ....................................... 6,653 --
Deferred income taxes .......................................... 13,298 --
Other current assets ........................................... 2,750 3,661
----------------- -------------------
Total current assets ......................................... 267,377 201,734
----------------- -------------------
Property, plant and equipment ................................... 95,034 116,566
Less, accumulated depreciation and amortization ................ 12,025 24,983
----------------- -------------------
83,009 91,583
----------------- -------------------
Intangibles, primarily cost in excess of net assets acquired,
net of amortization ............................................ 297,503 282,674
Deferred income taxes ........................................... 24,217 --
Other assets .................................................... 31,298 17,307
----------------- -------------------
Total assets.................................................. $703,404 $593,298
================= ===================
LIABILITIES AND SHAREHOLDERS' (INVESTED) EQUITY
Current liabilities:
Current portion of long-term debt .............................. $ 5,000 --
Accounts payable, trade ........................................ 33,052 $ 35,069
Accrued employment costs ....................................... 31,162 27,313
Customer advances .............................................. 15,989 3,381
Amounts in excess of costs incurred ............................ 18,469 10,918
Accrued interest ............................................... 4,419 --
Other current liabilities ...................................... 27,476 26,207
----------------- -------------------
Total current liabilities .................................... 135,567 102,888
----------------- -------------------
Pension and postretirement benefits ............................. 38,113 --
Other liabilities ............................................... 5,009 16,801
Long-term debt .................................................. 392,000 --
Commitments and contingencies
Common stock subject to repurchase agreement, $.01 par value,
authorized 3,000,000 shares, issued and outstanding 2,944,000
shares ......................................................... 14,638
Shareholders' equity
Class A Common Stock, $.01 par value; authorized
25,000,000 shares, issued and outstanding 17,056,000 shares .. 171 --
Additional paid-in capital ..................................... 110,191 --
Retained earnings .............................................. 16,715 --
Deemed distribution ............................................ (9,000) --
----------------- -------------------
Total shareholders' and invested equity ......................... 118,077 473,609
----------------- -------------------
Total liabilities and shareholders' and invested equity ..... $703,404 $593,298
================= ===================
</TABLE>
See notes to consolidated (combined) financial statements.
F-15
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
CONSOLIDATED (COMBINED) STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
CONSOLIDATED COMBINED
---------------- -------------------------------------
THREE
NINE MONTHS MONTHS
ENDED ENDED YEAR ENDED DECEMBER 31,
DECEMBER 31, MARCH 31, -----------------------
1997 1997 1996 1995
----------------- -------------- ---------- ----------
<S> <C> <C> <C> <C>
Sales ............................. $ 546,525 $158,873 $543,081 $166,781
Costs and expenses ................ 490,669 150,937 499,390 162,132
----------------- -------------- ---------- ----------
Operating income .................. 55,856 7,936 43,691 4,649
Interest income ................... 1,430 -- -- --
Interest expense .................. 29,884 8,441 24,197 4,475
----------------- -------------- ---------- ----------
Income (loss) before income taxes 27,402 (505) 19,494 174
income tax expense (benefit) ..... 10,687 (247) 7,798 1,186
----------------- -------------- ---------- ----------
Net income (loss) ................. $ 16,715 $ (258) $ 11,696 $ (1,012)
================= ============== ========== ==========
Basic earnings per share of
common stock ..................... $ 0.84
=================
Diluted earnings per share of
common stock ..................... $ 0.84
=================
Weighted average common shares
outstanding:
Basic............................. 20,000,000
=================
Diluted........................... 20,011,611
=================
</TABLE>
See notes to consolidated (combined) financial statements.
F-16
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
CONSOLIDATED (COMBINED) STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY AND INVESTED EQUITY
FOR THE NINE MONTHS ENDED DECEMBER 31, 1997, THREE MONTHS ENDED
MARCH 31, 1997 AND YEARS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY COMPANY
COMBINED CONSOLIDATED
------------- -----------------------------------------------------------------------
COMMON STOCK
----------------------- ADDITIONAL
INVESTED SHARES PAID-IN RETAINED EQUITY
EQUITY ISSUED PAR VALUE CAPITAL EARNINGS ADJUSTMENT TOTAL
------------- -------- ------------ ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance January 1, 1995 .. $199,506
Repayments to Lockheed
Martin.................. (3,831)
Net loss................. (1,012)
-------------
Balance December 31,
1995..................... 194,663
Advances from Lockheed
Martin.................. 267,250
Net income............... 11,696
-------------
Balance December 31,
1996..................... 473,609
Advances from Lockheed
Martin.................. 20,579
Net loss................. (258)
-------------
Balance March 31, 1997 ... $493,930 -- -- -- -- -- --
============= ======== =========== ============ ========== ============ ==========
Shares Issued............ 17,056 $171 $110,191 $110,362
Deemed distribution ..... $(9,000) (9,000)
Net Income............... $16,715 16,715
-------- ----------- ------------ ---------- ------------ ----------
Balance December 31,
1997..................... 17,056 $171 $110,191 $16,715 $(9,000) $118,077
======== =========== ============ ========== ============ ==========
</TABLE>
See notes to consolidated (combined) financial statements.
F-17
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
CONSOLIDATED (COMBINED) STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
CONSOLIDATED COMBINED
---------------- -------------------------------------
THREE
NINE MONTHS MONTHS
ENDED ENDED YEAR ENDED DECEMBER 31,
DECEMBER 31, MARCH 31, -----------------------
1997 1997 1996 1995
----------------- -------------- ---------- ----------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) ........................... $ 16,715 $ (258) $ 11,696 $(1,012)
Depreciation and amortization ............... 22,190 7,786 28,139 11,578
Amortization of deferred debt issue costs .. 1,517 -- -- --
Deferred income taxes ....................... 9,991 -- -- --
Changes in operating assets and liabilities,
net of amounts acquired
Contracts in process ....................... 18,161 (17,475) 23,543 (3,267)
Other current assets ....................... (275) (481) 3,049 788
Other assets ............................... 2,141 (761) (8,346) 1,245
Accounts payable ........................... (6,146) (207) 4,104 (648)
Accrued employment costs ................... 6,363 (625) 2,282 (611)
Customer advances .......................... (611) 1,146 (5,541) --
Amounts in excess of costs incurred ....... 1,156 (3,037) (6,045) (2,041)
Accrued interest ........................... 4,419 -- -- --
Other current liabilities .................. (7,132) (1,867) 3,180 4,004
Pension and postretirement benefits ....... 4,284 -- -- --
Other liabilities .......................... 1,087 (500) (25,327) (699)
----------------- -------------- ----------- ----------
Net cash from (used in) operating activities 73,860 (16,279) 30,734 9,337
----------------- -------------- ----------- ----------
INVESTING ACTIVITIES:
Acquisition of business ..................... (466,317) -- (287,803) --
Proceeds from assumption of contract
obligation ................................. 12,176 -- -- --
Net cash from assets held for sale .......... 3,179 -- -- --
Proceeds from sale of property .............. 9,458 -- -- --
Purchases of investments .................... (5,113) -- -- --
Capital expenditures ........................ (11,934) (4,300) (13,528) (5,532)
Disposition of property, plant and equipment 771 -- 3,347 26
----------------- -------------- ----------- ----------
net cash (used in) investing activities .... (457,780) (4,300) (297,984) (5,506)
----------------- -------------- ----------- ----------
FINANCING ACTIVITIES:
Borrowings under senior credit facility .... 175,000 -- -- --
Proceeds from sale of 10 3/8% senior
subordinated notes ......................... 225,000 -- -- --
Proceeds from issuance of common stock ..... 80,000 -- -- --
Debt issuance costs ......................... (15,606) -- -- --
Payment of debt ............................. (3,000) -- -- --
Advances from (repayments to) lockheed
martin ..................................... -- 20,579 267,250 (3,831)
----------------- -------------- ----------- ----------
Net cash from (used in) financing
activities.................................. 461,394 20,579 267,250 (3,831)
----------------- -------------- ----------- ----------
Net change in cash .......................... 77,474 -- -- --
Cash and cash equivalents, beginning of the
period...................................... -- -- -- --
----------------- -------------- ----------- ----------
Cash and cash equivalents, end of the period $ 77,474 -- -- --
================= ============== =========== ==========
</TABLE>
See notes to consolidated (combined) financial statements.
F-18
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS
(In thousands, except share and per share data)
1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
The accompanying consolidated financial statements include the assets,
liabilities and results of operations of L-3 Communications Holdings, Inc.,
successor company, ("L-3" or the "Company") following the change in ownership
(see Note 2) effective as of April 1, 1997 and for the period from April 1,
1997 to December 31, 1997. Prior to April 1, 1997, the statements comprise
substantially all of the assets and liabilities and results of operations of
(i) nine business units previously purchased by Lockheed Martin Corporation
("Lockheed Martin") as part of its acquisition of Loral Corporation ("Loral")
in April 1996 (the "Loral Acquired Businesses"), and (ii) one business unit,
Communications Systems -- East purchased by Lockheed Martin as part of its
acquisition of the aerospace business of GE in April 1993 (collectively, the
"Businesses" or the "Predecessor Company"). The combined financial statements
of the Predecessor Company reflect the Businesses' assets, liabilities and
results of operations included in Lockheed Martin's historical financial
statements. Intercompany accounts between Lockheed Martin and the Businesses
have been included in Invested Equity. The assets and operations of the
semiconductor product line and certain other facilities which are not
material have been excluded from the combined financial statements.
Significant intercompany and inter-business transactions and balances have
been eliminated.
The Company is a supplier of sophisticated secure communication systems
and specialized communication products including secure, high data rate
communication systems, microwave components, avionics, recorders, telemetry
and space products. The Company's customers include the Department of Defense
(the "DoD"), selected U.S. government intelligence agencies, major
aerospace/defense prime contractors and commercial customers. The Company
operates primarily in one industry segment, electronic components and
systems.
Substantially all the Company's products are sold to agencies of the U.S.
Government, primarily the Department of Defense, to foreign government
agencies or to prime contractors or subcontractors thereof. All domestic
government contracts and subcontracts of the Businesses are subject to audit
and various cost controls, and include standard provisions for termination
for the convenience of the U.S. Government. Multi-year U.S. Government
contracts and related orders are subject to cancellation if funds for
contract performance for any subsequent year become unavailable. Foreign
government contracts generally include comparable provisions relating to
termination for the convenience of the government.
2. CHANGE IN OWNERSHIP TRANSACTION
L-3 was formed by Mr. Frank C. Lanza, the former President and Chief
Operating Officer of Loral, Mr. Robert V. LaPenta, the former Senior Vice
President and Controller of Loral (collectively, the "Equity Executives"),
Lehman Brothers Capital Partners III, L.P. and its affiliates (the "Lehman
Partnership") and Lockheed Martin to acquire the Businesses. The Equity
Executives, the Lehman Partnership and Lockheed Martin own 14.9%, 50.1% and
34.0% of the Company, respectively.
The Company has no assets or liabilities and conducts no operations other
than through its investment in its wholly-owned subsidiary, L-3 Communication
Corporation.
On March 28, 1997, Lanza, LaPenta, the Lehman Partnership, L-3, and
Lockheed Martin entered into a Transaction Agreement (the "L-3 Acquisition
Agreement") whereby Holdings would acquire the Businesses from Lockheed
Martin (the "L-3 Acquisition"). Also included in the acquisition is a
semiconductor product line of another business and certain leasehold
improvements in New York City which were not material. Pursuant to the L-3
Acquisition Agreement, L-3 acquired the Businesses from Lockheed Martin for
$525,000, comprising $458,779 of cash, after a $21,221 reduction related to a
purchase price adjustment, and $45,000 of common equity, representing a 34.9%
interest in Holdings retained by Lockheed Martin, plus acquisition costs of
$8,000.
F-19
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
The Company and Lockheed Martin finalized the purchase price adjustment
pursuant to an amendment to the L-3 Acquisition Agreement dated November 5,
1997, which also included the assumption by the Company of Lockheed Martin's
rights and obligations under a contract for the U.S. Army's Command and
Control Vehicle ("C(2)V") Mission Module Systems ("MMS"), for the production
of mission communication systems for track vehicles, for which the Company
received a cash payment of $12,176.
In connection with the L-3 Acquisition Agreement, the Company anticipated
entering into a transition services agreement with Lockheed Martin pursuant
to which Lockheed Martin would provide to L-3 and its subsidiaries (and L-3
would provide to Lockheed Martin) certain corporate services of a type
previously provided at costs consistent with past practices until December
31, 1997 (or, in the case of Communications Systems -- East (formerly known
as Communications Systems -- Camden), for a period of up to 18 months after
the Closing). Lockheed Martin is providing L-3 the services contemplated by
the proposed transaction services agreement in the absence of any executed
agreement. The parties also entered into supply agreements which reflect
previously existing inter-company work transfer agreements or similar support
arrangements upon prices and other terms consistent with previously existing
arrangements. Holdings, the Company and Lockheed Martin have entered into
certain subleases of real property and cross-licenses of intellectual
property.
Pursuant to the L-3 Acquisition Agreement the Company also assumed certain
obligations relating to environmental liabilities and benefit plans.
In accordance with Accounting Principles Board Opinion No. 16, the
acquisition of the Businesses by Holdings and L-3 has been accounted for as a
purchase business combination effective as of April 1, 1997. The purchase
cost (including the fees and expenses related thereto) was allocated to the
tangible and intangible assets and liabilities of the Company based upon
their respective fair values. The assets and liabilities recorded in
connection with the purchase price allocation were $664,800 and $164,400,
respectively. The excess of the purchase price over the fair value of net
assets acquired of $303,200 was recorded as goodwill, and is being amortized
on a straight-line basis over a period of 40 years. As a result of the 34.9%
ownership interest retained by Lockheed Martin, the provisions of Emerging
Issues Task Force Issue Number 88-16 were applied in connection with the
purchase price allocation, which resulted in the recognition of a deemed
distribution of $9,000.
In connection with the determination of the fair value of assets acquired
and pursuant to the provisions of Accounting Principles Board Opinion No. 16,
the Company has valued acquired contracts in process at contract price, less
the estimated cost to complete and an allowance for the Company's normal
profit on its effort to complete such contracts.
Had the L-3 Acquisition occurred on January 1, 1996, the unaudited pro
forma sales, net income, basic earnings per common share and diluted earnings
per common share for the years ended December 31, 1997 and 1996 would have
been $703,600 and $16,300, $0.82 and $0.81, and $663,200 and $9,700, $0.49
and $0.48, respectively. The pro forma results, which are based on various
assumptions, are not necessarily indicative of what would have occurred had
the acquisition been consummated on January 1, 1996. The 1997 and 1996 pro
forma sales, net income and earnings per common share data have been adjusted
to (a) include the operations of the Loral Acquired Businesses from January
1, 1996 (Note 3) and (b) exclude the operations of the Hycor business net
assets held for sale from January 1, 1996 (Note 6).
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS: Cash equivalents consist of highly liquid
investments with a maturity of three months or less at time of purchase.
F-20
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
STATEMENTS OF CASH FLOWS: Changes in operating assets and liabilities are
net of the impact of acquisitions and final purchase price allocations. The
Predecessor Company participated in Lockheed Martin's cash management system,
under which all cash was received and payments were made by Lockheed Martin.
All transactions between the Predecessor Company and Lockheed Martin have
been accounted for as settled in cash at the time the transactions were
recorded by the Predecessor Company.
REVENUE RECOGNITION: Sales on production-type contracts are recorded as
units are shipped; profits applicable to such shipments are recorded pro
rata, based upon estimated total profit at completion of the contract. Sales
and profits on cost reimbursable contracts are recognized as costs are
incurred. Sales and estimated profits under other long-term contracts are
recognized under the percentage of completion method of accounting using the
cost-to-cost method. Amounts representing contract change orders or claims
are included in sales only when they can be reliably estimated and their
realization is probable.
Losses on contracts are recognized when determined. Revisions in profit
estimates are reflected in the period, on a cumulative catch-up basis, in
which the facts, requiring the revision, become known.
CONTRACTS IN PROCESS: Costs accumulated on contracts in process include
direct costs, as well as manufacturing overhead, and for government
contracts, general and administrative costs, independent research and
development costs and bid and proposal costs. In accordance with industry
practice, contracts in process contain amounts relating to contracts and
programs with long performance cycles, a portion of which may not be realized
within one year.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated
at cost. Depreciation is provided primarily on the straight-line method over
the estimated useful lives of the related assets. Leasehold improvements are
amortized over the shorter of the lease term or the estimated useful life of
the improvements.
COST IN EXCESS OF NET ASSETS ACQUIRED: The excess of the cost of the L-3
Acquisition over the fair value of the net assets acquired is being amortized
using a straight-line method over a 40 year period. Accumulated amortization
of the Company amounted to $5,741 at December 31, 1997.
The carrying amount of cost in excess of net assets acquired is evaluated
on a recurring basis. Current and future profitability as well as current and
future undiscounted cash flows, excluding financing costs, of the acquired
businesses are primary indicators of recoverability. For the nine months
ended December 31, 1997, there was no reduction to the carrying amount of the
cost in excess of net assets acquired resulting from these evaluations.
PREDECESSOR COMPANY INTANGIBLES: Intangibles, primarily the excess of the
cost of Businesses over the fair value of the net assets acquired, was
amortized using a straight-line method primarily over a 40-year period. Other
intangibles were amortized over their estimated useful lives which range from
11 to 15 years. Amortization expense of the Businesses was $2,655 for the
three months ended March 31, 1997; $10,115 and $6,086 for the years ended
December 31, 1996 and 1995, respectively. Accumulated amortization was
$26,524 at December 31, 1996.
Intangibles of the Predecessor Company include costs allocated to the
Businesses relating to the Request for Funding Authorization ("RFA"),
consisting of over 20 restructuring projects to reduce operating costs,
initiated by General Electric ("GE") Aerospace in 1990 and to the REC Advance
Agreement ("RAA"), a restructuring plan initiated after Lockheed Martin's
acquisition of GE Aerospace. The RAA was initiated to close two regional
electronic manufacturing centers. Restructure costs are reimbursable from the
U.S. Government if savings can be demonstrated to exceed costs. The total
cost of restructuring under the RFA and the RAA represented approximately 15%
of the estimated savings to the U.S. Government and, therefore, a deferred
asset has been recorded by Lockheed Martin. The deferred asset is being
allocated to all the former GE Aerospace sites, including the Communications
F-21
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
Systems Division, on a basis that includes manufacturing labor, overhead, and
direct material less non-hardware subcontracts. At December 31, 1997 and
1996, approximately $2,313 and $4,400, respectively, of unamortized RFA and
RAA costs are deferred on the Company's and the Predecessor Company's
consolidated (combined) balance sheets in other current assets and other
assets.
The carrying values of the Predecessor Company intangibles were reviewed
if the facts and circumstances indicated potential impairment of their
carrying value. If this review indicated that intangible assets were not
recoverable, as determined based on the undiscounted cash flows of the entity
acquired over the remaining amortization period, the Businesses carrying
values related to the intangible assets were reduced by the estimated
shortfall of cash flows.
INCOME TAXES: The Company provides for income taxes using the liability
method prescribed by the Financial Accounting Standards Board ("FASB")
Statement No. 109, "Accounting for Income Taxes." Under the liability method,
deferred income tax assets and liabilities reflect tax carryforwards and the
net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting and income tax purposes, as
determined under enacted tax laws and rates. The financial effect of changes
in tax laws or rates is accounted for in the period of enactment.
PREDECESSOR COMPANY INCOME TAXES: The Predecessor Company was included in
the consolidated Federal income tax return and certain combined and separate
state and local income tax returns of Lockheed Martin. However, for purposes
of these financial statements, the provision for income taxes has been
allocated to the Predecessor Company based upon reported combined income
before income taxes. Income taxes, current and deferred, are considered to
have been paid or charged to Lockheed Martin and are recorded through the
invested equity account with Lockheed Martin. The principal components of the
deferred taxes are contract accounting methods, property, plant and
equipment, goodwill amortization and timing of accruals.
RESEARCH AND DEVELOPMENT: Research and development costs sponsored by the
Company and the Predecessor Company include research and development, bid and
proposal costs related to government products and services. These costs
generally are allocated among all contracts and programs in progress under
U.S. Government contractual arrangements. Customer-sponsored research and
development costs incurred pursuant to contracts are accounted for as direct
contract costs.
STOCK OPTIONS: In accordance with Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations, compensation expense for stock options is recognized in
income based on the excess, if any, of the Company's fair value of the stock
at the grant date of the award or other measurement date over the amount an
employee must pay to acquire the stock. The exercise price for stock options
granted to employees equals or exceeds the fair value of the Company's common
stock at the date of grant, thereby resulting in no recognition of
compensation expense by the Company. The Company has adopted the disclosure
- -only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation"
("SFAS 123").
DERIVATIVE FINANCIAL INSTRUMENTS: In the normal course of financing
operations, the Company enters into interest rate cap and floor transactions
for interest rate protection purposes, and not for speculative or trading
purposes. Cash payments to and from the Company and the counterparties are
recorded as a component of interest expense. The initial cost of these
arrangements are deferred and amortized as interest expense.
USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses
during the reporting period. The
F-22
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
most significant of these estimates and assumptions relate to contract
estimates of sales and costs, allocations from Lockheed Martin,
recoverability of recorded amounts of fixed assets and cost in excess of net
assets acquired, litigation and environmental obligations. Actual results
could differ from these estimates.
EARNINGS PER SHARE: In accordance with SFAS No. 128, "Earnings per Share",
basic earnings per share is computed by dividing net income attributable to
common stockholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share ("diluted EPS") is
computed by dividing net income attributable to common stockholders adjusted
for any other changes to net income that would result from the assumed
issuance of the dilutive potential common shares by the weighted-average
number of common shares outstanding adjusted to include the number of
additional common shares that would have been outstanding if the dilutive
potential common shares had been issued.
ACCOUNTING PRONOUNCEMENTS: In June 1997, the FASB issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information." SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components (revenues, expenses, gains
and losses) in full set general purpose financial statements. SFAS No. 131
establishes accounting standards for the way that public business enterprises
report selected information about operating segments and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. In February 1998, the FASB issued
SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits". SFAS No. 132 revises employers' disclosures about pension and
other postretirement benefits plans. It does not change the measurement or
recognition of those plans. It standardizes the disclosure requirements for
pensions and other postretirement benefits to the extent practicable,
requires additional information on changes in the benefit obligations and
fair values of plan assets that will facilitate financial analysis, and
eliminates certain disclosures that are no longer as useful as they were when
SFAS No. 87 "Employers' Accounting for Pensions", SFAS No. 88 "Employers'
Accounting for Settlements and Curtailments of Defined Benefit Pension Plans
and for Termination Benefits", and SFAS No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions", were issued. SFAS No. 132
suggests combined formats for presentation of pension and other
postretirement benefit disclosures. SFAS No. 130, SFAS No. 131 and SFAS No.
132 are required to be adopted by 1998. The Company is currently evaluating
the impact, if any, of SFAS No. 130, SFAS No. 131 and SFAS No. 132.
Effective January 1, 1996, the Businesses adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets To
Be Disposed Of" ("SFAS 121"). SFAS 121 establishes the accounting standards
for the impairment of long-lived assets, certain intangible assets and cost
in excess of net assets acquired to be held and used for long-lived assets
and certain intangible assets to be disposed of. The impact of adopting SFAS
121 was not material.
Effective in December 1997 the Company adopted the provisions of SFAS No.
128, "Earnings Per Share" ("SFAS 128") and No. 129, "Disclosure of
Information About Capital Structure" ("SFAS 129").
RECLASSIFICATIONS: Certain reclassifications have been made to conform
prior-year amounts to the current-year presentation.
4. PREDECESSOR COMPANY ACQUISITION
Effective April 1, 1996, Lockheed Martin acquired substantially all the
assets and liabilities of the defense businesses of Loral, including the
Wideband Systems Division and the Products Group which are included in the
Businesses. The acquisition of the Wideband Systems Division and Products
Group businesses (the "Loral Acquired Businesses") has been accounted for as
a purchase by Lockheed Martin
F-23
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
Communications Systems -- Camden Division ("Division"). The acquisition has
been reflected in the financial statements based on the purchase price
allocated to those acquired businesses by Lockheed Martin. The assets and
liabilities recorded in connection with the purchase price allocation were
$401,000 and $113,200, respectively. As such, the accompanying combined
financial statements for periods prior to April 1, 1997 reflect the results
of operations of the Division and the Loral Acquired Businesses from the
effective date of acquisition including the effects of an allocated portion
of cost in excess of net assets acquired resulting from the acquisition.
5. CONTRACTS IN PROCESS
Billings and accumulated costs and profits on long-term contracts,
principally with the U.S. Government, comprise the following:
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY COMPANY
---------- -------------
DECEMBER 31,
-------------------------
1997 1996
---------- -------------
<S> <C> <C>
Billed contract receivables..................................... $ 39,029 $ 45,212
Unbilled contract receivables .................................. 33,136 84,814
Other billed receivables, principally commercial and affiliates 31,253 41,154
Inventoried costs .............................................. 82,954 72,880
---------- -------------
186,372 244,060
Less, unliquidated progress payments (19,170) (45,987)
---------- -------------
Net contracts in process........................................ $167,202 $198,073
========== =============
</TABLE>
The U.S. Government has title to or a secured interest in, inventory to
which progress payments are applied. Unbilled contract receivables represent
accumulated costs and profits earned but not yet billed to customers. The
Company believes that substantially all such amounts will be billed and
collected within one year.
The following data has been used in the determination of costs and
expenses:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
-------------- --------------------------------
NINE THREE
MONTHS MONTHS FOR THE YEAR ENDED
ENDED ENDED DECEMBER 31,
DECEMBER 31, MARCH 31, --------------------
1997 1997 1996 1995
-------------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Selling, general and administrative ("SG&A") costs
included in inventoried costs...................... $15,379 $14,536 $14,700 $1,156
Selling, general and administrative costs incurred . 88,527 28,449 82,226 6,525
Independent research and development, including bid
and proposal costs, included in SG&A incurred ..... $28,893 $12,024 $36,500 $9,800
</TABLE>
6. NET ASSETS HELD FOR SALE
The Company has accounted for the allocation of purchase price and the net
assets of its Hycor business in accordance with the FASB's Emerging Issues
Task Force Issue 87-11 "Allocation of Purchase Price to Assets to be Sold"
("EITF 87-11"). Accordingly, the net assets related to the Hycor business as
of April 1, 1997 are included in the accompanying consolidated balance sheet
as "Net assets held for sale". The fair value assigned to such net assets is
based upon management's estimate of the proceeds from the sale of the Hycor
business less the estimated income from operations for such business during
the holding period of April 1, 1997 through January 29, 1998 (the "holding
period"), plus interest expense on debt
F-24
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
allocated to such net assets during the holding period. On January 29, 1998,
the Company sold the Hycor business, excluding land and buildings for $3,500
in cash subject to adjustment based on final closing net assets. In
accordance with EITF 87-11, loss from the operations of the Hycor business of
$108 and interest expense of $552 on the debt allocated to the Hycor net
assets have been excluded from the Company's consolidated statements of
operations for the nine months ended December 31, 1997. Management of the
Company expects that any gain or loss realized on the ultimate disposition of
the Hycor business will not have a material impact on the original purchase
price allocation.
Also included in net assets held for sale at December 31, 1997 is a
Company property located in Atlanta, Georgia.
7. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
PREDECESSOR
COMPANY COMPANY
---------- -------------
DECEMBER 31,
-------------------------
1997 1996
---------- -------------
<S> <C> <C>
Land.......................................... $ 6,670 $ 9,200
Buildings and improvements ................... 19,487 27,000
Machinery, equipment, furniture and fixtures 58,978 73,137
Leasehold improvements ....................... 9,899 7,229
---------- -------------
$95,034 $116,566
========== =============
</TABLE>
Depreciation and amortization expense attributable to property, plant and
equipment was $13,320 for the nine months ended December 31, 1997; $4,529 for
the three months ended March 31, 1997, and $14,924 and $5,492 for the years
ended December 31, 1996 and 1995, respectively.
8. DEBT
Long-term debt consists of:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------
<S> <C>
Term loans............................. $172,000
10 3/8 Senior Subordinated Notes due
2007 ................................. 225,000
-----------------
$397,000
Less current portion of term loans ... 5,000
-----------------
Total long-term debt.................. $392,000
=================
</TABLE>
In connection with the L-3 Acquisition, the Company entered into a credit
facility (the "Senior Credit Facilities") with a syndicate of banks and
financial institutions for $275,000 consisting of $175,000 of term loans (the
"Term Loan Facilities") and a $100,000 revolving credit facility (the
"Revolving Credit Facility"). The Senior Credit Facilities bear interest, at
the option of the Company, at rates related to (i) the higher of federal
funds rate plus 0.50% per annum or the reference rate published by Bank of
America NT&SA or (ii) LIBOR. At December 31, 1997, such interest rates, based
on various maturities, ranged from 7.625% to 8.625%. Interest payments vary
in accordance with the type of borrowing and are made at a minimum every
three months. The Revolving Credit Facility expires in 2003 and is available
for ongoing working capital and letter of credit needs. The Term Loans mature
in installments until the final maturity date in 2006. Approximately $93,428
of the Revolving Credit Facility is available at December 31, 1997 reflecting
letters of credit of $6,572 drawn against the Revolving Credit Facility of
$100,000. In February 1998, the Senior Credit Facilities were amended to,
among other things, increase
F-25
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
the Revolving Credit Facility to $200,000, waive certain excess cash flow
prepayments, as defined, otherwise required, and permit the incurrence of up
to an additional $150,000 of subordinated debt. The Company pays a commitment
fee of 0.375% per annum on the unused portion of the Revolving Credit
Facility.
In April 1997, the Company issued $225,000 of 10 3/8% senior subordinated
notes (the "1997 Notes") due May 1, 2007 with interest payable semi-annually
on May 1 and November 1 of each year, commencing November 1, 1997. On
November 5, 1997, the Company completed its exchange offer relating to the
1997 Notes and the holders of the 1997 Notes received registered securities.
The 1997 Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after May 1, 2002, at various redemption prices plus
accrued and unpaid interest to the applicable redemption date. In addition,
prior to May 1, 2000, the Company may redeem up to 35% of the aggregate
principal amount of 1997 Notes at a redemption price of 109.375% of the
principal amount thereof, plus accrued and unpaid interest to the redemption
date with the net cash proceeds of one or more equity offerings by Holdings
that are contributed to the Company as common equity capital.
The Senior Credit Facilities and the 1997 Notes agreement contain
financial and restrictive covenants that limit, among other things, the
ability of the Company to borrow additional funds, dispose of assets, or pay
cash dividends. At December 31, 1997, none of the Company's retained earnings
were available to pay dividends. The Senior Credit Facilities contain
financial covenants, which remain in effect so long as any amount is owed by
the Company thereunder. These financial covenants require that (i) the
Company's debt ratio, as defined, be less than or equal to 5.50 for the
quarter ended December 31, 1997, and that the maximum allowable debt ratio,
as defined, thereafter be further reduced to less than or equal to 3.1 for
the quarters ending after June 30, 2002, and (ii) the Company's interest
coverage ratio, as defined, be at least 1.85 for the quarter ended December
31, 1997, and thereafter increasing the interest coverage ratio, as defined,
to at least 3.10 for any fiscal quarters ended after June 30, 2002. At
December 31, 1997, the Company was in compliance with these covenants.
In connection with the Senior Credit Facilities, the Company has granted
the lenders a first priority lien on substantially all of the Company's
assets, including the stock of L-3 Communications Corporation.
The aggregate principal payments for debt, excluding borrowings under the
Revolving Credit Facility, for the five years ending December 31, 1998
through 2002 are: $5,000, $11,000, $19,000, $25,000 and $33,200,
respectively.
The costs related to the issuance of debt have been deferred and are being
amortized as interest expense over the term of the related debt using a
method that approximates the effective interest method.
9. PREDECESSOR COMPANY'S INTEREST EXPENSE
Interest expense has been allocated to the Predecessor Company by applying
Lockheed Martin's weighted average consolidated interest rate to the portion
of the beginning of the period invested equity account deemed to be financed
by consolidated debt, which has been determined based on Lockheed Martin's
debt to equity ratio on such date, except that the acquisition of the Loral
Acquired Businesses has been assumed to be fully financed by debt. Management
of the Businesses believes that this allocation methodology is reasonable.
F-26
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
Interest expense of the Predecessor Company was calculated using the
following balances and interest rates:
<TABLE>
<CAPTION>
THREE MONTHS YEARS ENDED DECEMBER 31,
ENDED -------------------------
MARCH 31, 1997 1996 1995
-------------- ---------- ----------
<S> <C> <C> <C>
Invested Equity $473,609 $482,466 $199,506
Interest Rate .. 7.10% 7.20% 7.40%
</TABLE>
10. FINANCIAL INSTRUMENTS
The Company's financial instruments consist primarily of cash and cash
equivalents, billed contract receivables, other billed receivables
(principally commercial and affiliates), trade accounts payable, customer
advances, debt instruments, and interest rate cap and interest rate floor
contracts. The book values of cash and cash equivalents, billed contract
receivables, other billed receivables (principally commercial and
affiliates), trade accounts payable and customer advances are considered to
be representative of their respective fair values at December 31, 1997 due to
the short-term maturities or expected settlement dates of these instruments.
The Company's debt instruments consist of term loans and 1997 Notes (Note
8). The carrying values of the term loans approximate fair value because they
are variable-rate loans which bear interest at current market rates.
The 1997 Notes are registered, unlisted public debt which is traded in the
over-the-counter market. The fair value of such debt at December 31, 1997 was
estimated to be approximately $243,000, based on trading activity on December
31, 1997.
To mitigate risks associated with changing interest rates on certain of
its debt, the Company entered into the interest rate agreements. The fair
values of the interest rate caps and interest rate floors (collectively, the
"interest rate agreements") were estimated by discounting expected cash flows
using quoted market interest rates. The Company manages exposure to
counterparty credit risk by entering into the interest rate agreements only
with major financial institutions that are expected to fully perform under
the terms of such agreements. The notional amounts are used to measure the
volume of these agreements and do not represent exposure to credit loss. The
impact of the interest rate agreements was not material to interest expense
for the nine months ended December 31, 1997. Information with respect to the
interest rate agreements is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------
NOTIONAL UNREALIZED
AMOUNT GAINS (LOSSES)
---------- --------------
<S> <C> <C>
Interest rate caps . $100,000 $(1,008)
---------- --------------
Interest rate
floors.............. $ 50,000 $ (263)
---------- --------------
</TABLE>
At December 31, 1996, the Predecessor Company's financial instruments
consisted primarily of billed contract receivables, other billed receivables
(principally commercial and affiliates), trade accounts payable and customer
advances. The book value of billed contract receivables, other billed
receivables (principally commercial and affiliates), trade accounts payable
and customer advances approximated their respective fair values at December
31, 1996, due to the short-term maturities or expected settlement dates of
those instruments.
11. COMMON STOCK
The Company's Class A Common Stock possesses full voting rights and Class
B Common Stock and Class C Common Stock possess no voting rights except as
otherwise required by law. However, pursuant
F-27
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
to shareholders agreements, the holders of Classes B and C Common Stock have
the right to designate themselves as members of the Board of Directors as
long as they are employees of the Company or any of its subsidiaries. Each
share of Class B Common Stock will convert, at the option of the Company,
into a share of Class A common stock immediately prior to an initial public
offering of equity securities of the Company or upon the occurrence of
certain other events but not later than April, 2006, and will convert into
Class C common stock upon certain other events. Holders of Class B Common
Stock are entitled to share with the holders of Class A Common Stock in
dividends and liquidating distributions.
The Equity Executives are the holders of the Class B Common Stock which
has a par value of $0.01 per share and have the right until the effective
date of an initial public offering to require the Company to repurchase the
Class B Common Stock under certain circumstances. Accordingly, the Class B
Common Stock has been classified on the consolidated balance sheet as "common
stock subject to repurchase agreement" and excluded from shareholders' equity
as of December 31, 1997. At December 31, 1997, 3,000,000 shares of the Class
B Common Stock were authorized and 2,944,000 were outstanding.
12. EARNINGS PER SHARE
Basic earnings per common share and diluted earnings per common share for
the Company for the nine months ended December 31, 1997 were calculated as
follows:
<TABLE>
<CAPTION>
INCOME
AVAILABLE TO
COMMON WEIGHTED AVERAGE PER-SHARE
STOCKHOLDERS SHARES OUTSTANDING AMOUNT
-------------- ------------------ -----------
<S> <C> <C> <C>
Basic earnings per common share .. $16,715 20,000,000 $0.84
-------------- ------------------ -----------
Effect of dilutive securities .... -- 11,611
-------------- ------------------
Diluted earnings per common share $16,715 20,011,611 $0.84
============== ================== ===========
</TABLE>
For purposes of the earnings per common share computations, the Class B
Common Stock subject to repurchase agreement (Note 11) has been included in
the weighted average number of shares of common stock outstanding.
Earnings per share data is not presented for the Predecessor Company
because the Businesses were wholly-owned business units of Lockheed Martin
prior to the L-3 Acquisition.
13. INCOME TAXES
THE COMPANY
Pretax income of the Company for the nine months ended December 31, 1997
was $27,402 and was primarily domestic. The components of the Company's
provision for income taxes for the nine months ended December 31, 1997 are:
<TABLE>
<CAPTION>
<S> <C>
Income taxes currently payable, primarily federal $ 696
Deferred income taxes:
Federal .......................................... 8,635
State and local .................................. 1,356
--------
Subtotal ......................................... $ 9,991
--------
Total provision for income taxes .................. $10,687
========
</TABLE>
F-28
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
The effective income tax rate of the Company for the nine months ended
December 31, 1997 differs from the statutory federal income tax rate for the
following reasons:
<TABLE>
<CAPTION>
<S> <C>
Statutory federal income tax rate .............................. 35.0%
State and local income taxes, net of federal income tax benefit 3.2
Non-deductible goodwill amortization and other expenses ....... 3.7
Research and development and other tax credits ................. (2.9)
-------
Effective income tax rate ...................................... 39.0 %
=======
</TABLE>
The significant components of the Company's net deferred tax assets at
December 31, 1997 are:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Other postretirement benefits ....................... $ 8,649
Inventoried costs ................................... 8,711
Compensation and benefits ........................... 528
Pension costs ....................................... 4,177
Property, plant and equipment ....................... 8,098
Income recognition on long-term contracts .......... 3,691
Other, net .......................................... 1,861
Net operating loss and other credit carryforwards .. 2,969
---------
Total deferred tax assets........................... 38,684
Deferred tax liabilities:
Cost in excess of net assets acquired ............... (1,099)
Other, net .......................................... (70)
---------
Total deferred tax liabilities...................... (1,169)
---------
Net deferred tax assets............................... $37,515
=========
The net deferred tax assets are classified as
follows:
Current deferred tax assets ......................... $13,298
Long-term deferred tax assets........................ 24,217
---------
$37,515
=========
</TABLE>
At December 31, 1997, the Company had $2,969 of tax credit carryforwards,
primarily related to U.S. federal net operating losses and research and
experimentation tax credits which expire, if unused, in 2012. The Company
believes that these carryforwards will be available to reduce future income
tax liabilities and has recorded these carryforwards as non-current deferred
tax assets.
PREDECESSOR COMPANY
The (benefit) provision for income taxes for the Predecessor Company was
calculated by applying statutory tax rates to the reported income (loss)
before income taxes after considering items that do not enter into the
determination of taxable income and tax credits reflected in the consolidated
provision of Lockheed Martin, which are related to the Businesses.
Substantially all the income of the Businesses are from domestic operations.
For the three months ended March 31, 1997, it is estimated that the benefit
for deferred taxes represents $1,315. For the years ended December 31, 1996
and 1995, it is estimated that the (benefit) provision for deferred taxes
represents ($2,143) and $3,994, respectively.
F-29
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
The effective income tax rate of the Predecessor Company differs from the
statutory Federal income tax rate for the following reasons:
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS YEARS ENDED
ENDED DECEMBER 31,
MARCH 31, ----------------
1997 1996 1995
-------------- ------- -------
<S> <C> <C> <C>
Statutory federal income tax rate ..................... (35.0)% 35.0% 34.0%
Amortization of cost in excess of net assets acquired (8.1) 2 529
Research and development and other tax credits ....... (11.3) (2) --
State and local income taxes, net of federal income
tax benefit and state and local income tax credits .. 4.8 6 101
Foreign sales corporation tax benefits ................ (8.4) (1) --
Other, net ............................................ 9.1 -- 17.0
-------------- ------- -------
Effective income tax rate ............................. (48.9)% 40.0% 681%
============== ======= =======
</TABLE>
14. STOCK OPTIONS
THE COMPANY
The Company sponsors an option plan for key employees, pursuant to which
options to purchase up to 3,255,815 shares of common stock have been
authorized for grant.
On April 30, 1997, the Company adopted the 1997 Option Plan for key
employees and granted to the Equity Executives nonqualified options to
purchase, at $6.47 per share, 2,285,714 shares of Class A common stock of the
Company. In each case, half of the options are "Time Options" and half are
"Performance Options" (collectively, the "Options"). The Time Options become
exercisable with respect to 20% of the shares subject to the Time Options on
each of the first five anniversaries if employment continues through and
including such date. The Performance Options become exercisable nine years
after the grant date, but may become exercisable earlier with respect to up
to 20% of the shares subject to the Performance Options on each of the first
five anniversaries, to the extent certain defined targets are achieved. The
Options, which have a ten year term, become fully exercisable under certain
circumstances, including a change in control.
On July 1, 1997 and November 11, 1997, the Company granted nonqualified
options to certain officers and other employees of the Company to purchase at
$6.47 per share 689,500 shares of Class A common stock of Holdings
(collectively, the "1997 Options"). Generally, the 1997 Options vest over a
three-year period and expire ten years from the date of grant.
The exercise price for Holdings' stock options granted to employees in
1997 equaled the estimated fair value of Holdings' common stock at the date
of grant. Accordingly, in accordance with APB 25, no compensation expense was
recognized by the Company.
Pro forma information regarding net earnings as required by SFAS 123 has
been determined as if the Company had accounted for its employee stock
options under the fair value method. Because the Company is a nonpublic
entity the fair value for the options was estimated at the date of grant
using the minimum value method prescribed in SFAS 123, which does not
consider the expected volatility of the Company's stock price, with the
following weighted-average assumptions for 1997: risk-free interest rate of
6.3%; dividend yield of 0%; and weighted-average expected option life of 5.49
years.
F-30
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
For purposes of pro forma disclosures, the compensation cost of the
options based on their estimated fair values is amortized to expense over
vesting periods of the options. The Company's net income, basic EPS and
diluted EPS per common share for the nine months ended December 31, 1997
would have decreased to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
<S> <C>
Net income:
As reported ................. $16,715
=========
Pro forma.................... $16,161
=========
Basic EPS per common share:
As reported ................. $ 0.84
=========
Pro forma.................... 0.81
=========
Diluted EPS per common share:
As reported ................. $ 0.84
=========
Pro forma ................... 0.81
=========
</TABLE>
A summary of the stock option activity for the nine months ended December
31, 1997 is as follows:
<TABLE>
<CAPTION>
SHARES WEIGHTED AVERAGE
(IN THOUSANDS) EXERCISE PRICE
-------------- ----------------
<S> <C> <C>
Options granted ........................ 2,975 $6.47
Options exercised ...................... -- --
Options cancelled ...................... 4 $6.47
Options outstanding, December 31, 1997 2,971 $6.47
Options exercisable, December 31, 1997 -- --
</TABLE>
The weighted-average grant-date fair value of options granted during the
nine months ended December 31, 1997 was $1.82 per option. The weighted
average remaining contract life of the Company's outstanding stock options
was 9.37 years at December 31, 1997.
PREDECESSOR COMPANY
During the three months ended March 31, 1997 and the years ended December
31, 1996 and 1995, certain employees of the Predecessor Company participated
in Lockheed Martin's stock option plans. All stock options granted had 10
year terms and vested over a two year service period. Exercise prices of
options awarded in both years were equal to the market price of the stock on
the date of grant. Pro forma information regarding net earnings (loss) as
required by SFAS No. 123 has been determined as if the Predecessor Company
had accounted for its employee stock options under the fair value method. The
fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for the three months ended March 31, 1997, and the years ended
December 31, 1996 and 1995, respectively: risk-free interest rates of 5.58%,
5.58% and 6.64%; dividend yield of 1.70%; volatility factors related to the
expected market price of the Lockheed Martin's common stock of .186, .186 and
.216; weighted-average expected option life of five years. The
weighted-average fair values of options granted during 1997, 1996 and 1995
were $17.24, $17.24 and $16.09, respectively.
For the purposes of pro forma disclosures, the options' estimated fair
values are amortized to expense over the options' vesting periods. The
Predecessor Company's pro forma net loss for the three months ended March 31,
1997 and the years ended December 31, 1996 and 1995 were ($386), $11,531, and
($1,040), respectively.
F-31
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
15. COMMITMENTS AND CONTINGENCIES
The Company and the Predecessor Company lease certain facilities and
equipment under agreements expiring at various dates through 2011. At
December 31, 1997, the Company's future minimum payments for noncancellable
operating leases with initial or remaining terms in excess of one year are as
follows:
<TABLE>
<CAPTION>
OPERATING LEASES
------------------------------------
REAL ESTATE EQUIPMENT TOTAL
------------- ----------- --------
<S> <C> <C> <C>
1998.......... $ 8,599 $295 $ 8,894
1999 ......... 7,734 244 7,978
2000 ......... 10,030 232 10,262
2001 ......... 8,926 29 8,955
2002 ......... 2,795 22 2,817
Thereafter .. 14,393 -- 14,393
------------- ----------- --------
$52,477 $822 $53,299
============= =========== ========
</TABLE>
Real estate lease commitments have been reduced by minimum sublease
rentals of $22,106 due in the future under noncancellable subleases.
Leases covering major items of real estate and equipment contain renewal
and or purchase options which may be exercised by the Company and Predecessor
Company. Rent expense, net of sublease income from other Lockheed Martin
entities was $7,330 for the Company for the nine months ended December 31,
1997; $2,553 for the Predecessor Company for the three months ended March 31,
1997 and $8,495 and $4,772 for the Predecessor Company for the years ended
December 31, 1996 and 1995, respectively.
The Company is and the Predecessor Company has been engaged in providing
products and services under contracts with the U.S. Government and to a
lesser degree, under foreign government contracts, some of which are funded
by the U.S. Government. All such contracts are subject to extensive legal and
regulatory requirements, and, from time to time, agencies of the U.S.
Government investigate whether such contracts were and are being conducted in
accordance with these requirements. Under government procurement regulations,
an indictment of the Company and the Predecessor Company by a federal grand
jury could result in the Company and the Predecessor Company being suspended
for a period of time from eligibility for awards of new government contracts.
A conviction could result in debarment from contracting with the federal
government for a specified term.
The decline in the U.S. defense budget since the mid-1980s has resulted in
program delays, cancellations and scope reduction for defense contracts in
general. These events may or may not have an effect on the Company's
programs; however, in the event that U.S. Government expenditures for
products of the type manufactured by the Company are reduced, and not offset
by greater commercial sales or other new programs or products, or
acquisitions, there may be a reduction in the volume of contracts or
subcontracts awarded to the Company.
Pursuant to the L-3 Acquisition Agreement, the Company has agreed to
assume certain on-site and off-site environmental liabilities related to
events or activities occurring prior to the consummation of the L-3
Acquisition. Lockheed Martin has agreed to retain all environmental
liabilities for all facilities not used by the Businesses as of April 1997
and to indemnify fully the Company for such prior site environmental
liabilities. Lockheed Martin has also agreed, for the first eight years
following April 1997 to pay 50% of all costs incurred by the Company above
those reserved for on the Company's balance sheet at March 31, 1997 relating
to certain Company-assumed environmental liabilities and, for the seven years
thereafter, to pay 40% of certain reasonable operation and maintenance costs
relating to any environmental
F-32
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
remediation projects undertaken in the first eight years. The Company
believes that its total liability for known or reasonably probable
environmental claims, even without consideration of the Lockheed Martin
indemnification, would not either individually or collectively have a
material adverse effect upon the Company's financial condition or upon the
results of its operations.
Management continually assesses the Company's obligations with respect to
applicable environmental protection laws. While it is difficult to determine
the timing and ultimate cost to be incurred by the Company in order to comply
with these laws, based upon available internal and external assessments, with
respect to those environmental loss contingencies of which management is
aware, the Company believes that even without considering potential insurance
recoveries, if any, there are no environmental loss contingencies that,
individually or in the aggregate, would be material to the Company's results
of operations. The Company accrues for these contingencies when it is
probable that a liability has been incurred and the amount of the loss can be
reasonably estimated.
The Company and the Predecessor Company have been periodically subject to
litigation, claims or assessments and various contingent liabilities
(including environmental matters) incidental to its business. With respect to
those investigative actions, items of litigation, claims or assessments of
which they are aware, management of the Company is of the opinion that the
probability is remote that, after taking into account certain provisions that
have been made with respect to these matters, the ultimate resolution of any
such investigative actions, items of litigation, claims or assessments will
have a material adverse effect on the financial position or results of
operations of the Company and the Predecessor Company.
16. PENSIONS AND OTHER EMPLOYEE BENEFITS
THE COMPANY
PENSIONS: The Company maintains a number of pension plans, both
contributory and noncontributory, covering certain employees. Eligibility for
participation in these plans varies and benefits are generally based on
members' compensation and years of service. The Company's funding policy is
generally to contribute in accordance with cost accounting standards that
affect government contractors, subject to the Internal Revenue Code and
regulations thereon. Plan assets are invested primarily in U.S. government
and agency obligations and listed stocks and bonds.
Pension expense for the nine months ended December 31, 1997 includes the
following components:
<TABLE>
<CAPTION>
<S> <C>
Service cost ................. $ 5,109
Interest cost ................ 8,883
Actual return on plan assets (11,285)
Net deferral ................. 1,581
----------
Total pension cost ........... $ 4,288
==========
</TABLE>
F-33
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
The following presents the funded status and amounts recognized in the
balance sheet for the Company's pension plans:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------------
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
--------------- ---------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits ................................................ $13,742 $152,133
--------------- ---------------
Accumulated benefits ........................................... $13,825 $155,474
Effect of projected future salary increases .................... 3,337 25,795
--------------- ---------------
Projected benefits.............................................. $17,162 $181,269
=============== ===============
Plan assets at fair value........................................ $18,172 $155,278
--------------- ---------------
Plan assets in excess of (less than) projected benefit
obligation...................................................... 1,010 (25,991)
Unrecognized net (gain) loss .................................... (559) 5,683
--------------- ---------------
Prepaid (accrued) pension cost................................... $ 451 $(20,308)
=============== ===============
</TABLE>
The following assumptions were used in accounting for pension plans for
the Company:
<TABLE>
<CAPTION>
APRIL 1, 1997 DECEMBER 31, 1997
--------------- -----------------
<S> <C> <C>
Discount rate .................... 7.50% 7.25%
Rate of increase in compensation 5.00% 5.00%
Rate of return on plan assets ... 9.00% 9.00%
</TABLE>
In connection with the Company's assumption of certain plan obligations
pursuant to the L-3 Acquisition, Lockheed Martin has provided the PBGC with
commitments to assume sponsorship or other forms of financial support under
certain circumstances. In this connection, the Company has provided certain
assurances to Lockheed Martin including, but not limited to, (i) continuing
to fund the pension plans consistent with prior practices and to the extent
deductible for tax purposes and, where appropriate, recoverable under
Government contracts, (ii) agreeing to not increase benefits under the
pension plans without the consent of Lockheed Martin, (iii) restricting the
Company from a sale of any businesses employing individuals covered by the
pension plans if such sale would not result in reduction or elimination of
the Lockheed Martin Commitment with regard to the specific plan and (iv) if
the pension plans were returned to Lockheed Martin, granting Lockheed Martin
the right to seek recovery from the Company of those amounts actually paid,
if any, by Lockheed Martin with regard to the pension plans after their
return.
POST-RETIREMENT HEALTH CARE AND LIFE INSURANCE: In addition to providing
pension benefits, the Company provides certain health care and life insurance
benefits for retired employees and dependents at certain locations.
Participants are eligible for these benefits when they retire from active
service and meet the eligibility requirements for the Company's pension
plans. These benefits are funded primarily on a pay-as-you-go basis with the
retiree generally paying a portion of the cost through contributions,
deductibles and coinsurance provisions.
Post-retirement health care and life insurance costs for the nine months
ended December 31, 1997 include the following components:
<TABLE>
<CAPTION>
<S> <C>
Service cost............................................... $ 466
Interest cost ............................................. 840
-------
Total post-retirement health care and life insurance costs $1,306
=======
</TABLE>
F-34
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
The following table presents the amounts recognized in the balance sheet
for the Company at December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Accumulated post-retirement benefit obligation:
Retirees.................................................... $ 4,702
Fully eligible plan participants ........................... 3,188
Other active plan participants ............................. 10,990
---------
Total accumulated post-retirement benefit obligation ........ $18,880
Unrecognized net loss ....................................... 624
---------
Accrued post-retirement health care and life insurance costs $18,256
=========
</TABLE>
Actuarial assumptions used in determining the December 31, 1997
accumulated post-retirement benefit obligation include a discount rate of
7.25%, an average rate of compensation increase of 5.0% and an assumed health
care cost trend rate of 6.5% in 1997 decreasing gradually to a rate of 4.5%
by the year 2001. The discount rate used at April 1, 1997 was 7.50%. The
other assumptions did not change from April 1, 1997. Increasing the assumed
health care cost trend rate by 1% would change the accumulated
post-retirement benefits obligation at December 31, 1997 by approximately
$2,218 and the aggregate service and interest cost components for the nine
months ended December 31, 1997 by approximately $81 and $113, respectively.
EMPLOYEE SAVINGS PLAN: Under its various employee savings plans, the
Company matches the contributions of participating employees up to a
designated level. The extent of the match, vesting terms and the form of the
matching contribution vary among the plans. Under these plans, the Company's
matching contributions, in cash, for the nine months ended December 31, 1997
was $3,742.
THE PREDECESSOR COMPANY
Certain of the Businesses for the Predecessor Company participated in
various Lockheed Martin-sponsored pension plans covering certain employees.
Eligibility for participation in these plans varies, and benefits are
generally based on members' compensation and years of service. Lockheed
Martin's funding policy was generally to contribute in accordance with cost
accounting standards that affect government contractors, subject to the
Internal Revenue Code and regulations. Since the aforementioned pension
arrangements are part of certain Lockheed Martin defined benefit plans, no
separate actuarial data is available for the portion allocable to the
Businesses. Therefore, no liabilities or assets are reflected in the
accompanying combined financial statements of the Predecessor Company as of
December 31, 1996. The Businesses have been allocated pension costs based
upon participant employee headcount. Net pension expense included in the
accompanying combined financial statements of the Predecessor Company was
$1,848 for the three months ended March 31, 1997, and $7,027 and $4,134, for
the years ended December 31, 1996 and 1995, respectively.
In addition to participating in Lockheed Martin-sponsored pension plans,
certain of the Businesses of the Predecessor Company provided varying levels
of health care and life insurance benefits for retired employees and
dependents. Participants were eligible for these benefits when they retired
from active service and met the pension plan eligibility requirements. These
benefits are funded primarily on a pay-as-you-go basis with the retiree
generally paying a portion of the cost through contributions, deductibles and
coinsurance provisions. Since the aforementioned postretirement benefits are
part of certain Lockheed Martin postretirement arrangements, no separate
actuarial data is available for the portion allocable to the Businesses.
Accordingly, no liability is reflected in the accompanying combined financial
statements as of combined December 31, 1996 and 1995. The Businesses have been
allocated postretirement benefits cost based on participant employee
headcount. Postretirement benefit costs included in the accompanying combined
financial statements was $616 for the three months ended March 31, 1997 and
$2,787 and $2,124 for the years ended December 31, 1996 and 1995,
respectively. Under various employee savings plans sponsored by Lockheed
Martin, the Predecessor Company
F-35
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
matched contributions of participating employees up to a designated level.
Under these plans the matching contributions for the three months ended March
31, 1997 and for the years ended December 31, 1996 and 1995 were $1,241,
$3,940 and $1,478, respectively.
17. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosures to the consolidated statement of cash flows are
as follows:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
-------------- -------------------------------------------
THREE
NINE MONTHS YEAR ENDED
MONTHS ENDED ENDED DECEMBER 31,
DECEMBER 31, MARCH 31, -----------------------------
1997 1997 1996 1995
-------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
Interest paid ..... $21,245 -- -- --
================= ============== ====== ======
Income taxes paid $ 109 -- -- --
================= ============== ====== ======
</TABLE>
The Company issued $45,000 of Holdings Class A Common Stock to Lockheed
Martin in a non-cash transaction as partial consideration paid to Lockheed
Martin for the L-3 Acquisition.
18. SALES TO PRINCIPAL CUSTOMERS
The Company and the Predecessor Company operate primarily in one industry
segment, government electronic systems. Sales to principal customers are as
follows:
<TABLE>
<CAPTION>
COMPANY PREDECESSOR COMPANY
-------------- -------------------------------------------
THREE
NINE MONTHS YEAR YEAR
MONTHS ENDED ENDED ENDED ENDED
DECEMBER 31, MARCH 31, DECEMBER 31, DECEMBER 31,
1997 1997 1996 1995
-------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
U.S. Government Agencies ... $434,020 $128,505 $425,033 $161,617
Foreign (principally foreign
governments) ............... 12,090 13,612 33,475 4,945
Other (principally U.S.
commercial) ................ 100,415 16,756 84,573 219
-------------- ----------- -------------- --------------
$546,525 $158,873 $543,081 $166,781
============== =========== ============== ==============
</TABLE>
19. OTHER TRANSACTIONS WITH LOCKHEED MARTIN
The Company and the Predecessor Company sell products to Lockheed Martin
and its affiliates, net sales for which were $60,402 for the nine months
ended December 31, 1997; $21,171 for the three months ended March 31, 1997
and $70,658 and $25,874 for the years ended December 31, 1996 and 1995,
respectively. Included in Contracts in Process are receivables from Lockheed
Martin and its affiliates of $8,846 and $10,924 at December 31, 1997 and
1996, respectively.
Lockheed Martin provides the Company information systems and other
services and previously provided similar services to the Predecessor Company
for which the Company and the Predecessor Company were charged $13,690,
$4,210, $20,901 and $20,508 for the nine months ended December 31, 1997, the
three months ended March 31, 1997 and the years ended December 31, 1996 and
1995, respectively.
In December 1997, pursuant to an agreement among the shareholders of the
Company effective April 30, 1997, Lockheed Martin and Messrs. Lanza and
LaPenta sold 236,000 shares to the Company at a price of $6.47 per share
conditioned upon the Company's immediate resale of such shares to certain
management investors (other than Messrs. Lanza and LaPenta) at the same $6.47
price per share. In connection with the resale, the Company made recourse
loans to certain of those management investors aggregating approximately $679
which are due in two installments in March 1998 and 1999. These amounts have
been included in other assets in the Company's accompanying balance sheet.
F-36
<PAGE>
L-3 COMMUNICATIONS HOLDINGS, INC.
NOTES TO CONSOLIDATED (COMBINED) FINANCIAL STATEMENTS--(continued)
(In thousands, except share and per share data)
The Predecessor Company relied on Lockheed Martin for certain services,
including treasury, cash management, employee benefits, taxes, risk
management, internal audit, financial reporting, contract administration and
general corporate services. Although certain assets, liabilities and expenses
related to these services have been allocated to the Businesses, the combined
financial position, results of operations and cash flows presented in the
accompanying combined financial statements would not be the same had the
Businesses been independent entities.
The amount of allocated corporate expenses to the Predecessor Company and
reflected in these combined financial statements was estimated based
primarily on an allocation methodology prescribed by government regulations
pertaining to government contractors. Allocated costs to the Businesses were
$5,208 for the three months ended March 31, 1997, and $10,057 and $2,964 for
the years ended December 31, 1996 and 1995, respectively.
20. SUBSEQUENT EVENTS
In February 1998, the Company purchased substantially all the assets and
liabilities of the Satellite Transmission Systems division of California
Microwave, Inc. The purchase price of $27,000 is subject to adjustment based
on closing net assets. The Company used cash on hand to fund the purchase
price.
On December 22, 1997, the Company signed a definitive agreement to
purchase substantially all the assets and liabilities of the Ocean Systems
division of AlliedSignal Inc. The purchase price of $67,500, subject to
adjustment based on closing net working capital, will be financed through
cash on hand and/or borrowings available under the Senior Credit Facilities.
In February 1998, the Company entered into a definitive agreement to
purchase the assets of ILEX Systems ("ILEX") for $51,900 in cash and
additional consideration based on post-acquisition performance of ILEX.
The acquisition of ILEX and Ocean Systems are expected to close during the
first quarter of 1998. The company plans to finance the purchase prices using
its cash on hand and available borrowings under its revolving credit
facility.
In February 1998, the Company filed a registration statement with the
Securities and Exchange Commission ("SEC") for the sale of $150,000 aggregate
principal amount of Senior Subordinated Notes due 2008 (the "Notes
Offering"), and concurrently with the Notes Offering, Holdings filed a
registration statement with the SEC for the sale of 5.5 million shares of
common stock of Holdings.
21. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
COMPANY PREDECESSOR
FOR THE QUARTERS ENDED COMPANY
--------------------------------------------------------------
DEC. 31, 1997 SEPT. 30, 1997 JUNE 30, 1997 MARCH 31, 1997
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Sales............. $203,673 $174,822 $168,030 $158,873
Operating income 22,881 17,854 15,121 7,936
Net income
(loss)........... 8,348 5,276 3,091 (258)
Basic EPS ........ $ 0.42 $ 0.26 $ 0.15
Diluted EPS ...... $ 0.42 $ 0.26 $ 0.15
=============== ============== ===============
</TABLE>
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
-----------------------------------------------
DEC. 31, SEPT. 30, JUNE 30, MARCH 31,
1996 1996 1996 1996
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sales.............. $178,040 $158,594 $165,294 $41,153
Operating income . 20,564 12,197 9,254 1,676
Net income (loss) 8,401 3,055 737 (497)
</TABLE>
F-37
<PAGE>
LORAL ACQUIRED BUSINESSES
COMBINED FINANCIAL STATEMENTS
For the three months ended March 31, 1996 and the year ended December 31,
1995
F-38
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors of
L-3 Communications Holdings, Inc.:
We have audited the accompanying combined statements of operations and
cash flows for the Loral Acquired Businesses as defined in Note 1 (the
"Businesses") for the three months ended March 31, 1996 and the year ended
December 31, 1995. These financial statements are the responsibility of the
Businesses' management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined results of the operations and cash
flows of the Businesses for the three months ended March 31, 1996 and the
year ended December 31, 1995, in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, New York 10019
March 20, 1997
F-39
<PAGE>
LORAL ACQUIRED BUSINESSES
COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
Sales ...................... $132,200 $448,165
Cost and expenses .......... 124,426 424,899
-------------- -----------------
Operating income ........... 7,774 23,266
Allocated interest expense 4,365 20,799
-------------- -----------------
Income before income taxes 3,409 2,467
Income taxes ............... 1,292 854
-------------- -----------------
Net income.................. $ 2,117 $ 1,613
============== =================
</TABLE>
See notes to combined financial statements.
F-40
<PAGE>
LORAL ACQUIRED BUSINESSES
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income ................................... $ 2,117 $ 1,613
Depreciation and amortization ................ 5,011 20,625
Changes in operating assets and liabilities
Contracts in process ........................ (11,382) 7,327
Other current assets ........................ (3,436) 890
Other assets ................................ 2,437 6,736
Accounts payable and accrued liabilities ... 4,525 (4,533)
Other current liabilities ................... 3,348 4,428
Other liabilities ........................... (452) 117
-------------- -----------------
Net cash from operating activities ........... 2,168 37,203
-------------- -----------------
INVESTING ACTIVITIES:
Acquisition of business ...................... -- (214,927)
Capital expenditures ......................... (3,962) (12,683)
Disposition of property, plant and equipment 187 4,342
-------------- -----------------
(3,775) (223,268)
-------------- -----------------
FINANCING ACTIVITIES:
Advances from (repayments to) Loral ......... $ 1,607 $ 186,065
-------------- -----------------
Net change in cash............................ -- --
============== =================
</TABLE>
See notes to combined financial statements.
F-41
<PAGE>
LORAL ACQUIRED BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
1. BACKGROUND AND DESCRIPTION OF BUSINESS
On January 31, 1997, Lockheed Martin Corporation ("Lockheed Martin"),
Lehman Brothers Holdings Inc. ("Lehman"), Frank C. Lanza ("Lanza") and Robert
V. LaPenta ("LaPenta") entered into a Memorandum of Understanding ("MOU")
regarding the transfer of certain businesses of Lockheed Martin to a newly
formed corporation ("Newco") to be owned by Lockheed Martin, Lehman, Lanza
and LaPenta. The businesses proposed to be transferred (the "Loral Acquired
Businesses" or "Businesses") include Lockheed Martin's Wideband Systems
Division and the Products Group, comprised of ten autonomous operations, all
of which were acquired by Lockheed Martin effective April 1, 1996 as part of
the acquisition by Lockheed Martin of the defense electronics business of
Loral Corporation ("Loral"). Also included in the transaction is the
acquisition of a semiconductor product line of another business and certain
leasehold improvements in New York City.
The Businesses are leading suppliers of sophisticated secure communication
systems, microwave communication components, avionic and instrumentation
products and other products and services to major aerospace and defense
contractors as well as the U.S. Government. The Businesses operate primarily
in one industry segment, communication systems and products.
Substantially all the Businesses' products are sold to agencies of the
United States Government, primarily the Department of Defense, to foreign
government agencies or to prime contractors or subcontractors thereof. All
domestic government contracts and subcontracts of the Businesses are subject
to audit, various cost controls and include standard provisions for
termination for the convenience of the government. Multi-year government
contracts and related orders are subject to cancellation if funds for
contract performance for any subsequent year become unavailable. Foreign
government contracts generally include comparable provisions relating to
termination for the convenience of the government.
The decline in the U.S. defense budget since the mid 1980s has resulted in
program delays, cancellations and scope reductions for defense contractors in
general. These events may or may not have an effect on the Businesses'
programs; however, in the event that expenditures for products of the type
manufactured by the Businesses are reduced, and not offset by greater foreign
sales or other new programs or products, or acquisitions, there may be a
reduction in the volume of contracts or subcontracts awarded to the
Businesses.
The Businesses' operations, as presented herein, include allocations and
estimates of certain expenses of Loral based upon estimates of services
performed by Loral that management of the Businesses believe are reasonable.
Such services include treasury, cash management, employee benefits, taxes,
risk management, internal audit and general corporate services. Accordingly,
the results of operations and cash flows as presented herein may not be the
same as would have occurred had the Businesses been independent entities.
2. BASIS OF PRESENTATION
BASIS OF COMBINATION
The accompanying combined financial statements reflect the Businesses'
assets, liabilities and operations included in Loral Corporation's historical
financial statements that will be transferred to Newco. All significant
intercompany transactions and amounts have been eliminated. The combined
financial statements do not include the operations of telecommunications
switch product line which will not be transferred and was exited in 1995.
Also, the assets and operations of the semiconductor product line and certain
other facilities which are not material to the Businesses have been excluded
from the financial statements.
F-42
<PAGE>
LORAL ACQUIRED BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Dollars in thousands)
ALLOCATION OF CORPORATE EXPENSES
The amount of corporate office expenses reflected in these financial
statements has been estimated based primarily on the allocation methodology
prescribed by government regulations pertaining to government contractors,
which management of the Businesses believes to be a reasonable allocation
method.
INCOME TAXES
The Businesses were included in the consolidated Federal income tax return
and certain combined and separate state and local income tax returns of
Loral. However, for the purposes of these financial statements, the provision
for income taxes was allocated based upon reported income before income
taxes. Such provision was recorded through the advances from (repayments to)
Loral account.
INTEREST EXPENSE
Interest expense has been allocated to the Businesses by applying Loral's
weighted average consolidated interest rate to the portion of the beginning
of the period invested equity account deemed to be financed by consolidated
debt, which amount has been determined based on Loral's debt to equity ratio
on such date, except that the acquisition of Wideband Systems has been
assumed to be fully financed by debt.
STATEMENTS OF CASH FLOWS
The Businesses participated in Loral's cash management system, under which
all cash was received and payments made by Loral. All transactions between
the Businesses and Loral have been accounted for as settled in cash on the
date such transactions were recorded by the Businesses.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONTRACTS IN PROCESS
Sales on long-term production-type contracts are recorded as units are
shipped; profits applicable to such shipments are recorded pro rata, based
upon estimated total profit at completion of the contract. Sales and profits
on cost reimbursable contracts are recognized as costs are incurred. Sales
and estimated profits under other long-term contracts are recognized under
the percentage of completion method of accounting using the cost-to-cost
method. Amounts representing contract change orders or claims are included in
sales only when they can be reliably estimated and realization is probable.
Incentive fees and award fees enter into the determination of contract
profits when they can be reliably estimated.
Costs accumulated under long-term contracts include direct costs as well
as manufacturing, overhead, and for government contracts, general and
administrative, independent research and development and bid and proposal
costs. Losses on contracts are recognized when determined. Revisions in
profit estimates are reflected in the period in which the facts which require
the revision become known.
DEPRECIATION AND AMORTIZATION
Depreciation is provided primarily on the straight-line method over the
estimated useful lives of the related assets. Leasehold improvements are
amortized over the shorter of the lease term or the estimated useful life of
the improvements. The excess of the cost of purchased businesses over the
fair value of the net assets acquired is being amortized using a
straight-line method generally over a 40-year period.
F-43
<PAGE>
LORAL ACQUIRED BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Dollars in thousands)
The carrying amount of cost in excess of net assets acquired is evaluated
on a recurring basis. Current and future profitability as well as current and
future undiscounted cash flows, excluding financing costs, of the underlying
businesses are primary indicators of recoverability. There were no
adjustments to the carrying amount of cost in excess of net assets acquired
resulting from these evaluations during the periods presented.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Businesses' management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses
during the reporting period. The most significant of these estimates and
assumptions relate to contract estimates of sales and costs, cost allocations
from Loral, including interest and income taxes, recoverability of recorded
amounts of fixed assets and cost in excess of net assets acquired, litigation
and environmental obligations. Actual results could differ from these
estimates.
NEW ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1996, the Businesses adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets to Be Disposed Of" ("SFAS 121"). SFAS 121 establishes the accounting
standards for the impairment of long-lived assets, certain intangible assets
and cost in excess of net assets and certain intangible assets to be disposed
of. The impact of adopting SFAS 121 was not material.
Effective January 1, 1994, the Businesses adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" ("SFAS 112"). SFAS 112 requires that the costs of benefits provided
to employees after employment but before retirement be recognized on an
accrual basis. The adoption of SFAS 112 did not have a material impact on the
results of operations of the Businesses.
4. ACQUISITIONS
Effective May 1, 1995, Loral acquired substantially all the assets and
liabilities of the Defense Systems operations of Unisys Corporation, which
included the Wideband Systems Division. The acquisition has been accounted
for as a purchase. As such, the accompanying combined financial statements
reflect the results of operations of the Wideband Systems Division from the
effective date of acquisition, including the amortization of an allocated
portion of cost in excess of net assets acquired resulting from the
acquisition. Such allocation was based on the sales and profitability of the
Wideband Systems Divisions relative to the aggregate sales and profitability
of the defense systems operations acquired by Loral. The assets and
liabilities recorded in connection with the purchase price allocation were
$240,525 and $25,598, respectively.
Had the acquisition of the Wideband Systems Division occurred on January
1, 1995, the unaudited pro forma sales and net income for the year ended
December 31, 1995 would have been $524,355 and $504,780, respectively. The
results, which are based on various assumptions, are not necessarily
indicative of what would have occurred had the acquisition been consummated
as of January 1, 1995.
F-44
<PAGE>
LORAL ACQUIRED BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Dollars in thousands)
5. OPERATING EXPENSES
The following expenses have been included in the statements of operations:
<TABLE>
<CAPTION>
THREE YEAR
MONTHS ENDED ENDED
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
General and administrative expenses ...................... $23,558 $90,757
Independent research and development, and bid and
proposal costs .......................................... $ 5,587 $21,370
</TABLE>
6. INCOME TAXES
The provision for income taxes was calculated by applying Loral's
statutory tax rates to the reported pre-tax book income after considering
items that do not enter into the determination of taxable income and tax
credits reflected in the consolidated provision which are related to the
Businesses. It is estimated that deferred income taxes represent
approximately $714,000 and $2,857,000 of the provisions for income taxes
reflected in these financial statements for the three months ended March 31,
1996 and the year ended December 31, 1995. The principal components of
deferred income taxes are contract accounting methods, property plant and
equipment, goodwill amortization, and timing of accruals. Substantially all
of the Businesses' income is from domestic operations.
The following is a reconciliation of the statutory rate to the effective
tax rates reflected in the financial statements:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------
1996 1995
------- --------
<S> <C> <C>
Statutory Federal income tax rate ............................. 35.0% 35.0%
Research and development and other tax credits................. -- (18.6)
State and local income taxes, net of Federal income tax
benefit and state and local income tax credits ............... 3.9 (.3)
Foreign sales corporation tax benefit ......................... (2.2) (3.0)
Amortization of goodwill ...................................... 6.3 35.1
Other, net .................................................... (5.1) (13.6)
------- --------
Effective income tax rate ..................................... 37.9% 34.6%
======= ========
</TABLE>
7. INTEREST EXPENSE
Interest expense was calculated using the following balances and interest
rates:
<TABLE>
<CAPTION>
THREE YEAR
MONTHS ENDED ENDED
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
Invested Equity ........................... $453,062 $265,384
Interest Rate ............................. 7.40% 7.87%
Wideband Systems Allocated Purchase Price -- $214,927
Interest Rate.............................. -- 7.40%
</TABLE>
F-45
<PAGE>
LORAL ACQUIRED BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Dollars in thousands)
8. COMMITMENTS AND CONTINGENCIES
The Businesses lease certain facilities and equipment under agreements
expiring at various dates through 2011. Leases covering major items of real
estate and equipment contain renewal and/or purchase options which may be
exercised by the Businesses. Rent expense for the three months ended March
31, 1996 was $1,063. Rent expense for the year ended December 31, 1995 was
$4,276.
Management is continually assessing its obligations with respect to
applicable environmental protection laws. While it is difficult to determine
the timing and ultimate cost to be incurred by the Businesses in order to
comply with these laws, based upon available internal and external
assessments, the Businesses believe that even without considering potential
insurance recoveries, if any, there are no environmental loss contingencies
that, individually or in the aggregate, would be material to the Businesses'
operations. The Businesses accrue for these contingencies when it is probable
that a liability has been incurred and the amount of the loss can be
reasonably estimated. The Businesses believe that it has adequately accrued
for future expenditures in connection with environmental matters and that
such expenditures will not have a material adverse effect on its financial
position or results of operations.
There are a number of lawsuits or claims pending against the Businesses
and incidental to its business. However, in the opinion of management, the
ultimate liability on these matters, if any, will not have a material adverse
effect on the financial position or results of operations of the Businesses.
9. PENSIONS AND OTHER EMPLOYEE BENEFITS
PENSIONS
The Businesses participate in various Loral-sponsored pension plans both
contributory and non-contributory covering certain employees. Eligibility for
participation in these plans varies, and benefits are generally based on
members' compensation and years of service. Loral's funding policy was
generally to contribute in accordance with cost accounting standards that
affect government contractors, subject to the Internal Revenue code and
regulations thereon. Since the aforementioned pension arrangements were part
of certain Loral defined benefit or defined contribution plans, no separate
actuarial data was available for the Businesses. The Businesses have been
allocated their share of pension costs based upon participation employee
headcount. Net pension expense, which approximates the amount funded,
included in the accompanying financial statements was $1,234 and $4,391 for
the three months ended March 31, 1996 and the year ended December 31, 1995,
respectively.
POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
In addition to participating in Loral-sponsored pension plans, the
Businesses provide certain health care and life insurance benefits for
retired employees and dependents at certain locations. Participants are
eligible for these benefits when they retire from active service and meet the
pension plan eligibility requirements. These benefits are funded primarily on
a pay-as-you-go basis with the retiree generally paying a portion of the cost
through contributions, deductibles and coinsurance provisions. Since the
aforementioned postretirement benefits were part of certain Loral
postretirement arrangements, no separate actuarial data is available for the
Businesses. The Businesses have been allocated postretirement benefit costs
based upon participant employee headcount. Post-retirement benefits costs
included in the accompanying financial statements were $402 and $1,646 for
the three months ended March 31, 1996 and the year ended December 31, 1995,
respectively.
EMPLOYEE SAVINGS PLANS
Under various employee savings plans sponsored by Loral, the Businesses
matched the contributions of participating employees up to a designated
level. The extent of the match, vesting terms and the form
F-46
<PAGE>
LORAL ACQUIRED BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
(Dollars in thousands)
of the matching contribution vary among the plans. Under these plans, the
matching contributions, in cash, common stock or both, for the three months
ended March 31, 1996 and the year ended December 31, 1995 were $634 and
$1,879, respectively.
10. SALES TO PRINCIPAL CUSTOMERS
The Businesses operate primarily in one industry segment, electronic
components and systems. Sales to principal customers are as follows:
<TABLE>
<CAPTION>
THREE YEAR
MONTHS ENDED ENDED
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
U.S. Government Agencies .................. $ 94,993 $328,476
Foreign (principally foreign governments) 16,838 62,549
Other (principally commercial) ............ 20,369 57,140
-------------- -----------------
$132,200 $448,165
============== =================
</TABLE>
Foreign sales comprise the following:
<TABLE>
<CAPTION>
THREE YEAR
MONTHS ENDED ENDED
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
Export sales
Asia .............. $ 4,056 $19,248
Middle East ....... 3,648 4,147
Europe ............ 6,275 26,283
Other ............. 2,859 12,871
-------------- -----------------
Total foreign
sales............. $16,838 $62,549
============== =================
</TABLE>
11. RELATED PARTY TRANSACTIONS
The Businesses had a number of transactions with Loral and its affiliates.
Management believes that the arrangements are as favorable to the Businesses
as could be obtained from unaffiliated parties. The following describe the
related party transactions.
Loral allocated certain operational, administrative, legal and other
services to the Businesses. Costs allocated to the Businesses were $1,827 and
$6,535 for the three months ended March 31, 1996 and the year ended December
31, 1995, respectively. The Businesses sold products to Loral and its
affiliates. Net sales to Loral were $14,840 for the three months ended March
31, 1996 and were $54,600 in 1995. Net sales to Space Systems/Loral were
$2,471 for the three months ended March 31, 1996 and were $4,596 in 1995. Net
sales to K&F Industries were $1,173 for the three months ended March 31, 1996
and were $2,415 in 1995.
F-47
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC.
UNAUDITED CONDENSED FINANCIAL STATEMENTS
As of December 31, 1997 and for the
six months ended December 31, 1997 and 1996
F-48
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1997
(In Thousands)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Accounts receivable, less $554 allowance for doubtful
accounts .................................................... $ 22,204
Inventories .................................................. 10,382
----------
Total current assets .......................................... 32,586
Property, plant and equipment, at cost ........................ 21,663
Less accumulated depreciation and amortization ................ (14,467)
----------
Net property and equipment .................................... 7,196
Other assets .................................................. 15
----------
Total assets .................................................. $ 39,797
==========
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accounts payable ............................................. $ 6,508
Accrued liabilities .......................................... 3,703
Current portion of long-term debt ............................ 200
----------
Total current liabilities ..................................... 10,411
Long-term debt ................................................ 1,330
----------
Total liabilities ............................................. 11,741
Commitments
Division equity ............................................... 28,056
----------
Total liabilities and Division equity ......................... $ 39,797
==========
</TABLE>
See accompanying notes.
F-49
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31
----------------------
1997 1996
---------- ----------
<S> <C> <C>
Net sales ........................... $24,551 $ 38,770
Cost of products sold ............... 23,226 42,530
---------- ----------
Gross margin ........................ 1,325 (3,760)
---------- ----------
Expenses:
Research and development ........... 712 721
Marketing and administration ...... 5,123 8,064
Amortization of intangible assets . -- 72
---------- ----------
Total expenses ...................... 5,835 8,857
---------- ----------
Operating loss ...................... (4,510) (12,617)
Interest expense .................... (43) (70)
Interest income ..................... -- 5
---------- ----------
Loss before income tax benefit ..... (4,553) (12,682)
Allocated benefit from income taxes 1,639 4,185
---------- ----------
Net loss ............................ $(2,914) $ (8,497)
========== ==========
</TABLE>
See accompanying notes.
F-50
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31
----------------------
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ........................................................ $(2,914) $ (8,497)
Adjustments for noncash items:
Amortization of intangible assets .............................. -- 72
Depreciation and amortization of property, plant and equipment 780 1,200
Loss on sale of assets ........................................ -- 151
Provision for doubtful accounts ............................... 66 750
Changes in asset and liability accounts:
Accounts receivable ............................................ 6,053 16,124
Inventories .................................................... (2,644) 6,789
Prepaid expenses and other assets .............................. 85 213
Accounts payable ............................................... (1,256) (10,238)
Accrued liabilities ............................................ 132 (208)
---------- ----------
Net cash provided by operations ................................. 302 6,356
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ............................................ (160) (1,072)
Proceeds from sale of building .................................. -- 1,617
---------- ----------
Net cash provided by (used in) investing activities ............ (160) 545
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt ...................................... (100) (200)
Net cash provided to CMI ........................................ (42) (6,701)
---------- ----------
Net cash used in financing activities ........................... (142) (6,901)
---------- ----------
Cash and cash equivalents ....................................... $ -- $ --
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the six month period for interest .............. $ 36 $ 32
========== ==========
</TABLE>
See accompanying notes.
F-51
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SIX MONTHS ENDED DECEMBER 31, 1996 AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited financial statements include the operations of
the Satellite Transmission Systems Division ("STS" or the "Division") of
California Microwave, Inc. ("CMI" or the "Company"). The Division is a global
satellite communication systems integrator providing hardware, software and
services for turnkey projects to large commercial customers, principally
domestic and foreign telephone companies and major common carriers and to the
U.S. and foreign governments.
These financial statements are presented as if the Division had existed as
an entity separate from CMI during the periods presented and include the
historical assets, liabilities, sales and expenses that are directly related
to the Division's operations. However, these financial statements are not
necessarily indicative of the financial position and results of operations
which would have occurred had the Division been an independent entity.
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six-month periods ended December 31, 1996 and 1997
are not necessarily indicative of the results that may be expected for the
years ended June 30, 1997 and 1998. For further information, refer to the
financial statements and footnotes thereto included in the Division's
financial statements for the year ended June 30, 1997.
USE OF ESTIMATES; RISKS AND UNCERTAINTIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Significant estimates are used in determining the
collectibility of accounts receivable, warranty costs, inventory realization,
profitability on long-term contracts, restructuring reserves, recoverability
of property, plant and equipment, and contingencies. Actual results could
differ from estimates.
INVENTORIES AND COST OF PRODUCTS SOLD
Inventories are recorded at the lower of cost or market. Project
inventories are transferred to cost of products sold at the time revenue is
recognized based on the estimated total manufacturing costs and total
contract prices under each contract. Losses on contracts are recognized in
full when the losses become determinable. The cost of other inventories is
generally based on standard costs which approximate actual costs determined
by the first-in, first-out method.
F-52
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
--------------
(IN THOUSANDS)
<S> <C>
Projects in process..................................... $ 9,351
Less: progress billings................................. 1,547
--------------
7,804
Product inventories, principally materials and
supplies............................................... 2,578
--------------
Total................................................... $10,382
==============
</TABLE>
3. CORPORATE ALLOCATIONS
CMI allocates corporate expenses on a value-added basis to each division,
which CMI believes results in a reasonable allocation of such costs. The
accompanying financial statements reflect charges for general corporate
administrative expenses incurred by CMI which amounted to approximately
$832,000 and $793,000 for the six months ended December 31, 1996 and 1997,
respectively.
No interest is allocated by CMI to the Division.
The Division is charged for its proportional share of CMI's self-insured
medical plan. Such charges amounted to $1,015,000 and $732,000 for the six
months ended December 31, 1996 and 1997, respectively.
In addition, there were direct charges from CMI as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
DECEMBER 31,
--------------
1997 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Marketing.................. $304 $389
General and
administrative............ -- 142
------ ------
Total...................... $304 $531
====== ======
</TABLE>
The Division believes that the direct charges from CMI were reasonable
during the periods presented.
4. RESTRUCTURING
During fiscal 1997, a comprehensive review of the Division's operations
was performed, including a review of inventory levels, product development
and migration plans and facility and personnel needs. It was determined to
focus the Division on potentially higher margin products. This resulted in
the write-down of certain inventories and the restructuring of the Division's
operations. During the six month period ended December 31, 1996 inventory and
other charges of $10,300,000, arising from this review, were included in cost
of products sold. During February 1997, additional charges of $800,000
relating to excess facilities and severance were recorded. There are no
remaining cash outlays associated with the restructuring at December 31,
1997.
F-53
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. OTHER
In November 1997, the Division recorded a $1 million charge to cost of
sales relating to a contract with a customer in Sudan. The President of the
United States imposed economic sanctions on Sudan which banned U.S. companies
from doing business in Sudan and as a result, the Division could not continue
to perform under the existing contract. Based upon this, the contract was
terminated and the Division has been released from further performance
requirements.
On December 19, 1997, L-3 Communications Corporation, an unrelated party,
reached an agreement to purchase from CMI substantially all of the assets of
the Division, and to assume certain of the liabilities of the Division, for
approximately $27 million in cash. The final purchase price is subject to
adjustment based on the net assets of the Division at the closing date of the
transaction.
F-54
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF CALIFORNIA MICROWAVE, INC.
FINANCIAL STATEMENTS
As of June 30, 1997 and 1996 and for the
years ended June 30, 1997, 1996 and 1995
F-55
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
California Microwave, Inc.
We have audited the accompanying balance sheets of the Satellite
Transmission Systems Division of California Microwave, Inc. (the "Company")
as of June 30, 1997 and 1996, and the related statements of operations and
cash flows for each of the three years in the period ended June 30, 1997.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Satellite
Transmission Systems Division of California Microwave, Inc., as of June 30,
1997 and 1996, and the results of its operations and its cash flows for each
of the three years in the period ended June 30, 1997 in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Melville, New York
January 27, 1998
F-56
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
JUNE 30,
----------------------
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Accounts receivable, less $140 and $508 allowance for doubtful
accounts in 1996 and 1997......................................... $ 28,323 $ 46,750
Inventories........................................................ 7,738 10,412
Prepaid expenses and other assets.................................. 77 121
---------- ----------
Total current assets................................................ 36,138 57,283
Property, plant and equipment, at cost.............................. 21,503 21,378
Less accumulated depreciation and amortization...................... (13,687) (12,984)
---------- ----------
Net property and equipment ......................................... 7,816 8,394
Intangible assets, net of accumulated amortization of $2,268 in
1996............................................................... -- 2,032
Other assets........................................................ 23 2,045
---------- ----------
Total assets ....................................................... $ 43,977 $ 69,754
========== ==========
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accounts payable................................................... $ 7,764 $ 19,548
Accrued liabilities................................................ 3,571 3,584
Current portion of long-term debt.................................. 100 200
---------- ----------
Total current liabilities........................................... 11,435 23,332
Long-term debt...................................................... 1,530 1,630
---------- ----------
Total liabilities................................................... 12,965 24,962
Commitments
Division equity..................................................... 31,012 44,792
---------- ----------
Total liabilities and Division equity............................... $ 43,977 $ 69,754
========== ==========
</TABLE>
See accompanying notes.
F-57
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
STATEMENTS OF OPERATIONS
(In Thousands)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------
1997 1996 1995
----------- ---------- ---------
<S> <C> <C> <C>
Net sales......................................... $ 68,037 $124,393 $94,271
Cost of products sold............................. 65,724 102,399 86,335
----------- ---------- ---------
Gross margin...................................... 2,313 21,994 7,936
----------- ---------- ---------
Expenses:
Research and development......................... 1,360 2,540 2,288
Marketing and administration..................... 14,154 13,295 12,655
Amortization and write-down of intangible
assets........................................... 2,032 171 171
Restructuring.................................... 800 -- 2,446
----------- ---------- ---------
Total expenses.................................... 18,346 16,006 17,560
----------- ---------- ---------
Operating (loss) income........................... (16,033) 5,988 (9,624)
Interest expense.................................. (65) (69) (98)
Interest income................................... 40 11 3
----------- ---------- ---------
(Loss) income before income tax benefit
(expense)........................................ (16,058) 5,930 (9,719)
Allocated benefit (expense) from income taxes .... 4,676 (2,135) 3,207
----------- ---------- ---------
Net (loss) income................................. $(11,382) $ 3,795 $(6,512)
=========== ========== =========
</TABLE>
See accompanying notes.
F-58
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-----------------------------------
1997 1996 1995
----------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income................................... $(11,382) $ 3,795 $(6,512)
Adjustments for noncash items:
Amortization and write-down of intangible assets .. 2,032 171 171
Depreciation and amortization of property, plant
and equipment..................................... 1,639 1,746 1,848
Loss on sale of assets............................. 77 140 64
Provision for doubtful accounts.................... 750 100 150
Changes in asset and liability accounts:
Accounts receivable................................ 17,677 (17,019) 14,937
Inventories........................................ 2,674 12,243 (8,211)
Prepaid expenses and other assets.................. 449 1,449 5,627
Accounts payable................................... (11,783) 5,736 (3,747)
Accrued and other liabilities...................... (14) (1,697) 1,895
----------- ---------- ----------
Net cash provided by operations..................... 2,119 6,664 6,222
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures................................ (1,138) (1,099) (1,881)
Proceeds from sale of building...................... 1,617 -- --
----------- ---------- ----------
Net cash (used in) provided by investing
activities......................................... 479 (1,099) (1,881)
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt.......................... (200) (100) (200)
Net cash provided to CMI............................ (2,398) (5,465) (4,141)
----------- ---------- ----------
Net cash used in financing activities............... (2,598) (5,565) (4,341)
----------- ---------- ----------
Cash and cash equivalents........................... $ -- $ -- $ --
=========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest.............. $ 38 $ 66 $ 70
=========== ========== ==========
</TABLE>
See accompanying notes.
F-59
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1995, 1996 AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements include the operations of the
Satellite Transmission Systems Division ("STS" or the "Division") of
California Microwave, Inc. ("CMI" or the "Company"). The Division is a global
satellite communication systems integrator providing hardware, software and
services for turnkey projects to large commercial customers, principally
domestic and foreign telephone companies and major common carriers and to the
U.S. and foreign governments.
These financial statements are presented as if the Division had existed as
an entity separate from CMI during the periods presented and include the
historical assets, liabilities, sales and expenses that are directly related
to the Division's operations. However, these financial statements are not
necessarily indicative of the financial position and results of operations
which would have occurred had the Division been an independent entity.
USE OF ESTIMATES; RISKS AND UNCERTAINTIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Significant estimates are used in determining the
collectibility of accounts receivable, warranty costs, inventory realization,
profitability on long-term contracts, restructuring reserves, recoverability
of property, plant and equipment, and contingencies. Actual results could
differ from estimates.
CASH AND CASH EQUIVALENTS
The Division participates in CMI's centralized cash management function;
accordingly, the Division does not maintain separate cash accounts, other
than payroll and foreign subsidiary accounts, which are deemed insignificant,
and its cash disbursements and collections are settled through Division
equity.
INVENTORIES AND COST OF PRODUCTS SOLD
Inventories are recorded at the lower of cost or market. Project
inventories are transferred to cost of products sold at the time revenue is
recognized based on the estimated total manufacturing costs and total
contract prices under each contract. Losses on contracts are recognized in
full when the losses become determinable. During the year ended June 30,
1995, the Division recognized losses of approximately $2,800,000 on such
contracts. The cost of other inventories is generally based on standard costs
which approximate actual costs determined by the first-in, first-out method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried at cost, less accumulated
depreciation and amortization. Depreciation and amortization charges are
computed using the straight-line method based on the estimated useful lives
of the related assets.
INTANGIBLE ASSETS OF BUSINESS ACQUIRED
During 1997, CMI wrote off $1,888,000 of purchased intangible assets,
principally goodwill, relating to the original acquisition of STS by CMI,
which was pushed down to the Division's books. The intangible
F-60
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
assets consisted of the excess of the purchase price paid for STS over the
net tangible assets acquired and was amortized using the straight-line method
over 30 years. During 1997, CMI determined that the excess purchase price was
not recoverable due to a significant reduction in sales by the Division in
1997 as compared to prior periods and appropriately reduced the carrying
value.
OTHER LONG-LIVED ASSETS
In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed of," the Division records impairment losses on long-lived
assets used in operations when events and circumstances indicate that the
assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amount of such assets.
Other than as described above related to purchased intangibles, no such
losses have been incurred.
REVENUE RECOGNITION, RECEIVABLES AND CREDIT RISK
Revenue from product sales is recognized at the time of shipment. Sales on
certain long-term, small quantity, high unit value contracts are recognized
at the completion of significant project milestones, which are generally
contract line items. Scheduled billings and retainages under certain
contracts (principally export contracts) have deferred billing provisions
resulting in unbilled accounts receivable (included in accounts receivable)
of $7,426,000 and $4,425,000 at June 30, 1996 and 1997, respectively. The
unbilled receivable at June 30, 1997, is expected to be collected within one
year.
The Division manufactures and sells satellite communications products,
systems and turnkey telecommunications networks to large commercial
customers, principally domestic and foreign telephone companies and major
common carriers, and to the U.S. government. The Division generally requires
no collateral, but generally requires letters of credit, denominated in U.S.
dollars, from its foreign customers.
During 1996 and 1997, the Division periodically transferred certain
international accounts receivable to CMI. CMI insures these receivables under
a credit insurance program and then sells the receivables, without recourse,
at prevailing discount rates. The Division retains the responsibility to
collect and service these amounts. Outstanding customer receivables
transferred to CMI through Division equity amounted to approximately $421,000
and $2,100,000 during 1996 and 1997, respectively.
The Division charged to operations $150,000, $100,000 and $750,000 for its
provision for doubtful accounts in 1995, 1996 and 1997, respectively.
WARRANTY
The Company generally warrants its products for a period of 12 to 24
months from completion of contract or shipment. Warranty expense was
approximately $679,000, $753,000 and $688,000 for 1995, 1996 and 1997,
respectively.
INCOME TAXES
Income taxes reflect an allocation of CMI's income tax expense (benefit)
calculated based on CMI's effective tax rate. All deferred tax assets and
liabilities relating to the Division are included in intercompany balances
with CMI and are accounted for within Division equity (see Note 7). On a
stand-alone basis, income tax benefit (expense) for the year ended June 30,
1997 would not be material due to the existence of net operating loss
carryforwards at the Division level and the need for a full valuation
allowance on any resulting net deferred tax asset. Such net operating losses
have been fully utilized by CMI.
F-61
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
FISCAL YEAR
The Division's fiscal year ends on the Saturday closest to June 30, and
includes 52 weeks in fiscal 1995, 1996 and 1997. For 1995, 1996 and 1997, the
fiscal years ended on July 1, 1995, June 29, 1996 and June 28, 1997,
respectively. For clarity of presentation, the financial statements are
reported as ending on a calendar month end.
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
JUNE 30,
-------------------
LIFE 1997 1996
---------- --------- --------
(IN YEARS) (IN THOUSANDS)
<S> <C> <C> <C>
Land........................... $ 950 $ 950
Buildings ..................... 30 3,559 3,559
Machinery and equipment ...... 3-5 8,780 9,256
Office and computer equipment 3-10 6,440 5,653
Building improvements.......... -- 1,721 1,813
Vehicles ...................... 5 53 147
--------- --------
$21,503 $21,378
========= ========
</TABLE>
Building improvements are depreciated over the shorter of the life of the
improvement or the remaining life of the building.
3. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
JUNE 30,
------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Projects in process..................................... $6,484 $ 6,287
Less: progress billings................................. 2,544 1,991
-------- --------
3,940 4,296
Product inventories, principally materials and
supplies............................................... 3,798 6,116
-------- --------
Total................................................... $7,738 $10,412
======== ========
</TABLE>
F-62
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
JUNE 30,
------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Salaries and bonuses . $ 497 $1,381
Vacation.............. 610 873
Other payroll
related.............. 123 115
Warranties............ 899 758
Commissions........... 813 --
Other................. 629 457
-------- --------
$3,571 $3,584
======== ========
</TABLE>
5. LONG-TERM DEBT
The Division has industrial development bonds that are payable in annual
installments through November 9, 2007, may be prepaid at any time without
penalty and bear interest at 65% of the bank's floating rate (5.5% at June
30, 1997), based upon prevailing market conditions, which is redetermined
daily. The obligor of the industrial development bonds is a related entity,
and the bonds are secured by mortgages on the equipment and properties
involved.
At June 30, 1997, the annual maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
<S> <C>
1998................. $ 100,000
1999................. 200,000
2000................. 100,000
2001................. 200,000
2002................. 100,000
Thereafter........... 930,000
-----------
1,630,000
Less current
portion............. 100,000
-----------
$1,530,000
===========
</TABLE>
6. COMMITMENTS
On November 15, 1996, the Division leased a facility under an 18-month
noncancelable operating lease. Rent expense was approximately $209,000,
$229,000 and $69,000 for 1995, 1996, and 1997, respectively.
Future minimum lease payments under the operating lease is $48,000 for
1998.
F-63
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. DIVISION EQUITY
A summary of the Division equity activity is as follows:
<TABLE>
<CAPTION>
JUNE 30,
---------------------
1997 1996
---------- ---------
(IN THOUSANDS)
<S> <C> <C>
Beginning balance........ $ 44,792 $46,462
Net income (loss)........ (11,382) 3,795
Net cash provided to
CMI..................... (2,398) (5,465)
---------- ---------
Ending balance........... $ 31,012 $44,792
========== =========
</TABLE>
8. EMPLOYEE BENEFITS
The Division participates in the CMI defined contribution retirement plan
which covers substantially all of the employees of the Division. The
Division's contribution was $379,000, $700,000 and $180,000 for 1995, 1996
and 1997, respectively.
9. SIGNIFICANT CUSTOMERS AND SEGMENT INFORMATION
The Division operates in a single industry segment and is engaged in the
manufacture and sale of electronics equipment for satellite communications.
International sales were as follows:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------------
1997 1996 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Asia Pacific....... $22,333 $27,106 $17,164
Africa/Middle
East.............. 13,052 41,827 9,572
Latin America...... 5,149 11,137 14,768
Europe............. 7,828 15,984 9,784
Other.............. 1,391 2,973 4,312
--------- --------- ---------
$49,753 $99,027 $55,600
========= ========= =========
</TABLE>
The Division had revenues from one customer representing 17.3%, 31.5% and
11% of total revenues in 1995, 1996 and 1997, respectively.
10. CORPORATE ALLOCATIONS
CMI allocates corporate expenses on a value-added basis to each division,
which CMI believes results in a reasonable allocation of such costs. The
accompanying financial statements reflect charges for general corporate
administrative expenses incurred by CMI which amounted to approximately
$1,477,000, $1,555,000 and $1,663,000 in 1995, 1996 and 1997, respectively.
No interest is allocated by CMI to the Division.
The Division is charged for its proportional share of CMI's self-insured
medical plan. Such charges amounted to $944,000, $1,437,000 and $1,856,000 in
1995, 1996, and 1997, respectively.
F-64
<PAGE>
SATELLITE TRANSMISSION SYSTEMS DIVISION OF
CALIFORNIA MICROWAVE, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. CORPORATE ALLOCATIONS (Continued)
In addition, there were direct charges from CMI as follows:
<TABLE>
<CAPTION>
JUNE 30,
------------------------
1997 1996 1995
-------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Marketing.................. $ 889 -- $--
General and
administrative............ 285 $508 --
-------- ------ ------
Total...................... $1,174 $508 $--
======== ====== ======
</TABLE>
The Division believes that the direct charges from CMI were reasonable
during the periods presented.
11. RELATED PARTY TRANSACTIONS
Included in net sales are product sales to other divisions of CMI. These
sales totaled $3,584,000, $640,000 and $1,800,000 for 1995, 1996 and 1997,
respectively. In addition, there is approximately $2,363,000, $2,937,000 and
$776,000 of purchases from another division of CMI which is included in
ending inventory and $2,139,000, $3,576,000 and $1,129,000 due to this
division which is included in accounts payable at June 30, 1995, 1996 and
1997, respectively.
12. RESTRUCTURING
In June 1995, a decision was made to close the Division's Melbourne,
Florida facility as well as to perform a review of personnel needs at the
Division's operations. Pursuant to these decisions, approximately $2.4
million of restructuring charges were recorded, including approximately
$600,000 to reflect the facility at its net realizable value. There are no
remaining cash outlays associated with the restructuring at June 30, 1997.
In December 1996 and January 1997, a comprehensive review of the
Division's operations was performed, including a review of inventory levels,
product development and migration plans and facility and personnel needs. It
was determined to focus the Division on potentially higher margin products.
This resulted in the write-down of certain inventories and the restructuring
of the Division's operations. Inventory and other charges of $10,300,000,
arising from this review, were included in cost of products sold and excess
facilities and severance charges of $800,000 were included in restructuring.
There are no remaining cash outlays associated with the restructuring at June
30, 1997.
13. SUBSEQUENT EVENTS
In November 1997, the Division recorded a $1 million charge to cost of
sales relating to a contract with a customer in Sudan. The President of the
United States imposed economic sanctions on Sudan which banned U.S. companies
from doing business in Sudan, and as a result the Division could not continue
to perform under the existing contract. Based upon this, the contract was
terminated and the Division has been released from further performance
requirements.
On December 19, 1997, L-3 Communications Corporation, an unrelated party,
reached an agreement to purchase from CMI substantially all of the assets of
the Division, and to assume certain of the liabilities of the Division, for
approximately $27 million in cash. The final purchase price is subject to
adjustment based on the net assets of the Division at the closing date of the
transaction.
F-65
<PAGE>
ILEX SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997
F-66
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
ILEX Systems, Inc.:
We have audited the accompanying consolidated balance sheet of ILEX
Systems, Inc. and subsidiary as of December 31, 1997, and the related
consolidated statements of income, shareholders' equity, and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of ILEX
Systems, Inc. and subsidiary as of December 31, 1997, and the results of
their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
San Jose, California
February 9, 1998, except as to Note 9 which
is as of February 27, 1998
F-67
<PAGE>
ILEX SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents ..................................................... $ 4,919,548
Accounts receivable, net of allowance for doubtful accounts of $327,422 ...... 7,354,640
Unbilled accounts receivable .................................................. 4,868,453
Inventories ................................................................... 923,466
Deferred income taxes ......................................................... 13,000
Other current assets .......................................................... 278,771
-------------
Total current assets ......................................................... 18,357,878
Property, plant, and equipment:
Equipment ..................................................................... 2,343,643
Furniture, fixtures, and leasehold improvements ............................... 634,425
-------------
2,978,068
Accumulated depreciation and amortization ..................................... (2,031,763)
-------------
946,305
Goodwill, net of accumulated amortization of $117,940 .......................... 343,564
Deposits and other assets ...................................................... 138,730
-------------
$19,786,477
=============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ............................................. $ 62,833
Accounts payable .............................................................. 2,226,340
Accrued payroll and related expenses .......................................... 3,176,151
Deferred income ............................................................... 37,843
Distribution payable to shareholders .......................................... 2,216,877
Income taxes payable .......................................................... 80,552
Other current liabilities ..................................................... 175,011
-------------
Total current liabilities .................................................... 7,975,607
Other liabilities .............................................................. 18,678
-------------
Total liabilities ............................................................ 7,994,285
Shareholders' equity:
Common stock, no par value; 5,000,000 shares authorized; 1,317,605 shares
issued and outstanding ....................................................... 1,386,417
Retained earnings ............................................................. 10,405,775
-------------
Total shareholders' equity ................................................... 11,792,192
Commitments ....................................................................
-------------
$19,786,477
=============
</TABLE>
See accompanying notes to consolidated financial statements.
F-68
<PAGE>
ILEX SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Revenues:
Consulting fees ...................... $57,309,190
Equipment sales ...................... 6,213,038
-------------
63,522,228
-------------
Costs and expenses:
Cost of revenue, consulting .......... 41,852,031
Cost of sales, equipment ............. 3,314,614
Selling, general, and administrative 9,507,879
Research and development ............. 1,211,497
-------------
55,886,021
-------------
Operating income .................... 7,636,207
Other income (expense):
Interest income ...................... 135,114
Interest expense ..................... (8,579)
Loss on write-down of investment .... (250,000)
Other expense ........................ (108,000)
-------------
Income before income taxes .......... 7,404,742
Income taxes .......................... 550,000
-------------
Net income .......................... $ 6,854,742
=============
</TABLE>
See accompanying notes to consolidated financial statements.
F-69
<PAGE>
ILEX SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
------------------------- RETAINED SHAREHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
----------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Balances as of December 31, 1996 ........ 1,315,720 $1,352,249 $10,606,517 $11,958,766
Issuance of common stock in exchange for
services ............................... 3,400 42,500 -- 42,500
Stock repurchase ........................ (1,515) (8,332) (6,060) (14,392)
Distributions to shareholders ........... -- -- (7,049,424) (7,049,424)
Net income .............................. -- -- 6,854,742 6,854,742
----------- ------------ ------------- ---------------
Balances as of December 31, 1997 ........ 1,317,605 $1,386,417 $10,405,775 $11,792,192
=========== ============ ============= ===============
</TABLE>
See accompanying notes to consolidated financial statements.
F-70
<PAGE>
ILEX SYSTEMS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net income .......................................................................... $ 6,854,742
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ...................................................... 419,593
Allowance for doubtful accounts .................................................... (203,255)
Loss on write-down of investment ................................................... 250,000
Deferred income taxes .............................................................. 485,000
Issuance of common stock for services .............................................. 42,500
Changes in operating assets and liabilities:
Receivables ....................................................................... (1,267,205)
Inventories ....................................................................... 387,485
Other current assets .............................................................. (112,176)
Deposits and other assets ......................................................... 140,884
Accounts payable and accrued liabilities .......................................... 324,963
Deferred income ................................................................... (159,012)
Income taxes payable .............................................................. 80,552
Other liabilities ................................................................. (459,166)
-------------
Net cash provided by operating activities ........................................ 6,784,905
-------------
Cash flows used in investing activities--purchases of property, plant, and equipment (416,630)
-------------
Cash flows from financing activities:
Payments on debt .................................................................... (67,265)
Distributions paid to shareholders .................................................. (4,832,547)
Repurchase of common stock .......................................................... (14,392)
-------------
Net cash used in financing activities ............................................ (4,914,204)
-------------
Increase in cash and cash equivalents ................................................ 1,454,071
Cash and cash equivalents, beginning of year ......................................... 3,465,477
-------------
Cash and cash equivalents, end of year ............................................... $ 4,919,548
=============
Supplemental disclosures of cash flow information:
Cash paid during year:
Income taxes ....................................................................... $ 716,190
=============
Interest ........................................................................... $ 8,579
=============
Noncash investing and financing activities--distributions payable to shareholders .. $ 2,216,877
=============
</TABLE>
See accompanying notes to consolidated financial statements.
F-71
<PAGE>
ILEX SYSTEMS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(1) SUMMARY OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
ILEX Systems, Inc. (the "Company") provides services and products
primarily in four areas: environmental consulting services to private and
public sector customers; software consulting services to the federal
government and its contractors; supervisory control and data acquisition
products and services to the electrical utility industry; and secured
communications products, principally to the federal government and its
agencies. The majority of the Company's revenues are derived from its
software consulting services.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the financial
statements of the Company and its wholly owned subsidiary. All significant
intercompany balances and transactions have been eliminated in consolidation.
REVENUE RECOGNITION
The Company's consulting services are generally performed on time-and
materials-based contracts for the federal government and its contractors.
Accordingly, revenues are recognized as services are performed. Equipment
sales revenues are recognized upon shipment. Unbilled accounts receivable
comprise charges for services and materials provided to customers that have
not been invoiced.
The Company does not require collateral for its receivables. Reserves are
maintained for potential credit losses.
CASH EQUIVALENTS
Cash equivalents of $1,879,285 as of December 31, 1997, consist
principally of money market investments. For purposes of the accompanying
consolidated statement of cash flows, the Company considers all highly liquid
debt instruments with remaining maturities of three months or less when
acquired to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments in the Company's consolidated
financial statements approximates fair value due to the short-term maturities
of these instruments.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out basis) or
market.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. Depreciation is
calculated using the straight-line method over the estimated useful lives of
the assets (generally five years). Leasehold improvements are amortized
straight-line over the shorter of the lease term or the estimated useful life
of the asset.
GOODWILL
Goodwill, which represents the excess of purchase price over the fair
value of net assets acquired, is amortized on a straight-line basis over the
expected periods to be benefited of 10 to 15 years. The Company assesses the
recoverability of goodwill by determining whether the amortization of the
goodwill balance over its remaining life can be recovered through
undiscounted future operating cash flows of the acquired operation.
F-72
<PAGE>
INCOME TAXES
The Company elected S corporation status on March 17, 1997, effective
January 1, 1997. Federal and the majority of state income taxes on the income
of S corporations are generally payable by the individual shareholders rather
than the Company.
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date.
USE OF ESTIMATES
The Company's management has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
(2) INVENTORIES
Inventories consisted of the following as of December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Raw materials and
subassemblies.................. $833,945
Work in process................. 89,521
----------
$923,466
==========
</TABLE>
(3) LINE OF CREDIT AND LONG-TERM DEBT
The Company has a $5,000,000 line of credit with a bank that is due on
demand. Interest is payable at the bank's prime rate (8.5% as of December 31,
1997) and is secured by trade accounts receivable, inventories, and other
assets. Borrowings outstanding under the line of credit were $-0-as of
December 31, 1997. The line of credit contains certain restrictive financial
covenants, including a minimum level of net worth and cash flow to debt
ratio. As of December 31, 1997, the Company was in compliance with all such
covenants.
The Company has an unsecured promissory note payable to a former
shareholder that was issued in conjunction with the repurchase of shares of
common stock in 1992. The note bears interest at 10% with payments of $6,000
per month, including interest, through December 1998. As of December 31,
1997, the principal balance of this note was $62,833.
(4) INCOME TAXES
The provision for income taxes for the year ended December 31, 1997,
consisted of the following:
<TABLE>
<CAPTION>
<S> <C>
Federal:
Current .. --
Deferred . $388,000
----------
388,000
----------
State:
Current .. 65,000
Deferred . 97,000
----------
162,000
----------
$550,000
==========
</TABLE>
F-73
<PAGE>
The provision for income taxes for the year ended December 31, 1997,
differs from the federal statutory rate, primarily due to the flow through
nature of income tax liability to the shareholders and reduction of the
federal and partial state deferred income tax assets and liabilities as of
December 31, 1996, resulting from the S corporation election as follows:
<TABLE>
<CAPTION>
<S> <C>
Federal income tax statutory rate ........ 34.0%
State income tax rate..................... 2.2
Benefit of federal S corporation
election................................. (28.8)
--------
7.4%
========
</TABLE>
The gross deferred tax assets were $13,000 as of December 31, 1997,
consisting of the state deferred income tax assets and liabilities for those
states who do not recognize S corporation status. Management considers
realization of the net deferred tax assets more likely than not due to
continued profitability of the Company and significant carryback
opportunities.
(5) EMPLOYEE BENEFIT PLANS
The Company has two Section 401(k) retirement savings plans (the Plans).
Under the terms of the Plans, employees may make contributions based on a
percentage of eligible earnings. Company contributions to the Plans are
discretionary and totaled $359,718 in 1997.
(6) STOCK OPTION PLAN
The Company has 100,000 shares of common stock reserved for issuance under
its 1992 Incentive Stock Option Plan (the "Plan"). Under the Plan, the
Company may grant options to employees, officers, and directors. Options are
granted at prices not less than the fair market value of the Company's common
stock as determined by the Board of Directors on the grant date. Options vest
ratably over 48 months and expire 49 months from the date of grant.
The Company applies Accounting Principles Board Opinion No. 25 (APB 25) in
accounting for its stock options. The exercise price for stock options
granted to employees in 1997 equaled the fair value of the Company's common
stock at the date of grant. Accordingly, in accordance with APB 25, no
compensation expense was recognized by the Company.
For purposes of pro forma disclosures required by Statement of Financial
Accounting Standards No. 123 (SFAS 123), the compensation cost of the
options, based on their estimated fair values, is amortized to expense over
the vesting periods of the options. The Company's net income for the year
ended December 31, 1997 would have reduced to the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
<S> <C>
Net income:
As reported . $6,854,742
============
Pro forma .... $6,838,958
============
</TABLE>
On January 1, 1997, the Company had no options outstanding. In July 1997,
the Company granted 25,000 options at an exercise price of $17.50, all of
which were outstanding but not exercisable as of December 31, 1997.
The weighted-average grant-date fair value of options granted during the
year ended December 31, 1997 was $3.05 per option. The weighted-average
remaining contract life of the Company's outstanding stock options was 3.5
years at December 31, 1997.
Pro forma information regarding net income as required by SFAS 123 has
been determined as if the Company had accounted for its employee stock
options under the fair value method. The fair value for the options was
estimated at the date of grant using the minimum value method prescribed in
SFAS 123, which does not consider the expected volatility of the Company
stock price, with the following weighted-average assumptions for 1997: risk
free interest rate of 6.06%; dividend yield of 0%; and weighted-average
expected option life of 3.25 years.
F-74
<PAGE>
(7) COMMITMENTS
The Company leases certain facilities under operating leases that expire
at various dates through 2001. The Company in turn subleases some of these
facilities. As of December 31, 1997, future minimum lease payments under
noncancelable operating leases, exclusive of the sublease rentals, are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- --------------
<S> <C>
1998......... $1,474,448
1999......... 510,551
2000......... 292,096
2001......... 124,212
------------
$2,401,307
============
</TABLE>
Rent expense, exclusive of sublease rentals, was approximately $1,081,636
in 1997. Sublease rental income was approximately $186,733 in 1997.
(8) SIGNIFICANT CUSTOMERS
For the year ended December 31, 1997, sales to a single customer
represented 26% of revenues. The outstanding accounts receivable and unbilled
receivable balances for this customer as of December 31, 1997, were
$1,257,875 and $2,228,650, respectively.
(9) SUBSEQUENT EVENT
In January 1998, shareholders of the Company agreed to sell all of their
common stock for approximately $50,000,000, subject to certain adjustments,
plus additional consideration based on post-acquisition performance. The sale
closed on February 27, 1998.
F-75
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
A WHOLLY-OWNED OPERATION OF ALLIEDSIGNAL, INC.
COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1997
F-76
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Management and Board of Directors
L-3 Communications Holdings, Inc.
We have audited the accompanying combined balance sheet of AlliedSignal
Ocean Systems, a wholly owned operation of AlliedSignal, Inc. ("Ocean
Systems"), as of December 31, 1997 and the related combined statements of
operations, equity and cash flows for the year then ended. These financial
statements are the responsibility of Ocean System's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Ocean Systems as
of December 31, 1997, and the combined results of their operations and cash
flows for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Los Angeles, California
February 23, 1998
F-77
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY-OWNED OPERATION OF ALLIEDSIGNAL, INC.)
COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Accounts receivable, net of allowances for doubtful accounts of $81 $13,313
Inventories ........................................................ 25,274
Contracts in progress .............................................. 793
Prepaid expenses and other current assets .......................... 1,743
---------
Total current assets .............................................. 41,123
Property, plant and equipment, net .................................. 16,845
Capitalized software, net ........................................... 2,248
Goodwill, net ....................................................... 1,820
Other assets ........................................................ 31
---------
Total assets ........................................................ $62,067
=========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable ................................................... $ 2,626
Accrued liabilities ................................................ 16,112
Advance payments ................................................... 16,162
---------
Total current liabilities ......................................... 34,900
Accrued pension and postretirement benefits ......................... 10,959
---------
Total liabilities ................................................... 45,859
---------
Commitment and contingencies
Equity:
Invested equity..................................................... 9,312
ELAC common stock .................................................. 3,424
ELAC retained earnings ............................................. 4,570
Cumulative translation adjustment .................................. (1,098)
---------
Total equity......................................................... 16,208
---------
Total liabilities and equity ........................................ $62,067
=========
</TABLE>
See accompanying notes to the combined financial statements
F-78
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY-OWNED OPERATION OF ALLIEDSIGNAL, INC.)
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
Sales ................................. $73,033
Cost of sales ......................... 56,049
---------
Gross profit ......................... 16,984
Operating expenses:
General and administrative ........... 11,981
Selling .............................. 5,933
Bid and proposal ..................... 2,053
Independent research and development 2,765
---------
Total operating expenses ............ 22,732
---------
Loss from operations .................. (5,748)
Interest expense, net ................. 490
Other income .......................... (185)
---------
Loss before income taxes .............. (6,053)
Benefit for income taxes .............. (2,378)
---------
Net loss ............................ $(3,675)
=========
</TABLE>
See accompanying notes to the combined financial statements
F-79
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
COMBINED STATEMENT OF EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
INVESTED ELAC ELAC CUMULATIVE
EQUITY IN OS COMMON RETAINED TRANSLATION TOTAL
(DEFICIT) STOCK EARNINGS ADJUSTMENT EQUITY
-------------- -------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 ..... $ 8,298 $3,424 $6,403 $ 87 $18,212
Net loss .......................... (2,680) -- (995) -- (3,675)
Cumulative translation adjustment -- -- -- (1,185) (1,185)
Advances from (repayments to)
AlliedSignal ..................... 3,694 -- (838) -- 2,856
-------------- -------- ---------- ------------- ---------
Balance at December 31, 1997 ..... $ 9,312 $3,424 $4,570 $(1,098) $16,208
============== ======== ========== ============= =========
</TABLE>
See accompanying notes to the combined financial statements
F-80
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net loss ..................................................................... ($ 3,675)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation of property, plant and equipment ............................... 2,976
Amortization of capitalized software ........................................ 1,078
Amortization of intangible assets ........................................... 70
Loss on the disposal of property, plant and equipment ....................... 8
Changes in operating assets and liabilities:
Accounts receivable ........................................................ 13,561
Inventories ................................................................ (359)
Contracts in progress ...................................................... 1,666
Prepaid and other current assets ........................................... (220)
Accounts payable ........................................................... (1,976)
Accrued liabilities ........................................................ (10,472)
Advance payments ........................................................... (1,092)
Accrued pension and postretirement benefits ................................ (20)
----------
Net cash provided by operating activities ................................. 1,545
----------
Cash flows from investing activities:
Property, plant and equipment purchased ...................................... (3,090)
Software purchased ........................................................... (265)
----------
Net cash used in investing activities ..................................... (3,355)
----------
Cash flows from financing activities:
Advances from AlliedSignal, net .............................................. 3,198
----------
Net cash provided by financing activities ................................. 3,198
----------
Effect of foreign currency exchange rate changes on cash ..................... (1,388)
----------
Net change in cash ............................................................ --
Cash and cash equivalents at the beginning of the year ........................ --
----------
Cash and cash equivalents at the end of the year .............................. $ --
==========
Supplement disclosures of cash flow information:
Cash paid during the year for:
Interest--AlliedSignal ...................................................... $ 552
----------
</TABLE>
See accompanying notes to the combined financial statements
F-81
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
1. BACKGROUND AND DESCRIPTION OF BUSINESS
The Ocean Systems business ("Ocean Systems" or the "Company") is a wholly
owned operation of AlliedSignal Inc. ("AlliedSignal") comprised of the Ocean
Systems Division ("OS"), and AlliedSignal ELAC Nautik GmbH ("ELAC"). The OS
Division headquarters and principal operations, including one manufacturing
site, are located in Sylmar, California, a suburb of Los Angeles. OS also
operates marketing offices located in Canada ("ASCI") and England ("BOSL").
OS was acquired through AlliedSignal's merger with the Bendix Corporation in
1982. ELAC is a wholly owned subsidiary of AlliedSignal Deutschland ("AS
Deutschland") and is a separate legal entity located in Kiel, Germany. ELAC
was acquired from Honeywell Inc. in 1994.
On December 22, 1997, L-3 Communications Corporation, a wholly owned
subsidiary of L-3 Communications Holdings, Inc. ("L-3") entered into a
definitive Purchase Agreement with AlliedSignal to acquire substantially all
the net assets excluding land and buildings, and assumed certain of the
liabilities of OS and purchased the outstanding capital stock of ELAC from AS
Deutschland.
Ocean Systems develops, manufactures and sells sophisticated sonar
detection and tracking devices for underwater use. The Company's customers
include the U.S. Government, foreign governments, defense industry prime
contractors and commercial customers. The Company operates primarily in one
industry segment, electronic sonar components and systems.
All domestic government contracts and subcontracts of Ocean Systems are
subject to audit and various cost controls, and Government contracts and
related orders are subject to cancellation if funds for contract performance
for any subsequent year become unavailable. Foreign government contracts
generally include comparable provisions relating to termination for the
convenience of the foreign government.
The decline in the U.S. defense budget since the late 1980s has resulted
in program delays, cancellations and scope reduction for defense contracts in
general. These events may or may not have an effect on the Company's
programs; however, in the event that U.S. Government expenditures for
products of the type manufactured by the Company are reduced, and not offset
by greater foreign sales or other new programs or products, or acquisitions,
there may be a reduction in the volume of contracts or subcontracts awarded
to the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
BASIS OF PRESENTATION AND USE OF ESTIMATES
The accompanying combined financial statements reflect the assets,
liabilities and operations of Ocean Systems including OS and ELAC which are
combined herein as they are entities under common control and management. All
significant intercompany accounts and transactions have been eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principals requires the Company's management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the combined financial statements and the reported amounts of revenue and
expenses during the reporting period. The most significant of these estimates
and assumptions relate to contract estimates of sales and costs, excess and
obsolete inventory reserves, warranty reserves, pension estimates and
recoverability of recorded amounts of fixed assets. Actual results could
differ from these estimates.
REVENUE RECOGNITION
Under fixed-price contracts, sales and related costs are recorded upon
delivery and customer acceptance. Sales and related costs under
cost-reimbursable contracts are recorded on the percentage of
F-82
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
completion method. Anticipated future losses on contracts are charged to
income when identified. Revisions in profit estimates are reflected in the
period in which the facts, which require the revision, become known.
ACCOUNTS RECEIVABLE
Management assesses the credit risk and records an allowance for
uncollectable accounts as considered necessary based on several factors
including, but not limited to, an analysis of specific customers, historical
trends, current economic conditions and other information. The U.S. Navy
comprises a significant portion of Ocean System's revenues. The Company's
other customers include the navies of many foreign countries. The Company's
credit risk is affected by conditions or occurrences within the U.S.
Government and economic conditions of the countries in which the Company
operates or has customers. Sales are made on unsecured, customer-specific
credit terms, which may include extended terms.
INVENTORIES
Inventories are valued at the lower of cost or market using the average
cost method. Inventories consist of raw materials and supplies, work in
process and finished goods. An excess and obsolete inventory reserve has been
established primarily for raw materials and parts that have not been
allocated to firm contracts. The excess and obsolete inventory reserve is
based on estimates of future usage of inventory on hand.
CONTRACTS IN PROCESS
Costs accumulated under cost-reimbursable contracts include direct costs,
as well as manufacturing overhead. In accordance with industry practice,
these amounts are included in current assets.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost net of
accumulated depreciation. For financial purposes, property, plant and
equipment is generally depreciated on the straight line method using
estimated useful lives ranging from 3 to 20 years. Leasehold improvements are
amortized over the shorter of the lease term or the estimated useful life of
the improvements. Interest costs incurred during the construction of plant
and equipment are capitalized using an imputed interest rate approximating
8%. Interest costs capitalized during 1997 amounted to $57.
CAPITALIZED SOFTWARE
Capitalized software primarily represents costs incurred related to the
purchase and implementation of the Company's MRP II business system.
Capitalized software is reported at historical cost less accumulated
amortization. Amortization is based on the estimated useful service life not
to exceed five years. Amortization of capitalized software was $1,078 for the
year ended December 31, 1997. Accumulated amortization was $2,368 at December
31, 1997.
GOODWILL
Goodwill represents the excess of the cost of the purchased business over
the net assets acquired and is being amortized on a straight-line basis over
40 years. This excess relates primarily to the allocated portion of goodwill
arising out of the AlliedSignal merger with Bendix in 1982 and was allocated
to OS
F-83
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
based on the proportionate percentage of OS pretax earnings to the total
Bendix Aerospace Group pretax earnings at the time of the AlliedSignal
acquisition from Bendix. Amortization expense was $70 for the year ended
December 31, 1997. Accumulated amortization was $980 at December 31, 1997.
The carrying amounts of intangible assets are reviewed if the facts and
circumstances indicate potential impairment of their carrying value. If this
review indicates that intangible assets are not recoverable, as determined
based on the undiscounted cash flows of the entity acquired over the
remaining amortization period, the Company's carrying values related to the
intangible assets are reduced to the fair value of the asset.
RESEARCH AND DEVELOPMENT AND SIMILAR COSTS
Research and development costs sponsored by the Company include research
and development and bid and proposal efforts related to government products
and services. Customer-sponsored research and development costs incurred are
included in contract costs.
FOREIGN OPERATIONS AND FOREIGN CURRENCY TRANSLATION
The Company's major foreign operation is ELAC located in Germany with the
Deutsche mark as its functional currency. Assets and liabilities are
translated at current exchange rates at the end of the period. Income and
expenses are translated using the monthly average exchange rates. The effect
of the unrealized rate fluctuations on translating foreign currency assets
and liabilities into U.S. dollars are accumulated as a separate component of
equity in the accompanying combined balance sheet.
There are no material foreign currency gains or losses for the year ended
December 31, 1997 as the Company's U.S. sales to foreign customers are
denominated in U.S. dollars. ASCI Canadian sales are denominated in Canadian
dollars and the ELAC foreign sales are denominated in Deutsche marks.
FINANCIAL INSTRUMENTS
At December 31, 1997, the carrying value of the Company's financial
instruments, such as receivables, accounts payable and accrued liabilities,
approximate fair value, based on the short-term maturities of these
instruments.
INCOME TAXES
The benefit for income taxes for OS was computed by applying statutory tax
rates to the reported loss before income taxes after considering items that
do not enter into the determination of taxable income and tax credits
reflected in the consolidated provision of AlliedSignal which are related to
OS. Income taxes for OS are assumed to have been settled with AlliedSignal at
December 31, 1997 and there are no separate tax attributes related to OS. For
ELAC, separate tax attributes that relate specifically to ELAC have been
considered in computing taxes.
3. TRANSACTIONS WITH ALLIEDSIGNAL
Ocean Systems relies on AlliedSignal for certain services, including
treasury, cash management, employee benefits, taxes, risk management,
internal audit, financial reporting, legal, contract administration and
general corporate services. Although certain assets, liabilities and expenses
related to these services have been allocated to the Company, the combined
financial position, results of operations and cash flows presented in the
accompanying combined financial statements would not be the same as would
have occurred had the Company been an independent entity. The following
describes the related party transactions.
F-84
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
ALLOCATION OF CORPORATE EXPENSES
The amount of allocated corporate expenses reflected in these combined
financial statements has been estimated based primarily on an allocation
methodology prescribed by government regulations pertaining to government
contractors. Corporate expenses allocated to Ocean Systems were $2,258 for
the year ended December 31, 1997, and are included in general and
administrative expense in the accompanying combined statement of operations.
PENSIONS
Certain of the Company's employees participate in various AlliedSignal
sponsored pension plans covering certain employees. Eligibility for
participation in these plans varies, and benefits are generally based on
employees' compensation and years of service.
AlliedSignal funding policy is generally to contribute in accordance with
cost accounting standards that affect government contractors subject to the
Internal Revenue code and regulations. Although the aforementioned pension
arrangements are part of certain AlliedSignal defined benefit plans, separate
actuarial estimates were made for the portion allocable to the Company.
Pension expense included in the accompanying combined statement of operations
was $1,452 for the year ended December 31, 1997. The pension plan liability
at December 31, 1997 was fully funded. The Company also has a supplemental
pension plan for highly compensated employees as defined by IRS rules. The
liability reflected in the accompanying combined balance sheet was $650 at
December 31, 1997. Pension expense included in the combined statement of
operations for the supplemental pension plan was $24 for the year ended
December 31, 1997.
The Company's German employees of ELAC are covered by a separate pension
plan. Pension costs included the following components for the year ended
December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Service costs earned during the year ......... $163
Interest cost on projected benefit obligation 119
Actual return on plan assets .................. (92)
Amortization of unrecognized net obligation .. 24
------
Net periodic pension cost ..................... $214
======
</TABLE>
F-85
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
The following table sets forth the ELAC pension plan funded status and
amounts recognized in the Company's combined balance sheet at December 31,
1997:
<TABLE>
<CAPTION>
<S> <C>
Actuarial present value of benefit obligation
Vested ................................................ $1,067
Nonvested ............................................. 296
--------
Accumulated benefit obligation ....................... 1,363
========
Projected benefit obligation .......................... 1,919
Plan assets at fair value ............................. 1,422
--------
Projected benefit obligation in excess of plan assets 497
Unrecognized net loss ................................ 37
Unrecognized prior service costs .....................
Unrecognized net obligation .......................... (361)
--------
Accrued pension costs ............................... $ 173
========
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Major assumptions were:
Discount Rate ................................... 6.8%
Expected long-term rate of return on assets .... 6.8%
Rate of increase in compensation levels ........ 4.0%
</TABLE>
POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS
In addition to participating in AlliedSignal pension plans, employees of
OS are provided varying levels of health care and life insurance benefits for
retired employees and dependents. Participants are eligible for these
benefits when they retire from active service and meet the pension plan
eligibility requirements. These benefits are funded primarily on a
pay-as-you-go basis with the retiree generally paying of the cost through
contributions, deductibles and coinsurance provisions.
Although the aforementioned postretirement benefits are part of certain
AlliedSignal postretirement arrangements, separate actuarial estimates were
made for the portion allocable to the Company. The weighted average discount
rate utilized in determining the accumulated postretirement benefit
obligation was 7.25% for 1997. Net postretirement benefit costs included in
the combined statements of operations was $1,072 for the year ended December
31, 1997.
The net postretirement benefit costs for 1997 included the following
components:
<TABLE>
<CAPTION>
<S> <C>
Service cost-benefits attributed to service during the period $ 545
Interest cost on accumulated postretirement benefit obligation 704
Amortization of gain .......................................... (177)
=======
Net postretirement benefit cost ............................... $1,072
=======
</TABLE>
F-86
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
The funded status of the plan and related liability amounts recognized in
the accompanying combined balance sheet at December 31, 1997 were as follows:
<TABLE>
<CAPTION>
<S> <C>
Accumulated postretirement benefit obligation:
Fully eligible active plan participants ..... $2,698
Other active plan participants ............... 7,049
--------
9,747
Unrecognized prior service costs .............. --
Unrecognized net gain (loss) .................. --
--------
Accrued postretirement benefit cost ......... $9,747
========
</TABLE>
EMPLOYEE SAVINGS PLANS
Ocean Systems North American operation also has a supplemental savings
plan in which the Company matches the contributions of participating
employees up to a designated level. Under this plan, the matching
contributions, in cash, were $54 for the year ended December 31, 1997 and the
liability recorded at December 31, 1997 was $562.
INTEREST EXPENSE
Interest expense has been allocated to the Company by applying
AlliedSignal's weighted average consolidated interest rate to the portion of
the beginning of the period equity account deemed to be financed by
consolidated debt, which has been determined based on AlliedSignal's debt to
equity ratio on such date. Management of the Company believes that this
allocation methodology is reasonable.
The allocated interest expense was calculated using the following equity
balance and interest rate, for the year ended December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
Equity ........ $5,751
Interest Rate 9.6%
</TABLE>
Allocated interest expense for the year ended December 31, 1997 amounted
to $552 and is included in interest expense, net in the accompanying combined
statement of operations.
INCOME TAXES
The Company will be included in the consolidated Federal income tax
return, foreign tax returns and certain combined and separate state and local
income tax returns of AlliedSignal for 1997. Income taxes for OS are
considered to have been settled with AlliedSignal at December 31, 1997 and
are recorded through the invested equity account with AlliedSignal as there
are no separate stand alone tax attributes related to OS.
ELAC participates in the AlliedSignal Deutschland GmbH profit pooling
agreement for corporate income tax and municipal trade tax. Since entering
into this agreement ELAC has not paid German taxes, as any profits or losses
of ELAC are transferred to AlliedSignal Deutschland. For purposes of these
combined financial statements, the tax attributes that relate to ELAC prior
to entering into the pooling agreement have been considered in computing the
separate ELAC tax computations as these attributes will remain with ELAC
after the termination of the pooling agreement after the acquisition by L-3.
F-87
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
STATEMENT OF CASH FLOWS
The company participates in the AlliedSignal cash management system, under
which all cash is received and payments are made by AlliedSignal. All
transactions between the Company and AlliedSignal have been accounted for as
settled in cash at the time such transactions were recorded by the Company.
4. INVENTORIES AND CONTRACTS IN PROCESS
Net inventories are comprised of the following components at December 31,
1997:
<TABLE>
<CAPTION>
<S> <C>
Raw materials and supplies ............ $14,894
Work in process ....................... 6,675
Finished goods ........................ 12,080
Excess and obsolete inventory reserve (7,772)
---------
Net inventories ...................... 25,877
Less, unliquidated progress payments (603)
---------
$25,274
=========
</TABLE>
For the year ended December 31, 1997, there were no general and
administrative, independent research and development, or bid and proposal
costs charged to inventory.
Contracts in process, amounting to $793 as of December 31, 1997, include
accumulated inventoried costs and profits on cost or cost-reimbursement
contracts, principally with the U.S. Government. The U.S. Government has
title to, or a security interest in, inventories to which progress payments
are applied. The Company believes that substantially all such amounts will be
billed and collected within one year.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1997 are comprised of the
following components:
<TABLE>
<CAPTION>
<S> <C>
Buildings, building improvements and land
improvements ................................ $ 9,108
Machinery, equipment, furniture and fixtures 48,060
Leasehold improvements ....................... 300
----------
57,468
Less, accumulated depreciation and
amortization ................................ (43,324)
----------
14,144
Land ......................................... 388
Construction in progress ..................... 2,313
----------
$ 16,845
==========
</TABLE>
Depreciation and amortization expense was $2,976 for the year ended
December 31, 1997.
F-88
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
6. INCOME TAXES
The effective tax rate differs from the statutory federal income tax rate
for the following reasons:
<TABLE>
<CAPTION>
<S> <C>
Statutory federal income tax rate .... (35.0)%
State taxes net of federal benefit ... (6.0)%
Foreign losses with no tax benefit ... 6.7 %
Foreign sales corporation tax
benefit.............................. (4.5)%
Other, net............................ (0.5)%
---------
(39.3)%
=========
</TABLE>
At December 31, 1997, the German trade tax and corporate income tax net
operating loss ("NOL") carryovers amounted to $953 and $1,180, respectively,
and may be carried forward indefinitely.
At December 31, 1997, deferred tax assets related to ELAC's German trade
tax and corporate income tax NOL carryovers amounted to $468. A full
valuation is recorded against the deferred tax asset.
The valuation allowance for deferred taxes was based on ELAC's historical
losses from operations and its current year loss. In addition, certain
aspects of the acquisition could limit the utilization of a portion or all of
these NOL carryovers. Accordingly, management believes currently there is not
enough historical information to support that it is more likely than not that
ELAC will realize the future tax benefit of these NOL carryovers.
7. EQUITY
Invested equity represents the equity contributed to OS by AlliedSignal
and related accumulated results of operations of OS. ELAC common stock
represents the one share of common stock held by AS Deutschland. ELAC's
retained earnings includes the impact of ELAC's accumulated operating losses,
and repayments to AlliedSignal offset by the effects of the amortization of
negative goodwill associated with the ELAC acquisition from Honeywell.
8. SALES TO PRINCIPAL CUSTOMERS
The Company operates primarily in one industry segment, electronic sonar
components and systems. Sales to principal customers are as follows for the
year ended December 31, 1997:
<TABLE>
<CAPTION>
<S> <C>
U.S. Government agencies and prime contractors $36,133
German government............................... 5,895
Other foreign governments....................... 24,883
Commercial customers............................ 6,122
---------
$73,033
=========
</TABLE>
F-89
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
Summarized data of the Company's operations by geographic area for the
year ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
NORTH REST OF
AMERICA GERMANY EUROPE ASIA OTHER ELIM TOTAL
--------- --------- --------- --------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated
customer ............. $39,002 $ 8,146 $6,220 $18,611 $1,054 -- $73,033
Inter-area sales ...... 19,536 4,334 -- -- -- $(23,870) --
Loss from operations . (4,658) (1,090) -- -- -- -- (5,748)
Identifiable assets at
December 31, 1997 ... 51,613 10,454 -- -- -- -- 62,067
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
The Company leases certain facilities and equipment under agreements
expiring at various dates through 2011. At December 31, 1997, future minimum
payments for noncancellable operating leases with initial or remaining terms
in excess of one year are $933 for 1998, $340 for 1999, $161 for 2000, $35
for 2001 and $7 for 2002.
Leases covering major items of real estate and equipment contain renewal
and or purchase options which may be exercised by the company. Rent expense,
net of sublease income from other AlliedSignal entities, was $1,342 for the
year ended December 31, 1997.
Management is continually assessing the Company's obligations with respect
to applicable environmental protection laws. While it is difficult to
determine the timing and ultimate cost to be incurred by the Company in order
to comply with these laws, based upon available internal and external
assessments, with respect to those environmental loss contingencies of which
management of the Company is aware, the Company believes that even without
considering potential insurance recoveries, if any, there are no
environmental loss contingencies that individually or in the aggregate, would
be material to the Company's combined financial position, cash flows and
results of operations. The Company accrues for these contingencies when it is
probable that a liability has been incurred and the amount of the loss can be
reasonably estimated.
The Company is engaged in providing products and services under contracts
with the U.S. Government and foreign government agencies. All such contracts
are subject to extensive legal and regulatory requirements, and, from time to
time, agencies of the U.S. Government investigate whether such contracts were
and are being conducted in accordance with these requirements. Under
government procurement regulations, an indictment of the Company by a federal
grand jury could result in the Company being suspended for a period of time
from eligibility for awards of new government contracts. A conviction could
result in debarment from contracting with federal government for a specified
term.
The Company is also periodically subject to periodic review or audit by
agencies of the U.S. Government. At December 31, 1997, there are several
pending issues with these agencies that are incidental to the Company's
business. One of these reviews was critical of the Company's procedures for
maintaining control of Government owned property in the Company's custody.
The Company is responsible and liable for $93 million of Government-owned
property in its possession. With respect to this and other U.S. Government
matters, the Company's management believes the ultimate resolution of any
such matters will not have a material adverse effect on the combined
financial position, cash flows or results of operations of the Company.
F-90
<PAGE>
ALLIEDSIGNAL OCEAN SYSTEMS
(A WHOLLY OWNED OPERATION OF ALLIEDSIGNAL, INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
The Company is periodically subject to litigation, claims or assessments
and various contingent liabilities (including environmental matters)
incidental to their business. With respect to those investigative actions,
items of litigation, claims or assessments of which they are aware,
management of the Company is of the opinion that the probability is remote
that, after taking into account certain provisions that have been made with
respect to these matters, the ultimate resolution of any such investigative
actions, items of litigation, claims or assessments will have a material
adverse effect on the combined financial position, cash flows or results of
operations of the Company.
F-91
<PAGE>
Pictures of the platforms, such as Global Star, International Space Station,
U-2, E-2C, F14, aircraft carrier, into which L-3's products are integrated.
SECURE COMMUNICATION SYSTEMS
SECURE HIGH DATA RATE COMMUNICATIONS
Wideband Data Links
SATELLITE COMMUNICATION TERMINALS
Ground-Based Satellite
Communication Terminals
SPACE COMMUNICATION AND GROUND CONTROL
Satellite Communication and Tracking Systems
Satellite Command and Control Sustainment and Support
MILITARY COMMUNICATIONS
Shipboard Communication Systems
Digital Battlefield Communications
Communication Software
Support Services
INFORMATION SECURITIES SYSTEMS
Secure Telephone Unit (STU III)
Secure Terminal Equipment (STE)
Local Management Device/Key Processor (LMD/KP)
Information Processing Systems
SPECIALIZED COMMUNICATION PRODUCTS
MICROWAVE PRODUCTS
Passive Components, Mechanical Switches and Wireless Assemblies
Safety Products
Semiconductors
Satellite and Wireless Components
AVIONICS AND OCEAN SYSTEMS
Aviation Recorders
Antenna Systems
Display Systems
Ocean Systems
TELEMETRY, INSTRUMENTATION AND SPACE PRODUCTS
Airborne, Ground and Space Telemetry
Space Products
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE U.S.
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Available Information.............................. i
Prospectus Summary................................. 1
Risk Factors....................................... 10
Use of Proceeds.................................... 18
Dilution........................................... 19
Dividend Policy.................................... 19
Capitalization..................................... 20
Unaudited Pro Forma Condensed Consolidated
Financial Information............................. 21
Selected Financial Information..................... 28
Management's Discussion and Analysis of
Financial Condition and Results of Operations .... 30
Business........................................... 42
Certain Relationships and Related Transactions .... 60
Management......................................... 62
Ownership of Capital Stock......................... 70
Description of Certain Indebtedness................ 71
Description of Capital Stock....................... 75
Shares Eligible for Future Sale.................... 76
United States Federal Tax Considerations ......... 78
Underwriting....................................... 80
Legal Matters...................................... 84
Experts ........................................... 84
Index to Financial Statements ..................... F-1
</TABLE>
UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE COMMON STOCK
OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
5,500,000 SHARES
[L3 LOGO]
L-3 COMMUNICATIONS
HOLDINGS, INC.
COMMON STOCK
PROSPECTUS
, 1998
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
C.E. UNTERBERG, TOWBIN
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH JURISDICTION.
SUBJECT TO COMPLETION, DATED APRIL 27, 1998
PROSPECTUS
5,500,000 SHARES
[L3 LOGO]
L-3 COMMUNICATIONS HOLDINGS, INC.
COMMON STOCK
All of the shares of Common Stock, par value $.01 per share (the "Common
Stock"), of L-3 Communications Holdings, Inc. ("Holdings") offered hereby are
being sold by Holdings. Of the 5,500,000 shares of Common Stock offered
hereby, 1,100,000 shares are initially being offered outside the United
States and Canada by the International Managers (the "International
Offering") and 4,400,000 shares are initially being offered in the United
States and Canada by the U.S. Underwriters (the "U.S. Offering" and together
with the International Offering, the "Common Stock Offering"). See
"Underwriting". The initial public offering price and underwriting discounts
and commissions are identical for both the International Offering and the
U.S. Offering. The closing of the U.S. Offering is a condition to the closing
of the International Offering.
Prior to the Offering, there has been no public market for the Common
Stock of Holdings. It is currently estimated that the initial public offering
price will be between $18.00 and $20.00 per share. See "Underwriting" for a
discussion of factors to be considered in determining the initial public
offering price. The Common Stock has been approved for listing, subject to
notice of issuance, on the New York Stock Exchange (the "NYSE") under the
symbol .
Concurrently with the Common Stock Offering, L-3 Communications
Corporation, a wholly-owned subsidiary of Holdings, is publicly offering (the
"Notes Offering" and, together with the Common Stock Offering, the
"Offerings") $150.0 million aggregate principal amount of its % Senior
Subordinated Notes due 2008 (the "Notes"). Prior to the consummation of the
Common Stock Offering, affiliates of Lehman Brothers Inc. own 49.0% of the
outstanding Common Stock of Holdings. See "Ownership of Capital Stock".
---------------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN RISK
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE COMMON STOCK.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
=============================================================================
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
- -----------------------------------------------------------------------------
Per Share ..... $ $ $
- -----------------------------------------------------------------------------
Total(3) ...... $ $ $
=============================================================================
(1) Holdings has agreed to indemnify the International Managers and the
U.S. Underwriters (together, the "Underwriters") against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(2) Before deducting expenses payable by Holdings estimated at $ .
(3) Holdings has granted to the U.S. Underwriters a 30-day option to
purchase up to an additional 825,000 shares of Common Stock, solely to
cover over-allotments, if any. If the U.S. Underwriters exercise the
option in full, the Price to Public will total $ , the
Underwriting Discounts and Commissions will total $ and the
Proceeds to Company will total $ . See "Underwriting".
The shares of Common Stock offered by this Prospectus are offered by the
International Managers named herein subject to prior sale, to withdrawal,
cancellation or modification of the offer without notice, to delivery to and
acceptance by the International Managers and to certain other conditions. It
is expected that delivery of the certificates for the shares of Common Stock
will be made at the offices of Lehman Brothers Inc., New York, New York on or
about , 1998.
LEHMAN BROTHERS
BEAR, STEARNS INTERNATIONAL LIMITED
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
C.E. UNTERBERG, TOWBIN
, 1998
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
INTERNATIONAL MANAGERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Available Information ............................. i
Prospectus Summary................................. 1
Risk Factors....................................... 10
Use of Proceeds.................................... 18
Dilution........................................... 19
Dividend Policy.................................... 19
Capitalization..................................... 20
Unaudited Pro Forma Condensed Consolidated
Financial Information............................. 21
Selected Financial Information..................... 28
Management's Discussion and Analysis of
Financial Condition and Results of Operations .... 30
Business........................................... 42
Certain Relationships and Related Transactions .... 60
Management......................................... 62
Ownership of Capital Stock......................... 70
Description of Certain Indebtedness................ 71
Description of Capital Stock....................... 75
Shares Eligible for Future Sale.................... 76
United States Federal Tax Considerations ......... 78
Underwriting....................................... 80
Legal Matters...................................... 84
Experts ........................................... 84
Index to Financial Statements ..................... F-1
</TABLE>
UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE COMMON STOCK
OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
5,500,000 SHARES
[L3 LOGO]
L-3 COMMUNICATIONS
HOLDINGS, INC.
COMMON STOCK
PROSPECTUS
, 1998
LEHMAN BROTHERS
BEAR, STEARNS INTERNATIONAL LIMITED
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
C.E. UNTERBERG, TOWBIN
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
- ----------------------------------------------------------- ---------
<S> <C> <C>
Securities and Exchange Commission registration fee ....... $37,318
National Association of Securities Dealers, Inc. filing fee 13,150
New York Stock Exchange listing application fee ........... *
Legal fees and expenses .................................... *
Accounting fees and expenses ............................... *
Printing and engraving fees and expenses ................... *
Blue Sky fees and expenses ................................. *
Transfer Agent fees and expenses............................ *
Miscellaneous expenses...................................... *
---------
Total...................................................... *
=========
</TABLE>
- ------------
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
for, among other things:
(i) permissive indemnification for expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by designated persons, including directors and officers of a
corporation, in the event such persons are parties to litigation other
than stockholder derivative actions if certain conditions are met;
(ii) permissive indemnification for expenses (including attorneys' fees)
actually and reasonably incurred by designated persons, including
directors and officers of a corporation, in the event such persons are
parties to stockholder derivative actions if certain conditions are met;
(iii) mandatory indemnification for expenses (including attorneys' fees)
actually and reasonably incurred by designated persons, including
directors and officers of a corporation, in the event such persons are
successful on the merits or otherwise in defense of litigation covered by
(i) and (ii) above; and
(iv) that the indemnification provided for by Section 145 is not deemed
exclusive of any other rights which may be provided under any by-law,
agreement, stockholder or disinterested director vote, or otherwise.
In addition to the indemnification provisions of the DGCL described above,
the Registrant's Certificate of Incorporation (the "Certificate of
Incorporation") provides that the Registrant shall, to the fullest extent
permitted by the DGCL, (i) indemnify its officers and directors and (ii)
advance expenses incurred by such officers or directors in relation to any
action, suit or proceeding.
The Registrant's Bylaws (the "Bylaws") require the advancement of expenses
to an officer or director (without a determination as to his conduct) in
advance of the final disposition of a proceeding if such person furnishes a
written affirmation of his good faith belief that he has met the applicable
standard of conduct and furnishes a written undertaking to repay any advances
if it is ultimately determined that he is not entitled to indemnification. In
connection with proceedings by or in the right of the Registrant, the Bylaws
provide that indemnification shall include not only reasonable expenses, but
also judgments, fines, penalties and amounts paid in settlement. The Bylaws
provide that the Registrant may, subject to authorization on a case-by-case
basis, indemnify and advance expenses to employees or agents to the same
extent as a director or to a lesser extent (or greater, as permitted by law)
as determined by the Board of Directors.
II-1
<PAGE>
The Bylaws purport to confer upon officers and directors contractual
rights to indemnification and advancement of expenses as provided therein.
The Certificate of Incorporation limits the personal liability of
directors to the Registrant or its stockholders for monetary damages for
breach of the fiduciary duty as a director, other than liability as a
director (i) for breach of duty of loyalty to the Registrant or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL (certain illegal distributions) or (iv) for any transaction for
which the director derived an improper personal benefit.
The Registrant maintains officers' and directors' insurance covering
certain liabilities that may be incurred by officers and directors in the
performance of their duties.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since April 30, 1997, Holdings has sold unregistered securities in the
amounts, at the times and for the aggregate amounts of consideration listed
below. The securities were sold directly by Holdings and did not involve any
underwriter. Holdings considers these securities to have been offered and
sold in transactions not involving any public offering and, therefore, to be
exempted from registration under Section 4(2) of the Securities Act. The
following assumes the conversion of Class B Common Stock into Common Stock
which will occur upon the consummation of the Common Stock Offering.
On April 30, 1997, Holdings issued 10,020,000 shares of Common Stock to
the Lehman Partnership and 6,980,000 shares of Common Stock to Lockheed
Martin for aggregate consideration of $109,990,000. On April 30, 1997,
Holdings issued 1,500,000 shares of Common Stock to each of Messrs. Lanza and
LaPenta for aggregate consideration of $15,000,000. Of such shares, 226,000
shares have been repurchased by Holdings.
On December 19, 1997, Holdings issued 226,000 shares of Common Stock to 21
management investors for aggregate consideration of $1,462,220.
On March 2, 1998, Holdings issued 228,571 shares of Common Stock to each
of Messrs. Lanza and LaPenta upon exercise of the first year of vesting under
their respective stock option agreements for aggregate consideration of
$2,957,700.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
The following exhibits are filed pursuant to Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- --------------- --------------------------------------------------------------------------------------------
<S> <C>
*1.1 Form of U.S. Underwriting Agreement among L-3 Communications Holdings, Inc. and the U.S.
Underwriters named therein.
*1.2 Form of International Underwriting Agreement among Holdings and the International Managers
named therein.
*3.1 Certificate of Incorporation.
*3.2 By-Laws.
*4.1 Form of Common Stock Certificate.
*5 Opinion of Simpson Thacher & Bartlett.
10.1 Credit Agreement, dated as of April 30, 1997 among L-3 Communications Corporation and
lenders named therein, as amended.
10.2 Indenture dated as of April 30, 1997 between L-3 Communications Corporation and The Bank of
New York, as Trustee.
*10.3 Stockholders Agreement dated as of April 30, 1997 among L-3 Communications Holdings, Inc.
and the stockholders parties thereto.
*10.4 Transaction Agreement dated as of March 28, 1997, as amended, among Lockheed Martin
Corporation, Lehman Brothers Capital Partners III, L.P., Frank C. Lanza, Robert V. LaPenta
and L-3 Communications Holdings, Inc.
10.5 Employment Agreement dated April 30, 1997 between Frank C. Lanza and L-3 Communications
Holdings, Inc.
10.51 Employment Agreement dated April 30, 1997 between Robert V. LaPenta and L-3 Communications
Holdings, Inc.
**10.6 Lease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, Inc., L-3
Communications Corporation and KSL, Division of Bonneville International.
10.61 Lease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, L-3 Communications
Corporation and Unisys Corporation.
**10.62 Sublease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, Inc., L-3
Communications Corporation and Unisys Corporation.
10.7 Limited Noncompetition Agreement dated April 30, 1997 between Lockheed Martin Corporation
and L-3 Communications Corporation.
10.8 Asset Purchase Agreement dated as of December 19, 1997 between L-3 Communications
Corporation and California Microwave, Inc.
10.81 Asset Purchase Agreement dated as of February 10, 1998 between FAP Trust and L-3
Communications Corporation.
*10.82 Asset Purchase Agreement dated as of March 30, 1998 among AlliedSignal Inc., AlliedSignal
Technologies, Inc., AlliedSignal Deutschland GMBH and L-3 Communications Corporation.
**10.9 Form of Stock Option Agreement for Employee Options.
**10.91 Form of 1997 Stock Option Plan for Key Employees.
*10.10 L-3 Communications Corporation Pension Plan.
11 L-3 Communications Holdings, Inc. Computation of Basic Earnings Per Share and Diluted
Earnings Per Share
*23.1 Consent of Simpson Thacher & Bartlett (included as part of its opinion filed as Exhibit 5
hereto).
23.2 Consent of Coopers & Lybrand L.L.P., independent certified public accountants.
23.3 Consent of Ernst & Young LLP, independent certified public accountants.
23.31 Consent of Ernst & Young LLP, independent certified public accountants.
23.4 Consent of KPMG Peat Marwick LLP, independent certified public accountants.
**24 Powers of Attorney.
</TABLE>
- ------------
* To be provided by amendment.
** Previously filed.
II-3
<PAGE>
(b) Financial Statement Schedules
Not applicable.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreements,
certificates in such denominations and registered in such names as required
by the Underwriters to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused the Registration Statement or amendments thereto to be signed on
its behalf by the undersigned, thereunto duly authorized, on April 27, 1998.
L-3 COMMUNICATIONS HOLDINGS, INC.
By: /s/ Christopher C. Cambria
---------------------------------
Vice President -- General Counsel
and Secretary
Pursuant to the requirements of the Securities Act, the Registration
Statement has been signed on the 27th day of April, 1998 by the following
persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ---------------------------------- ---------------------------------------------------------
<S> <C>
*
---------------------------------- Chairman, Chief Executive Officer and Director (Principal
Frank C. Lanza Executive Officer)
*
---------------------------------- President, Chief Financial Officer (Principal Financial
Robert V. LaPenta Officer) and Director
*
---------------------------------- Vice President--Finance and Controller (Principal
Michael T. Strianese Accounting Officer )
*
----------------------------------
David J. Brand Director
*
----------------------------------
Thomas A. Corcoran Director
*
----------------------------------
Alberto M. Finali Director
*
----------------------------------
Eliot M. Fried Director
*
----------------------------------
Frank H. Menaker, Jr. Director
*
----------------------------------
Robert B. Millard Director
*
----------------------------------
John E. Montague Director
*
----------------------------------
Alan H. Washkowitz Director
*By: /s/ Christopher C. Cambria
----------------------------------
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- --------------- --------------------------------------------------------------------------------------------
<S> <C>
*1.1 Form of U.S. Underwriting Agreement among L-3 Communications Holdings, Inc. and the U.S.
Underwriters named therein.
*1.2 Form of International Underwriting Agreement among Holdings and the International Managers
named therein.
*3.1 Certificate of Incorporation.
*3.2 By-Laws.
*4.1 Form of Common Stock Certificate.
*5 Opinion of Simpson Thacher & Bartlett.
10.1 Credit Agreement, dated as of April 30, 1997 among L-3 Communications Corporation and
lenders named therein, as amended.
10.2 Indenture dated as of April 30, 1997 between L-3 Communications Corporation and The Bank of
New York, as Trustee.
*10.3 Stockholders Agreement dated as of April 30, 1997 among L-3 Communications Holdings, Inc.
and the stockholders parties thereto.
*10.4 Transaction Agreement dated as of March 28, 1997, as amended, among Lockheed Martin
Corporation, Lehman Brothers Capital Partners III, L.P., Frank C. Lanza, Robert V. LaPenta
and L-3 Communications Holdings, Inc.
10.5 Employment Agreement dated April 30, 1997 between Frank C. Lanza and L-3 Communications
Holdings, Inc.
10.51 Employment Agreement dated April 30, 1997 between Robert V. LaPenta and L-3 Communications
Holdings, Inc.
**10.6 Lease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, Inc., L-3
Communications Corporation and KSL, Division of Bonneville International.
10.61 Lease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, L-3 Communications
Corporation and Unisys Corporation.
**10.62 Sublease dated as of April 29, 1997 among Lockheed Martin Tactical Systems, Inc., L-3
Communications Corporation and Unisys Corporation.
10.7 Limited Noncompetition Agreement dated April 30, 1997 between Lockheed Martin Corporation
and L-3 Communications Corporation.
10.8 Asset Purchase Agreement dated as of December 19, 1997 between L-3 Communications
Corporation and California Microwave, Inc.
10.81 Asset Purchase Agreement dated as of February 10, 1998 between FAP Trust and L-3
Communications Corporation.
*10.82 Asset Purchase Agreement dated as of March 30, 1998 among AlliedSignal Inc., AlliedSignal
Technologies, Inc., AlliedSignal Deutschland GMBH and L-3 Communications Corporation.
**10.9 Form of Stock Option Agreement for Employee Options.
**10.91 Form of 1997 Stock Option Plan for Key Employees.
*10.10 L-3 Communications Corporation Pension Plan.
11 L-3 Communications Holdings, Inc. Computation of Basic Earnings Per Share and Diluted
Earnings Per Share
*23.1 Consent of Simpson Thacher & Bartlett (included as part of its opinion filed as Exhibit 5
hereto).
23.2 Consent of Coopers & Lybrand L.L.P., independent certified public accountants.
23.3 Consent of Ernst & Young LLP, independent certified public accountants.
23.31 Consent of Ernst & Young LLP, independent certified public accountants.
23.4 Consent of KPMG Peat Marwick LLP, independent certified public accountants.
**24 Powers of Attorney.
</TABLE>
- ------------
* To be provided by amendment.
** Previously filed.
<PAGE>
===============================================================================
EXHIBIT 10.1
L-3 COMMUNICATIONS CORPORATION,
a Delaware corporation
-------------------------
CREDIT AGREEMENT
dated as of April 30, 1997
-------------------------
$275,000,000
Credit Facility
------------------------
LEHMAN COMMERCIAL PAPER INC.,
as Arranger, Syndication Agent and Documentation Agent,
and
BANK OF AMERICA NT & SA
as Administrative Agent
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . .
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . .
1.2 Other Definitional Provisions . . . . . . . . . . . . . . .
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS AND LOANS . . . . . . . . . .
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . .
2.2 Procedure for Borrowing . . . . . . . . . . . . . . . . . .
2.3 Commitment Fee . . . . . . . . . . . . . . . . . . . . . .
2.4 Termination or Reduction of Revolving Credit
Commitments . . . . . . . . . . . . . . . . . . . . . .
2.5 Repayment of Loans; Evidence of Debt . . . . . . . . . . .
2.6 Optional Prepayments; Mandatory Prepayments and
Reduction of Commitments . . . . . . . . . . . . . . .
2.7 Conversion and Continuation Options . . . . . . . . . . . .
2.8 Minimum Amounts and Maximum Number of Tranches . . . . . .
2.9 Interest Rates and Payment Dates . . . . . . . . . . . . .
2.10 Computation of Interest and Fees . . . . . . . . . . . . .
2.11 Inability to Determine Interest Rate . . . . . . . . . . .
2.12 Pro Rata Treatment and Payments . . . . . . . . . . . . .
2.13 Illegality . . . . . . . . . . . . . . . . . . . . . . . .
2.14 Requirements of Law . . . . . . . . . . . . . . . . . . .
2.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
2.16 Indemnity . . . . . . . . . . . . . . . . . . . . . . . .
2.17 Replacement of Lenders . . . . . . . . . . . . . . . . . .
2.18 Certain Fees . . . . . . . . . . . . . . . . . . . . . . .
2.19 Certain Rules Relating to the Payment of Additional
Amounts . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . .
3.1 L/C Commitment . . . . . . . . . . . . . . . . . . . . . .
3.2 Procedure for Issuance of Letters of Credit . . . . . . . .
3.3 Fees, Commissions and Other Charges . . . . . . . . . . . .
3.4 L/C Participation . . . . . . . . . . . . . . . . . . . . .
3.5 Reimbursement Obligation of the Borrower . . . . . . . . .
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . .
3.7 Letter of Credit Payments . . . . . . . . . . . . . . . . .
3.8 Application . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . .
4.1 Financial Condition . . . . . . . . . . . . . . . . . . . .
4.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . .
4.3 Corporate Existence; Compliance with Law . . . . . . . . .
4.4 Corporate Power; Authorization; Enforceable Obligations . .
4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . .
4.6 No Material Litigation . . . . . . . . . . . . . . . . . .
4.7 No Default . . . . . . . . . . . . . . . . . . . . . . . .
4.8 Ownership of Property; Liens . . . . . . . . . . . . . . .
4.9 Intellectual Property . . . . . . . . . . . . . . . . . . .
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
4.11 Federal Regulations . . . . . . . . . . . . . . . . . . .
4.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . .
4.13 Investment Company Act; Other Regulations . . . . . . . .
4.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
4.15 Purpose of Loans . . . . . . . . . . . . . . . . . . . . .
4.16 Environmental Matters . . . . . . . . . . . . . . . . . .
4.17 Collateral Documents . . . . . . . . . . . . . . . . . . .
4.18 Accuracy and Completeness of Information . . . . . . . . .
4.19 Solvency. . . . . . . . . . . . . . . . . . . . . . . . .
4.20 Labor Matters . . . . . . . . . . . . . . . . . . . . . .
4.21 Transaction Documents . . . . . . . . . . . . . . . . . .
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . .
5.1 Conditions to Initial Loans . . . . . . . . . . . . . . . .
5.2 Conditions to Each Extension of Credit . . . . . . . . . .
SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . .
6.1 Financial Statements . . . . . . . . . . . . . . . . . . .
6.2 Certificates; Other Information . . . . . . . . . . . . . .
6.3 Payment of Obligations . . . . . . . . . . . . . . . . . .
6.4 Conduct of Business and Maintenance of Existence . . . . .
6.5 Maintenance of Property; Insurance . . . . . . . . . . . .
6.6 Inspection of Property; Books and Records; Discussions . .
6.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . .
6.8 Environmental Laws . . . . . . . . . . . . . . . . . . . .
6.9 Further Assurances . . . . . . . . . . . . . . . . . . . .
6.10 Additional Collateral . . . . . . . . . . . . . . . . . .
6.11 Interest Rate Protection . . . . . . . . . . . . . . . . .
6.12 Foreign Jurisdictions . . . . . . . . . . . . . . . . . .
6.13 Novation; Federal Assignment of Claims . . . . . . . . . .
6.14 Maintenance of Collateral; Alterations . . . . . . . . . .
6.15 Arrangements with the Seller . . . . . . . . . . . . . . .
SECTION 7. NEGATIVE COVENANTS
7.1 Financial Condition Covenants . . . . . . . . . . . . . . .
7.2 Limitation on Indebtedness . . . . . . . . . . . . . . . .
7.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . .
7.4 Limitation on Guarantee Obligations . . . . . . . . . . . .
7.5 Limitation on Fundamental Changes . . . . . . . . . . . . .
7.6 Limitation on Sale of Assets . . . . . . . . . . . . . . .
7.7 Limitation on Dividends . . . . . . . . . . . . . . . . . .
7.8 Limitation on Capital Expenditures . . . . . . . . . . . .
7.9 Limitation on Investments, Loans and Advances . . . . . . .
7.10 Limitation on Optional Payments and Modifications of
Instruments and Agreements . . . . . . . . . . . . . .
7.11 Limitation on Transactions with Affiliates . . . . . . . .
7.12 Limitation on Sales and Leasebacks . . . . . . . . . . . .
7.13 Limitation on Changes in Fiscal Year . . . . . . . . . . .
7.14 Limitation on Negative Pledge Clauses . . . . . . . . . .
7.15 Limitation on Lines of Business . . . . . . . . . . . . .
7.16 Designated Senior Debt . . . . . . . . . . . . . . . . . .
SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
SECTION 9. THE AGENTS; THE ARRANGER . . . . . . . . . . . . . . . . . .
9.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . .
9.2 Delegation of Duties . . . . . . . . . . . . . . . . . . .
9.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . .
9.4 Reliance by Agents . . . . . . . . . . . . . . . . . . . .
9.5 Notice of Default . . . . . . . . . . . . . . . . . . . . .
9.6 Non-Reliance on Agents and Other Lenders . . . . . . . . .
9.7 Indemnification . . . . . . . . . . . . . . . . . . . . . .
9.8 Agents, in Their Individual Capacities . . . . . . . . . .
9.9 Successor Administrative Agent . . . . . . . . . . . . . .
9.10 The Arranger . . . . . . . . . . . . . . . . . . . . . . .
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .
10.1 Amendments and Waivers . . . . . . . . . . . . . . . . .
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . .
10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . .
10.4 Survival of Representations and Warranties . . . . . . . .
10.5 Payment of Expenses and Taxes . . . . . . . . . . . . . .
10.6 Successors and Assigns; Participation and Assignments . .
10.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . .
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . .
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . .
10.10 Integration . . . . . . . . . . . . . . . . . . . . . . .
10.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . .
10.12 SUBMISSION TO JURISDICTION; WAIVERS . . . . . . . . . . .
10.13 Acknowledgements . . . . . . . . . . . . . . . . . . . .
10.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . .
10.15 Confidentiality . . . . . . . . . . . . . . . . . . . . .
<PAGE>
EXHIBITS
Exhibit A-1 Form of Tranche A Term Note
Exhibit A-2 Form of Tranche B Term Note
Exhibit A-3 Form of Tranche C Term Note
Exhibit A-4 Form of Revolving Credit Note
Exhibit A-5 Form of Swing Line Note
Exhibit B-1 Form of Parent Guarantee
Exhibit B-2 Form of Subsidiary Guarantees
Exhibit B-3 Form of Parent Pledge and Security Agreement
Exhibit B-4 Form of Borrower Pledge and Security Agreement
Exhibit B-5 Form of Subsidiary Pledge and Security Agreement
Exhibit C-1 Form of Mortgage
Exhibit C-2 Form of Deed of Trust
Exhibit D-1 Form of Legal Opinion of Simpson Thacher and
Bartlett
Exhibit D-2 Form of Legal Opinion of Fried, Frank, Harris,
Shriver & Jacobson
Exhibit E Form of Borrowing Certificate
Exhibit F Form of Certificate of Non-U.S. Lender
Exhibit G Form of Assignment and Acceptance
SCHEDULES
Schedule I Lenders and Commitments
Schedule II Pricing Grid
Schedule III Real Property to be Mortgaged
Schedule IV Transaction Documents
Schedule 4.4 Required Consents
Schedule 4.5 No Legal Bar
Schedule 4.6 Material Litigation
Schedule 4.8 Real Property
Schedule 4.9 Intellectual Property Claims
Schedule 4.10 Taxes
Schedule 4.14 Subsidiaries
Schedule 4.17 Filing Jurisdictions
Schedule 6.5 Insurance
Schedule 6.10 Certain Real Property
Schedule 7.2(f) Existing Indebtedness
Schedule 7.3(f) Existing Liens
Schedule 7.4 Existing Guarantee Obligations
Schedule 7.9(c) Officers
Schedule 7.9(g) Existing Investments
<PAGE>
CREDIT AGREEMENT, dated as of April 30, 1997, among L-3
Communications Corporation, a Delaware corporation (the "Borrower") which is
wholly owned by L-3 Communications Holdings, Inc., a Delaware corporation
("Holdings"), the several lenders from time to time parties hereto (the
"Lenders"), Lehman Commercial Paper Inc. ("LCPI") as arranger (in such
capacity, the "Arranger"), LCPI, as syndication agent (in such capacity, the
"Syndication Agent"), LCPI, as documentation agent (in such capacity, the
"Documentation Agent") and Bank of America NT & SA ("BOA"), as administrative
agent for the Lenders (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower is a party to the Transaction Agreement, dated
as of March 28, 1997 (as amended through the date hereof the "Transaction
Agreement"), by and among Lockheed Martin Corporation, a Maryland corporation
(the "Seller"), the Borrower, Lehman Brothers Capital Partners III, L.P.
("Capital Partners") and its Affiliates, Frank C. Lanza and Robert V. LaPenta;
WHEREAS, pursuant to the Transaction Agreement, on the Closing Date:
(i) the Seller, on behalf of itself and its various transferor subsidiaries,
will transfer (the "Asset Contribution") to the Borrower, on behalf of and at
the direction of Holdings, the Transferred Assets (as defined in the
Transaction Agreement); (ii) Holdings will issue to the Seller 6,980,000 shares
of its Class A Common Stock par value $.01 per share; (iii) Holdings will pay
the Seller $479,835,000 in cash (subject to adjustment as provided in the
Transaction Agreement) (the "Cash Consideration"); and (iv) the Borrower, on
behalf of and at the direction of Holdings, will assume the Assumed Liabilities
(as defined in the Transaction Agreement);
WHEREAS, Holdings' obligation to pay the Cash Consideration will be
financed with (i) an investment of not less than $79,835,000 in Holdings Class
A Common Stock (the "Equity Investment"), of which (x) $64,835,000 will be
provided by Capital Partners and (y) $7,500,000 will be provided by each of
Frank C. Lanza and Robert J. LaPenta, (ii) the issuance and sale by the
Borrower of senior subordinated debt securities for cash proceeds of at least
$225.0 million (the "Securities Offering") and (iii) senior debt financing;
WHEREAS, the Borrower has requested the Lenders to extend credit to
it (i) to finance a portion of the Cash Consideration to be paid by Holdings in
connection with the Asset Contribution and (ii) for working capital and general
corporate purposes of the Borrower and its Subsidiaries after the Closing Date;
and
WHEREAS, the Lenders are willing to extend such credit to the
Borrower upon and subject to the terms and conditions hereafter set forth;
NOW, THEREFORE, parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
1
<PAGE>
"Adjustment Date": the fifth day following the receipt by the
Administrative Agent of the financial statements for the most recently
completed fiscal period furnished pursuant to subsection 6.1(a) or (b), as
the case may be, and the compliance certificate with respect to such
financial statements furnished pursuant to subsection 6.2(c). For purposes
of determining the Applicable Margin and the Commitment Fee Rate, the
first "Adjustment Date" shall mean the date on which the financial
statements for the fiscal quarter ended September 30, 1997 furnished
pursuant to subsection 6.1(b) and the related compliance certificate
furnished pursuant to subsection 6.2(c) are delivered to the
Administrative Agent pursuant to subsection 6.1(b) and 6.2(c),
respectively.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the management and
policies of such Person, whether by contract or otherwise.
"Agents": the collective reference to the Syndication Agent, the
Documentation Agent and the Administrative Agent.
"Aggregate Outstanding Extensions of Credit": as to any Lender with
respect to any Type of Loan at any time, an amount equal to the sum of (a)
the aggregate principal amount of all Loans of such Type made by such
Lender then outstanding and (b) in the case of Revolving Credit Loans,
such Lender's Commitment Percentage of the L/C Obligations then
outstanding.
"Agreement": this Credit Agreement, as amended, restated,
supplemented or otherwise modified from time to time.
"Applicable Margin": at any time, the percentages set forth on
Schedule II under the relevant column heading opposite the level of the
Debt Ratio most recently determined; provided that (a) the Applicable
Margins commencing on the Closing Date shall be those set forth in
Schedule II opposite a Debt Ratio captioned "greater than or equal to
4.75" until the first Adjustment Date, (b) the Applicable Margins
determined for any Adjustment Date (including the first Adjustment Date)
shall remain in effect until a subsequent Adjustment Date for which the
Debt Ratio falls within a different level and (c) if the financial
statements and related compliance certificate for any fiscal period are
not delivered by the date due pursuant to subsections 6.1 and 6.2, the
Applicable Margins shall be (i) for the first 35 days subsequent to such
due date, the Applicable Margin in effect prior to such due date and (ii)
thereafter, those set forth opposite a Debt Ratio captioned "greater than
or equal to 4.75," in either case, until the date of delivery of such
financial statements and compliance certificate.
"Application": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to issue a
Letter of Credit.
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"Asset Contribution": as defined in the recitals to this
Agreement.
"Asset Sale": any sale, sale-leaseback, or other disposition by
any Person or any Subsidiary thereof of any of its property or assets,
including the stock of any Subsidiary of such Person, except sales and
dispositions permitted by subsection 7.6 other than subsection 7.6(b) or
(e).
"Assignee": as defined in subsection 10.6(c).
"Attributable Debt": in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the
rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during
the remaining term of the lease included in such sale and leaseback
transaction (including any period for which such lease has been extended
or may, at the option of the lessor, be extended).
"Available Commitment": as to any Lender and any Type of Loan, at any
time, an amount equal to the excess, if any, of (a) such Lender's
Commitment with respect to such Type of Loan over (b) such Lender's
Aggregate Outstanding Extensions of Credit with respect to such Type of
Loan.
"Base Rate": means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by BOA in San
Francisco, California, as its "reference rate." (The "reference rate" is a
rate set by BOA based upon various factors including BOA's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate.)
"Base Rate Loans": Loans the rate of interest applicable to which
is based upon the Base Rate.
"BOA": as defined in the recitals to this Agreement.
"Borrower Pledge and Security Agreement": the Borrower Pledge and
Security Agreement substantially in the form of Exhibit B-4, to be
executed and delivered by the Borrower, as the same may be amended,
supplemented or otherwise modified.
"Borrowing Date": any Business Day specified in a notice pursuant
to subsection 2.2 as a date on which the Borrower requests the Lenders
to make Loans hereunder.
"Business": as defined in subsection 4.16.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City or San Francisco, California are
authorized or required by law to close and, if the applicable Business Day
relates to Eurodollar Loans, any day on which dealings are carried on in
the applicable London interbank market.
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"Capital Expenditures" shall mean, for any fiscal period, the
aggregate of all expenditures that, in conformity with GAAP (but excluding
capitalized interest), are or are required to be included as additions
during such period to property, plant or equipment reflected on the
consolidated balance sheet of the Borrower and its Subsidiaries, excluding
the expenditures relating to the Transaction.
"Capital Lease Obligations": of any Person as of the date of
determination, the aggregate liability of such Person under Financing
Leases reflected on a balance sheet of such Person under GAAP.
"Capital Partners": as defined in the recitals to this Agreement.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"Cash Consideration": as defined in the recitals to this
Agreement.
"Cash Equivalents": (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and time deposits with maturities of one year or less from the
date of acquisition and overnight bank deposits of any Lender or of any
commercial bank having capital and surplus in excess of $500,000,000, (c)
repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not
more than 90 days with respect to securities issued or fully guaranteed or
insured by the United States Government, (d) commercial paper of a
domestic issuer rated at least A-2 by Standard and Poor's Rating Group
("S&P") or P-2 by Moody's Investors Service, Inc. ("Moody's"), or carrying
an equivalent rating by a nationally recognized rating agency if both of
S&P and Moody's cease publishing ratings of investments, (e) securities
with maturities of one year or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at
least A by S&P or A by Moody's, (f) securities with maturities of one year
or less from the date of acquisition backed by standby letters of credit
issued by any Lender or any commercial bank satisfying the requirements of
clause (b) of this definition or (g) shares of money market mutual or
similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"Change of Control": the occurrence of any of the following
events:
(i) the Principals and their Related Parties, as a whole, shall
at any time cease to own, directly or indirectly, 60% of the Capital
Stock of Holdings, determined on a fully diluted basis; or
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(ii) the Principals or their Related Parties, as a whole, shall
at any time cease to own, determined on a fully diluted basis,
sufficient shares of the Capital Stock of Holdings, determined on a
fully diluted basis, to elect a majority of the Board of Directors of
Holdings and the Borrower or otherwise cease to have the right or
ability, by voting power, contract or otherwise, to elect or
designate for election a majority of the Board of Directors of
Holdings and the Borrower; or
(iii) Holdings shall, at any time, cease to own 100% of the
Capital Stock of the Borrower; or
(iv) a "Change of Control" shall have occurred under the
Indenture.
"Class": (i) Lenders having Tranche A Term Loan Exposure and/or
Revolving Loan Exposure (taken together as a single class), (ii) Lenders
having Tranche B Term Loan Exposure and (iii) Lenders having Tranche C
Term Loan Exposure.
"Closing Date": the date on which the conditions precedent set
forth in subsection 5.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all assets of the Credit Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by
any Security Document.
"Commitment": as to any Lender, such Lender's Tranche A Term Loan
Commitment, Tranche B Term Loan Commitment, Tranche C Term Loan
Commitment and Revolving Credit Commitment.
"Commitment Letter": the Commitment Letter, dated as of April 2,
1997, among Holdings, the Borrower and LCPI, as the same may be amended,
supplemented or otherwise modified from time to time.
"Commitment Fee Rate": at any time, the rates per annum set forth on
Schedule II under the relevant column heading opposite the level of the
Debt Ratio most recently determined; provided that (a) the Commitment Fee
Rate commencing on the Closing Date shall be that set forth in Schedule II
opposite a Debt Ratio captioned "greater than or equal to 4.75" until the
first Adjustment Date, (b) the Commitment Fee Rate determined for any
Adjustment Date (including the first Adjustment Date) shall remain in
effect until a subsequent Adjustment Date for which the Debt Ratio falls
within a different level and (c) if the financial statements and related
compliance certificate for any fiscal period are not delivered by the date
due pursuant to subsections 6.1 and 6.2, the Commitment Fee Rate shall be
(i) for the first 35 days subsequent to such due date, the Commitment Fee
Rate in effect prior to such due date and (ii) thereafter, that set forth
opposite a Debt Ratio captioned "greater than or equal to 4.75," in either
case, until the date of delivery of such financial statements and
compliance certificate.
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"Commitment Percentage": as to the Commitment of any Lender with
respect to any Type of Loan at any time, the percentage which the
Commitment of such Lender with respect to such Type of Loan then
constitutes of the aggregate Commitments with respect to such Type of Loan
(or, at any time after such Commitments shall have expired or terminated,
the percentage which the aggregate amount of the Aggregate Outstanding
Extensions of Credit of such Lender with respect to such Type of Loan
constitutes of the aggregate amount of the Aggregate Outstanding
Extensions of Credit of all Lenders with respect to such Type of Loan).
"Commitment Period": the period from and including the date hereof
to but not including the Revolving Loan Termination Date or such earlier
date on which the Revolving Credit Commitments shall terminate as
provided herein.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower
and which is treated as a single employer under Section 414 (b) or (c) of
the Code.
"Consolidated EBITDA": as of the last day of any fiscal quarter,
Consolidated Net Income (excluding without duplication, (x) extraordinary
gains and losses in accordance with GAAP, (y) gains and losses in
connection with asset dispositions whether or not constituting
extraordinary gains and losses and (z) gains or losses on discontinued
operations) for such period, plus (i) Consolidated Cash Interest Expense
for such period, plus (ii) to the extent deducted in computing such
Consolidated Net Income, the sum of income taxes, depreciation and
amortization for the four fiscal quarters ended on such date; provided
that for any calculation of Consolidated EBITDA for any fiscal period
ending during the first three full fiscal quarters following March 31,
1997, Consolidated EBITDA shall be deemed to be Consolidated EBITDA from
March 31, 1997 to the last day of such period multiplied by a fraction the
numerator of which is 365 and the denominator of which is the number of
days from March 31, 1997 to the last day of such period.
"Consolidated Cash Interest Expense": as of the last day of any
fiscal quarter, the amount of interest expense, payable in cash, of the
Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP for the four fiscal quarters
ended on such date; provided that for any calculation of Consolidated Cash
Interest Expense for any fiscal period ending during the first three full
fiscal quarters following March 31, 1997, Consolidated Cash Interest
Expense shall be deemed to be Consolidated Cash Interest Expense from
March 31, 1997 to the last day of such period multiplied by a fraction the
numerator of which is 365 and the denominator of which is the number of
days from March 31, 1997 to the last day of such period.
"Consolidated Net Income": for any fiscal period, net income of
the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Debt": at any date, all Indebtedness of the
Borrower and its Subsidiaries outstanding on such date for borrowed
money or the deferred purchase price of property, including, without
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limitation, in respect of Financing Leases but excluding Indebtedness
permitted pursuant to subsection 7.2(h).
"Consolidated Working Capital": at any date, the excess of (a) the
sum of all amounts (other than cash and Cash Equivalents) that would, in
accordance with GAAP, be set forth opposite the caption "total current
assets" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date over (b) the sum of all amounts
that would, in accordance with GAAP, be set forth opposite the caption
"total current liabilities" (or any like caption) on a consolidated
balance sheet of the Borrower and its Subsidiaries on such date
(excluding, to the extent it would otherwise be included under current
liabilities, any short-term Consolidated Total Debt and the current
portion of any long-term Consolidated Total Debt).
"Constitutional Documents": as to any Person, the articles or
certificate of incorporation and by-laws, partnership agreement or other
organizational documents of such Person.
"Contingent Purchase Price Receipts": at any date, the aggregate
cash received by Holdings, the Borrower or any of their Subsidiaries in
respect of any purchase price adjustment made pursuant to, or in
connection with, the Transaction Agreement subsequent to the date
hereof.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Documents": this Agreement, the Notes, the Applications,
the Guarantees and the Security Documents.
"Credit Parties": the Borrower, Holdings, and each Subsidiary of
the Borrower which is a party to a Credit Document.
"Debt Ratio": as at the last day of any fiscal quarter, the ratio
of (a) Consolidated Total Debt on such date to (b) Consolidated EBITDA.
"Default": any of the events specified in Section 8, whether or
not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States
of America.
"Environmental Laws": any and all laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, or other legally enforceable
requirement (including, without limitation, common law) of any foreign
government, the United States, or any state, local, municipal or other
governmental authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment or of human
health as affected by the environment as has been, is now, or may at any
time hereafter be, in effect, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Sections 9601 et seq.; the Toxic Substance
Control Act, 15 U.S.C. Sections 9601
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et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section
1802 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq.; the Clean Water Act; 33 U.S.C. Sections 1251 et
seq.; the Clean Air Act, 42 U.S.C. Sections 7401 et seq.; or other similar
federal and/or state environmental laws.
"Environmental Permits": any and all permits, licenses,
registrations, notifications, exemptions and any other authorization
required under any applicable Environmental Law.
"Equity Documents": the Stockholder Agreement, the Subscription
Agreements and the Option Agreements.
"Equity Investment": as defined in the recitals to this Agreement.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": means for any day for any
Interest Period the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day (whether
or not applicable to any Lender) under regulations issued from time to
time by the FRB for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities").
"Eurodollar Loans": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.
"Eurodollar Rate": means, for any Interest Period, with respect to
Eurodollar Loans comprising part of the same borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined
by the Administrative Agent as follows:
Eurodollar Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage": for any day for any Interest Period
the maximum reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day (whether or not applicable
to any Lender) under regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency
liabilities").
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess
of (a) the sum, without duplication, of (i) Consolidated Net Income for
such fiscal year, (ii) the net decrease, if any, in Consolidated Working
Capital during such fiscal year, (iii) to the extent deducted in computing
such Consolidated Net Income, non-cash
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interest expense, depreciation and amortization for such fiscal year, (iv)
extraordinary non-cash losses during such fiscal year subtracted in the
determination of Consolidated Net Income for such fiscal year, (v) change
in deferred tax liability of the Borrower for such fiscal year, (vi)
non-cash losses in connection with asset dispositions whether or not
constituting extraordinary losses, (vii) non-cash ordinary losses and
(viii) Contingent Purchase Price Receipts in excess of $10,000,000 over
(b) the sum, without duplication, of (i) the aggregate amount of permitted
cash Capital Expenditures made by the Borrower and its Subsidiaries during
such fiscal year, (ii) the net increase, if any, in Consolidated Working
Capital during such fiscal year, (iii) the aggregate amount of payments of
principal in respect of any Indebtedness not prohibited hereunder during
such fiscal year (other than prepayments of Revolving Credit Loans not
accompanied by reductions of the Commitments), (iv) deferred income tax
credit of the Borrower for such fiscal year, (v) extraordinary non-cash
gains during such fiscal year added in the determination of Consolidated
Net Income for such fiscal year, (vi) non-cash gains in connection with
asset dispositions whether or not constituting extraordinary gains and
(vii) non-cash ordinary gains.
"Excess Cash Flow Payment Date": in respect of any fiscal year,
the date on which the Borrower is required to deliver audited financial
statements for such fiscal year to each Lender pursuant to subsection
6.1(a).
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Final Maturity Date": March 31, 2006.
"Foreign Subsidiary": any Subsidiary which is organized under the
laws of any jurisdiction outside the United States or under the laws of
the U.S. Virgin Islands.
"FRB": means the Board of Governors of the Federal Reserve System,
and any governmental authority succeeding to any of its principal
functions.
"GAAP": generally accepted accounting principles in the United
States of America in effect from on the Closing Date.
"GC Notice Recipient": with respect to any Government Contract,
the true and correct (x) contracting officer, or the head of the
respective U.S. government department or agency, (y) surety or sureties
upon the bond or bonds, if any, in connection with such Government
Contract, and (z) disbursing officer, if any designated in such
Government Contract to make payment.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
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Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued
a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, reimbursement obligations under letters of
credit and any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Guarantees": the Parent Guarantee and the Subsidiary Guarantees.
"Indebtedness": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices and accrued expenses incurred in the ordinary course of
business), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under Financing Leases, (d) all obligations of such Person in
respect of acceptances issued or created for the account of such Person,
(e) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable
for the payment thereof and (f) all Attributable Debt of such Person with
respect to sale and leaseback transactions of such Person.
"Indenture": the Indenture between the Borrower and The Bank of
New York, as trustee, pursuant to which the Subordinated Notes are
issued.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245
of ERISA.
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"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any Base Rate Loan, the last
Business Day of each March, June, September and December, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the
last Business Day of such Interest Period, and (c) as to any Eurodollar
Loan having an interest period longer than three months, (i) each Business
Day which is three months or a whole multiple thereof after the first day
of such Interest Period and (ii) the last Business Day of such Interest
Period.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion,
as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the
preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less
than three Business Days prior to the last day of the then current
Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) any Interest Period for any Loan that would otherwise
extend beyond the Termination Date of such Loan shall end on the
Termination Date of such Loan;
(iii) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
in which such Interest Period would otherwise be scheduled to end)
shall end on the last Business Day of the appropriate calendar month;
and
(iv) no Interest Period with respect to any portion of any Type
of Term Loan shall extend beyond a date on which the Borrower is
required to make a scheduled payment of principal of Term Loans of
such Type unless the sum of (a) the aggregate principal amount of
Term Loans of such Type that are Base Rate Loans plus (b) the
aggregate principal amount of Term Loans of such Type that are
Eurodollar Rate Loans with Interest Periods expiring on or before
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such date equals or exceeds the principal amount required to be paid
on Term Loans of such Type on such date.
"Interest Rate Agreement": any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other
similar agreement or arrangement.
"Interest Rate Agreement Obligations": the obligations of the
Borrower or any of its Subsidiaries to make payments to counterparties
under Interest Rate Agreements in the event of the occurrence of a
termination event thereunder.
"Issuing Lender": BOA, in its capacity as issuer of any Letter of
Credit or, at the election of BOA, such other Lender or Lenders that
agree to act as Issuing Lender at the request of the Company.
"LCPI": as defined in the recitals to this Agreement.
"L/C Commitment": $15,000,000.
"L/C Fee Payment Date": the last Business Day of each March, June,
September and December.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters
of Credit which have not then been reimbursed pursuant to subsection 3.5.
"L/C Participants": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
"Lender" and "Lenders": the persons identified as Lenders and listed
on the signature pages of this Agreement (including the Issuing Bank and
the Swing Line Lender), together with their successors and permitted
assigns pursuant to subsection 10.6; provided that the term "Lenders",
when used in the context of a particular Commitment, shall mean Lenders
having that Commitment.
"Letters of Credit": as defined in subsection 3.1.
"LIBOR": the rate of interest per annum determined by the
Administrative Agent to be the arithmetic mean (rounded upward to the next
1/16th of 1%) of the rates of interest per annum notified to the
Administrative Agent by each Reference Bank as the rate of interest at
which dollar deposits in the approximate amount of the amount of the Loan
to be made or continued as, or converted into, a Eurodollar Rate Loan by
such Reference Bank and having a maturity comparable to such Interest
Period would be offered to major banks in the London interbank market at
their request at approximately 11:00 a.m. (London time) two Business Days
prior to the commencement of such Interest Period.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
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retention agreement and any Financing Lease having substantially the same
economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Lockheed Martin Predecessor Businesses": the businesses to be
transferred by the Seller and its Subsidiaries to the Borrower
pursuant to the Transaction Agreement.
"Loral Acquired Businesses": that portion of the Lockheed Martin
Predecessor Businesses consisting of the Seller's Wide Band Systems
Division and Products Group, comprised of ten autonomous operations,
acquired by the Seller effective April 1, 1996, as part of the
acquisition by the Seller of the defense electronics business of
Loral Corporation.
"Material Adverse Effect": a material adverse effect on (a) the
business, assets, operations, property or condition (financial or
otherwise) of Holdings and its Subsidiaries taken as a whole, (b) the
validity or enforceability of this or any of the other Credit Documents or
the rights or remedies of the Agents or the Lenders hereunder or
thereunder or (c) the Transaction.
"Materials of Environmental Concern": any hazardous or toxic
substances, materials or wastes, defined or regulated as such in or under,
or that could give rise to liability under, any applicable Environmental
Law, including, without limitation, asbestos, polychlorinated biphenyls,
urea-formaldehyde insulation, gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products.
"Mortgages": the collective reference to the mortgages and deeds of
trust to be executed and delivered by the Borrower or the appropriate
Subsidiary, substantially in the forms of Exhibit C-1 and C-2 (with such
changes therein as may be required to reflect different laws and practices
in the various jurisdictions in which the Mortgages are to be recorded),
covering the parcels of real property identified in Schedule III, as the
same may be amended, supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds": the aggregate cash proceeds (including Cash
Equivalents) received by Holdings or any of its Subsidiaries in respect
of:
(a) any issuance by the Borrower or any of its Subsidiaries
of Indebtedness after the Closing Date;
(b) any Asset Sale; and
(c) any cash payments received in respect of promissory notes or
other evidences of indebtedness delivered to Holdings or such
Subsidiary in respect of an Asset Sale;
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in each case net of (without duplication) (i), (A) in the case of an Asset
Sale, the amount required to repay any Indebtedness (other than the Loans)
secured by a Lien on any assets of Holdings or a Subsidiary of Holdings
that are sold or otherwise disposed of in connection with such Asset Sale
and (B) reasonable and appropriate amounts established by Holdings or such
Subsidiary, as the case may be, as a reserve against liabilities
associated with such Asset Sale and retained by Holdings or such
Subsidiary, (ii) the reasonable expenses (including legal fees and
brokers' and underwriters' commissions, lenders fees, credit enhancement
fees, accountants' fees, investment banking fees, survey costs, title
insurance premiums and other customary fees, in any case, paid to third
parties or, to the extent permitted hereby, Affiliates) incurred in
effecting such issuance or sale and (iii) any taxes reasonably
attributable to such sale and reasonably estimated by Holdings or such
Subsidiary to be actually payable.
"Non-Excluded Taxes": as defined in subsection 2.15.
"Non-U.S. Lender": as defined in subsection 2.15(b).
"Notes": The Tranche A Term Notes, the Tranche B Term Notes, the
Tranche C Term Notes, the Revolving Credit Notes and the Swing Line Note
(or any of them).
"Novation Agreement": as defined in the Transaction Agreement.
"Obligations": as defined in the Guarantees and the Security
Documents.
"Option Agreements": the Option Agreements between Holdings and
each of Frank C. Lanza and Robert V. LaPenta, each dated as of the
Closing Date.
"Parent Distributions": as defined in the Parent Guarantee.
"Parent Guarantee": the Parent Guarantee substantially in the form
of Exhibit B-1, to be executed and delivered by Holdings, as the same
may be amended, supplemented or otherwise modified.
"Parent Pledge and Security Agreement": the Parent Pledge and
Security Agreement substantially in the form of Exhibit B-3, to be
executed and delivered by Holdings, as the same may be amended,
supplemented or otherwise modified.
"Participant": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any successor thereto.
"Permitted Liens": Liens permitted to exist under subsection 7.3.
"Permitted Stock Payments": (A) dividends by the Borrower to Holdings
in amounts equal to the amounts required for Holdings to pay franchise
taxes and other fees required to maintain its legal existence and provide
for other operating costs of up to $1,000,000 per fiscal year, (B)
dividends by the Borrower to Holdings in amounts equal to amounts required
for Holdings to pay federal, state and local income
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taxes to the extent such income taxes are actually due and owing; provided
that the aggregate amount paid under this clause (B) does not exceed the
amount that the Borrower would be required to pay in respect of the income
of the Borrower and its Subsidiaries if the Borrower were a stand alone
entity that was not owned by Holdings, and (C) from and after May 1, 1999,
dividends by the Borrower to Holdings payable solely out of Excess Cash
Flow which is not required to be applied to the prepayment of Loans and
the permanent reduction of Commitments pursuant to subsection 2.6(a)(iii),
provided that (i) as of the last day of the most recently completed fiscal
quarter the Debt Ratio is less than or equal to 3.5 to 1, (ii) the
aggregate amount of dividends paid by the Borrower to Holdings under this
clause (C) since the date of this Agreement does not exceed $5,000,000 and
(iii) Holdings promptly uses the proceeds of such dividends to repurchase
Capital Stock of Holdings.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan covered by
ERISA and in respect of which the Borrower or any Commonly Controlled
Entity maintains, administers, contributes to or is required to
contribute to, or under which the Borrower or any Commonly Controlled
Entity may incur any liability.
"Principals": each of Lehman Brothers Holdings, Inc., Capital
Partners, the Seller, Frank C. Lanza and Robert V. LaPenta.
"Pro Forma Financial Statements": as defined in subsection 4.1(c).
"Properties": as defined in subsection 4.17.
"Purchase Agreement": the Purchase Agreement, dated as of April
25, 1997, among the Borrower and each of Lehman Brothers, Inc. and
BancAmerica Securities, Inc.
"Receivables": as defined in the Security Documents.
"Reference Bank": the Bank of America NT & SA.
"Register": as defined in subsection 10.6(d).
"Registration Rights Agreement": the Registration Rights
Agreement, dated as of April 30, 1997, among the Borrower and each of
Lehman Brothers, Inc. and BancAmerica Securities, Inc.
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to subsection 3.5 for amounts
drawn under Letters of Credit.
"Refunded Swing Line Loan": as defined in subsection 2.1(b)(iii).
"Related Party": with respect to the Principals, (a) any
controlling stockholder, 51% (or more) owned Subsidiary, or spouse or
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immediate family member (in the case of an individual) of such Principal
or (b) a trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 51% or more controlling interest of which consist of the
Principals and/or such other Persons referred to in the immediately
preceding clause (a).
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty-day notice
period is waived under the regulations of the PBGC.
"Required Lenders": at any time, Lenders the Commitment
Percentages for all Types of Loans of which aggregate more than 50%.
"Requirement of Law": as to any Person, the Constitutional Documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Requisite Class Lenders": at any time, (a) for the Class Lenders
having Tranche A Term Loan Exposure, Lenders having or holding 66 2/3% of
the aggregate Tranche A Term Loan Exposure of all Lenders, (b) for the
Class Lenders having Revolving Credit Loan Exposure, Lenders having or
holding 66 2/3% of the aggregate Revolving Credit Loan Exposure of all
Lenders, (c) for the Class Lenders having Tranche B Term Loan Exposure,
Lenders having or holding 66 2/3% of the aggregate Tranche B Term Loan
Exposure of all Lenders and (d) for the Class Lenders having Tranche C
Term Loan Exposure, Lenders having or holding 66 2/3% of the aggregate
Tranche C Term Loan Exposure of all Lenders.
"Responsible Officer": the chief executive officer, the president
or vice president of the Borrower or, with respect to financial matters,
the chief financial officer, vice president--finance or treasurer of the
Borrower.
"Restricted Government Contracts": as defined in the Security
Documents.
"Revolving Credit Commitment": the commitment of a Lender, as set
forth on Schedule I hereto, to make Revolving Credit Loans to the Borrower
pursuant to Subsection 2.1(a)(iv) and, to issue and/or purchase
participations in Letters of Credit pursuant to Section 3; and "Revolving
Credit Commitments" means such commitments of all Lenders in the
aggregate, which shall initially be $100,000,000.
"Revolving Credit Lender": any Lender or Lenders having a Revolving
Credit Commitment or a Revolving Credit Loan outstanding.
"Revolving Credit Loans": the Loans made by Revolving Credit
Lenders to the Borrower pursuant to Subsection 2.1(a)(iv).
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"Revolving Credit Loan Exposure": with respect to any Lender as of
date of determination, (i) if there are no outstanding Letters of Credit
or Revolving Credit Loans, that Lender's Revolving Credit Commitment, and
(ii) otherwise, the sum of (a) the aggregate outstanding principal amount
of the Revolving Credit Loans of that Lender plus (b) in the event that
Lender is an Issuing Lender, the aggregate Letter of Credit Usage in
respect of all Letters of Credit issued by that Lender (in each case net
of any participations purchased by other Lenders in such Letters of Credit
or any unreimbursed drawings thereunder) plus (c) in the event that such
Lender is the Swing Line Lender, the aggregate principal amount of Swing
Line Loans made by such Lender then outstanding (net of any participations
purchased by other Lenders in such Swing Line Loans) plus (d) the
aggregate amount of all participations purchased by that Lender in any
outstanding Swing Line Loans or Letters of Credit or any unreimbursed
drawings under any Letters of Credit.
"Revolving Credit Notes": (i) the promissory notes of the Borrower
issued pursuant to subsection 2.5(i)(iv) on the Closing Date to evidence
the Revolving Credit Loans of any Lender and (ii) any promissory notes
issued by the Borrower pursuant to Section 10.6(d) in connection with
assignments of the Revolving Credit Commitments and Revolving Credit Loans
of any Lenders, in each case substantially in the form of Exhibit A-4
annexed hereto, as they may be amended, supplemented or otherwise modified
from time to time.
"Revolving Loan Termination Date": March 31, 2003.
"Security Documents": the collective reference to the Parent Pledge
and Security Agreement, the Borrower Pledge and Security Agreement and the
Subsidiary Pledge and Security Agreement, the Mortgages and all other
security documents hereafter delivered to the Administrative Agent
granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Borrower hereunder and under any of the
other Credit Documents or to secure any guarantee of any such obligations
and liabilities.
"Securities Offering": as defined in the recitals to this
Agreement.
"Seller": as defined in the recitals to this Agreement.
"Similar Business": a business, at least a majority of whose revenues
in the most recently ended calendar year were derived from (i) the sale of
defense products, electronics, communications systems, aerospace products,
avionics products and/or communications products, (ii) any services
related thereto, (iii) any business or activity that is reasonably similar
thereto or a reasonable extension, development or expansion thereof or
ancillary thereto, and (iv) any combination of any of the foregoing.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Stockholders Agreement": the Stockholders Agreement, dated as of
April 30, 1997, by and among the Borrower, Holdings, the Seller, the
Principals and any other party that may from time to time become a party
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thereto as provided therein, as the same may be amended, supplemented or
otherwise modified from time to time.
"Subordinated Debt": indebtedness outstanding under the
Subordinated Notes.
"Subordinated Debt Documents": the Indenture, the Registration
Rights Agreement, the Purchase Agreement and the Subordinated Notes.
"Subordinated Notes": the Borrower's 10 3/8% Senior Subordinated
Notes, due 2007 (the "Initial Subordinated Notes"), issued on the Closing
Date, and the subordinated notes of the Borrower, having the same terms as
the Initial Subordinated Notes, issued in exchange for the Initial
Subordinated Notes as contemplated by the Subordinated Debt Documents.
"Subscription Agreements": the Common Stock Subscription
Agreements between Holdings and each of Frank C. Lanza, Robert V.
LaPenta, Capital Partners and the Seller, each dated as of the Closing
Date.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, directly
or indirectly, by such Person. Unless otherwise qualified, all references
to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantees": the Subsidiary Guarantees substantially
in the form of Exhibit B-2, to be executed and delivered by the
Borrower's Subsidiaries, as the same may be amended, supplemented or
otherwise modified.
"Subsidiary Pledge and Security Agreement": the Subsidiary Pledge
and Security Agreement substantially in the form of Exhibit B-5, to be
executed and delivered by the Borrower's Subsidiaries, as the same may
be amended, supplemented or otherwise modified.
"Swing Line Lender": means Bank of America NT & SA.
"Swing Line Loans": as defined in Section 2.1(b).
"Term Loan Commitment or Term Loan Commitments": the commitments
of a Lender to make any Term Loans pursuant to subsection 2.1(a); and
Term Loan Commitments means such commitments of all Lenders in the
aggregate, which shall initially be $175,000,000.
"Term Loan Exposure": with respect to a Lender of a Type of Term Loan
as of any date of determination, (i) prior to the termination of all of a
Lender's Commitment with respect to the Term Loans of such Type, that
Lender's Commitment with respect to Term Loans of such Type (or any
portion thereof that has not been terminated) plus the outstanding
principal amount of the Term Loan of such Type of that Lender, and (ii)
after the termination of all of a Lender's Commitment
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with respect to the Term Loans of such Type, the outstanding principal
amount of the Term Loan of such Type of that Lender.
"Term Loans": one or more of the Tranche A Term Loans, the Tranche
B Term Loans or the Tranche C Term Loans.
"Termination Date": (i) with respect to Tranche A Term Loans, March
31, 2003; (ii) with respect to Tranche B Term Loans, March 31, 2005; (iii)
with respect to Tranche C Term Loans, March 31, 2006; and (iv) with
respect to Revolving Credit Loans and Swing Line Loans, the Revolving
Credit Termination Date.
"Tranche": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day); Tranches may be identified as
"Eurodollar Tranches".
"Tranche A Term Lender": any Lender having a Tranche A Term Loan
Commitment or a Tranche A Term Loan outstanding.
"Tranche A Term Loans": the Loans made by Tranche A Term Lenders
to the Borrower pursuant to subsection 2.1(a)(i).
"Tranche A Term Loan Commitment": the commitment of a Tranche A Term
Lender, as set forth on Schedule I hereto, to make a Tranche A Term Loan
to the Borrower pursuant to subsection 2.1(a)(i); and "Tranche A Term Loan
Commitments" means such commitments of all Tranche A Term Lenders in the
aggregate, which shall initially be $100,000,000.
"Tranche A Term Notes": (i) the promissory notes of the Borrower
issued pursuant to subsection 2.5(i)(i) on the Closing Date to evidence
the Tranche A Term Loans of any Lender and (ii) any promissory notes
issued by the Borrower pursuant to subsection 10.6(d) in connection with
assignments of the Tranche A Term Loan Commitments and Tranche A Term
Loans of any Lender, in each case substantially in the form of Exhibit A-1
annexed hereto, as they may be amended, supplemented or otherwise modified
from time to time.
"Tranche B Term Lenders": any Lender having a Tranche B Term Loan
Commitment or a Tranche B Term Loan outstanding.
"Tranche B Term Loans": the Loans made by Tranche B Term Lenders
to the Borrower pursuant to subsection 2.1(a)(ii).
"Tranche B Term Loan Commitment": the commitment of a Tranche B Term
Lender to make a Tranche B Term Loan to the Borrower pursuant to
subsection 2.1(a)(ii); and "Tranche B Term Loan Commitments" means such
commitments of all Tranche B Term Lenders in the aggregate, which shall
initially be $45,000,000.
"Tranche B Term Notes": (i) the promissory notes of the Borrower
issued pursuant to subsection 2.5(i)(ii) on the Closing Date to evidence
the Tranche B Term Loans of any Lender and (ii) any promissory notes
issued by the Borrower pursuant to subsection 10.6(d) in connection with
assignments of the Tranche B Term Loan Commitments and Tranche B Term
Loans of any Lender, in each case substantially in the form of
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Exhibit A-2 annexed hereto, as they may be amended, supplemented or
otherwise modified from time to time.
"Tranche C Term Lender": any Lender having a Tranche C Term Loan
Commitment or a Tranche C Term Loan outstanding.
"Tranche C Term Loan Commitment": the commitment of a Tranche C Term
Lender, as set forth on Schedule I hereto, to make a Tranche C Term Loan
to the Borrower pursuant to subsection 2.1(a)(iii); and "Tranche C Term
Loan Commitments" means such commitments of all Tranche C Term Lenders in
the aggregate, which shall initially be $30,000,000.
"Tranche C Term Loans": the Loans made by Tranche C Term Lenders to
the Borrower pursuant to subsection 2.1(a)(iii).
"Tranche C Term Notes": (i) the promissory notes of the Borrower
issued pursuant to subsection 2.5(i)(iii) on the Closing Date to evidence
the Tranche C Term Loans of any Lender and (ii) any promissory notes
issued by the Borrower pursuant to subsection 10.6(d) in connection with
assignments of the Tranche C Term Loan Commitments and Tranche C Term
Loans of any Lender, in each case substantially in the form of Exhibit A-3
annexed hereto, as they may be amended, supplemented or otherwise modified
from time to time.
"Transaction": the transactions contemplated by the Transaction
Documents.
"Transaction Agreement": as defined in the recitals to this
Agreement.
"Transaction Documents": (i) the Transaction Agreement, the
Schedules thereto and the documents set forth on Schedule IV hereto,
(ii) the Equity Documents and (iii) the Subordinated Debt Documents.
"Transferee": as defined in subsection 10.6(f).
"Type": a Revolving Loan, a Tranche A Term Loan, a Tranche B Term
Loan, a Tranche C Term Loan or a Swing Line Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"U.S. Taxes": any tax, assessment, or other charge or levy and any
liabilities with respect thereto, including any penalties, additions to
tax, fines or interest thereon, imposed by or on behalf of the United
States or any taxing authority thereof.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Credit Document or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Credit Document, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrower and its Subsidiaries not defined in subsection 1.1
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and accounting terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments. (a) Subject to the terms and conditions hereof, each
Lender severally agrees to make the loans described in this Section 2.1(a) as
applicable to the Borrower.
(i) Tranche A Term Loans. Each Tranche A Term Lender severally
agrees to make a term loan to the Borrower on the Closing Date in an
aggregate principal amount which does not exceed the amount of such
Lender's Tranche A Term Loan Commitment. Amounts borrowed under this
subsection 2.1(a)(i) and subsequently repaid may not be reborrowed.
(ii) Tranche B Term Loans. Each Tranche B Term Lender severally
agrees to make a term loan to the Borrower on the Closing Date in an
aggregate principal amount which does not exceed the amount of such
Lender's Tranche B Term Loan Commitment. Amounts borrowed under this
subsection 2.1(a)(ii) and subsequently repaid may not be reborrowed.
(iii) Tranche C Term Loans. Each Tranche C Term Lender severally
agrees to make a term loan to the Borrower on the Closing Date in an
aggregate principal amount which does not exceed the amount of such
Lender's Tranche C Term Loan Commitment. Amounts borrowed under this
subsection 2.1(a)(iii) and subsequently repaid may not be reborrowed.
(iv) Revolving Credit Loans. Each Revolving Credit Lender
severally agrees to make revolving credit loans to the Borrower, from
time to time during the Commitment Period, in an aggregate principal
amount at any one time outstanding which, when added to the aggregate
principal amount of outstanding Swing Line Loans made by such Lender
(or in which such Lender has purchased a participation) and such
Lender's Revolving Credit Commitment Percentage of the then
outstanding L/C Obligations, does not exceed the amount of such
Lender's Revolving Credit Commitment. During the Commitment Period,
the Borrower may use the Revolving Credit Commitments by borrowing,
prepaying the Revolving Credit Loans, in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) (i) Subject to the terms and conditions hereof, the Swing Line
Lender agrees to make swing line loans (individually, a "Swing Line Loan";
collectively, the "Swing Line Loans") to the Borrower from time to
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time during the Commitment Period in an aggregate principal amount at any one
time outstanding not to exceed $10,000,000; provided, that no Swing Line Loan
shall be made if, after giving effect thereto and to the simultaneous use of
the proceeds thereof, the aggregate principal amount of Revolving Credit Loans
then outstanding plus the aggregate principal amount of Swing Line Loans then
outstanding, plus the aggregate amount of L/C Obligations then outstanding
would exceed the Revolving Credit Commitments of the Revolving Credit Lenders.
Amounts borrowed by the Borrower under this subsection 2.1(b) may be repaid
and, through but excluding the Termination Date, reborrowed. All Swing Line
Loans shall be made as Base Rate Loans and may not be converted into Eurodollar
Loans. In order to borrow a Swing Line Loan, the Borrower shall give the Swing
Line Lender, with a copy to the Administrative Agent, irrevocable notice (which
notice must be received by the Swing Line Lender prior to 12:00 Noon, New York
City time) on the requested Borrowing Date specifying the amount of the
requested Swing Line Loan which shall be in a minimum amount of $500,000 or
whole multiples of $100,000 in excess thereof. The proceeds of the Swing Line
Loan will be made available by the Swing Line Lender to the Borrower at the
office of the Swing Line Lender by crediting the account of the Borrower at
such office with such proceeds.
(ii) The Swing Line Loans shall be evidenced by a promissory
note of the Borrower, substantially in the form of Exhibit A-5 (the "Swing Line
Note"), with appropriate insertions, payable to the order of the Swing Line
Lender and representing the obligation of the Borrower to pay the unpaid
principal amount of the Swing Line Loans, with interest thereon as prescribed
in subsection 2.9. The Swing Line Note shall (i) be dated the Closing Date,
(ii) be stated to mature on the Termination Date and (iii) bear interest,
payable on the dates specified in 2.9, for the period from the date thereof to
the Termination Date on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum specified in subsection
2.9.
(iii) The Swing Line Lender, at any time in its sole and
absolute discretion, may on behalf of the Borrower (which hereby irrevocably
directs the Swing Line Lender to act on its behalf) request each Lender,
including the Swing Line Lender, to make a Revolving Credit Loan (which shall
be a Base Rate Loan) in an amount equal to such Lender's Commitment Percentage
with respect to Revolving Credit Loans of such Revolving Credit Loan (the
"Refunded Swing Line Loans") outstanding on the date such notice is given.
Unless any of the events described in subsection 8(f) shall have occurred (in
which event the procedures of subsection 2.1(b)(iv) shall apply) each Lender
shall, not later than 12:00 P.M., New York City time, on the Business Day next
succeeding the date on which such notice is given, make available to the Swing
Line Lender in immediately available funds the amount equal to the Revolving
Credit Loan to be made by such Lender. The proceeds of such Revolving Credit
Loans shall be immediately applied to repay the Refunded Swing Line Loans. Upon
any request by the Swing Line Lender to the Lender pursuant to this subsection
2.1(b)(iii), the Administrative Agent shall promptly give notice to the
Borrower of such request.
(iv) If prior to the making of a Revolving Credit Loan pursuant
to subsection 2.1(b)(iii) one of the events described in subsection 8(f) shall
have occurred, each Lender will, on the date such Loan was to have been made,
purchase an undivided participating interest in the Swing Line Loans in an
amount equal to its Commitment Percentage with respect to
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Revolving Credit Loans. Each Lender will immediately transfer to the Swing
Line Lender, in immediately available funds, the amount of its participation.
(v) Whenever, at any time after the Swing Line Lender has
received from any Lender such Lender's participating interest in a Swing Line
Loan, the Swing Line Lender receives any payment on account thereof, the Swing
Line Lender will distribute to such Lender its participating interest in such
amount (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Lender's participating interest was
outstanding and funded); provided, however, that in the event that such payment
received by the Swing Line Lender is required to be returned, such Lender will
return to the Swing Line Lender any portion thereof previously distributed by
the Swing Line Lender to it.
(vi) Each Lender's obligation to purchase participating
interests pursuant to subsection 2.1(b)(iv) shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
(a) any set-off, counterclaim, recoupment, defense or other right which such
Lender or the Borrower may have against the Swing Line Lender, any other Lender
or anyone else for any reason whatsoever, (b) the occurrence or continuance of
any Default or Event of Default; (c) any adverse change in the condition
(financial or otherwise) of the Borrower; (d) any breach of this Agreement by
the Borrower or any other Lender; or (e) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.
(c) Except for Swing Line Loans, which shall be Base Rate Loans, the
Loans may from time to time be (i) Eurodollar Loans, (ii) Base Rate Loans or
(iii) a combination thereof, as determined by the Borrower and notified to the
Administrative Agent in accordance with subsections 2.2 and 2.7, provided that
no Revolving Credit Loan shall be made as a Eurodollar Loan after the day that
is one month prior to the Termination Date with respect to such Loan.
2.2 Procedure for Borrowing. The Borrower may borrow under the
Commitments during the Commitment Period on any Business Day, provided that the
Borrower shall give the Administrative Agent irrevocable notice (which notice
must be received by the Administrative Agent prior to (a) 11:00 A.M., New York
City time, three Business Days prior to the requested Borrowing Date, if all or
any part of the requested Loans are to be initially Eurodollar Loans, (b) 11:00
A.M., New York City time, on the requested Borrowing Date in the case of a
Swing Line Loan or a Base Rate Loan), specifying (i) the amount to be borrowed
of each Type of Loan, (ii) the requested Borrowing Date, (iii) whether the
borrowing is to be of Eurodollar Loans, Base Rate Loans or a combination
thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar
Loans, the respective lengths of the initial Interest Periods therefor. Each
borrowing under the Commitments shall be in an amount equal to (x) in the case
of Base Rate Loans (other than Swing Line Loans), $2,000,000 or a whole
multiple of $500,000 in excess thereof (or, if the then Available Commitments
are less than $2,000,000, such lesser amount), (y) in the case of Swing Line
Loans, as provided in subsection 2.1(b)(i) and (z) in the case of Eurodollar
Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Lender thereof. Each Lender will make the amount of its
pro rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the office of the Administrative Agent specified in
subsection
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10.2 prior to 11:00 A.M., New York City time (in the case of Eurodollar Loans)
or 2:30 P.M., New York City time (in the case of Base Rate Loans), on the
Borrowing Date requested by the Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the
Borrower by the Administrative Agent crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made available to
the Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent. All notices given by the Borrower under this subsection
2.2 may be made by telephonic notice promptly confirmed in writing.
2.3 Commitment Fee. The Borrower agrees to pay to the Administrative
Agent for the account of each Revolving Credit Lender a commitment fee for the
period from and including the first day of the Commitment Period to and
including the Revolving Loan Termination Date, computed at the Commitment Fee
Rate on the average daily amount of the Available Commitment of such Revolving
Credit Lender during the period for which payment is made, payable quarterly in
arrears on the last Business Day of each March, June, September and December
and on the Revolving Loan Termination Date, commencing on the first of such
dates to occur after the date hereof.
2.4 Termination or Reduction of Revolving Credit Commitments. The
Borrower shall have the right, upon not less than three Business Days' written
notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time, to reduce the amount of the Revolving Credit
Commitments ratably among the Revolving Credit Lenders; provided that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Credit Loans made on the effective date
thereof, the aggregate principal amount of the Revolving Credit Loans then
outstanding, when added to the then outstanding L/C Obligations and the
outstanding Swing Line Loans, would exceed the Revolving Credit Commitments
then in effect. Any such reduction shall be in an amount equal to $2,000,000 or
a whole multiple of $500,000 in excess thereof and shall reduce permanently the
Revolving Credit Commitments then in effect.
2.5 Repayment of Loans; Evidence of Debt.
(a) Scheduled Payments of Tranche A Term Loans. The Borrower
shall make principal payments on the Tranche A Term Loans on March 31, June 30,
September 30 and December 31 of each year, commencing on June 30, 1997, in the
amounts set forth opposite the corresponding Payment Period as follows:
Scheduled Repayment
Payment Period of Tranche A Term Loans
-------------- -----------------------
Closing Date - 6/30/97 $ 800,000
7/1/97 - 9/30/97 800,000
10/1/97 - 12/31/97 800,000
1/1/98 - 3/31/98 800,000
4/1/98 - 6/30/98 800,000
7/1/98 - 9/30/98 1,250,000
10/1/98 - 12/31/98 1,250,000
1/1/99 - 3/31/99 1,250,000
4/1/99 - 6/30/99 1,250,000
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7/1/99 - 9/30/99 3,750,000
10/1/99 - 12/31/99 3,750,000
1/1/00 - 3/31/00 3,750,000
4/1/00 - 6/30/00 3,750,000
7/1/00 - 9/30/00 5,250,000
10/1/00 - 12/31/00 5,250,000
1/1/01 - 3/31/01 5,250,000
4/1/01 - 6/30/01 5,250,000
7/1/01 - 9/30/01 6,750,000
10/1/01 - 12/31/01 6,750,000
1/1/02 - 3/31/02 6,750,000
4/1/02 - 6/30/02 6,750,000
7/1/02 - 9/30/02 9,333,333.33
10/1/02 - 12/31/02 9,333,333.33
1/1/03 - 3/31/03 9,333,333.34
$ 100,000,000;
provided that the scheduled installments of principal of the Tranche A Term
Loans set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Term Loans in accordance with subsection 2.6 (as
provided in such subsection); and provided further that the Tranche A Term
Loans and all other amounts owed hereunder with respect to the Tranche A Term
Loans shall be paid in full no later than March 31, 2003, and the final
installment payable by the Borrower in respect of the Tranche A Term Loans on
such date shall be in an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by the Borrower under
this Agreement with respect to the Tranche A Term Loans.
(b) Scheduled Payments of Tranche B Term Loans. The Borrower
shall make principal payments on the Tranche B Term Loans on March 31, June 30,
September 30 and December 31 of each year, commencing on June 30, 1997, in the
amounts set forth opposite the corresponding Payment Period as follows:
Scheduled Repayment
Payment Period of Tranche B Term Loans
-------------- -----------------------
Closing Date - 6/30/97 $ 100,000
7/1/97 - 9/30/97 100,000
10/1/97 - 12/31/97 100,000
1/1/98 - 3/31/98 100,000
4/1/98 - 6/30/98 100,000
7/1/98 - 9/30/98 125,000
10/1/98 - 12/31/98 125,000
1/1/99 - 3/31/99 125,000
4/1/99 - 6/30/99 125,000
7/1/99 - 9/30/99 125,000
10/1/99 - 12/31/99 125,000
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1/1/00 - 3/31/00 125,000
4/1/00 - 6/30/00 125,000
7/1/00 - 9/30/00 125,000
10/1/00 - 12/31/00 125,000
1/1/01 - 3/31/01 125,000
4/1/01 - 6/30/01 125,000
7/1/01 - 9/30/01 125,000
10/1/01 - 12/31/01 125,000
1/1/02 - 3/31/02 125,000
4/1/02 - 6/30/02 125,000
7/1/02 - 9/30/02 125,000
10/1/02 - 12/31/02 125,000
1/1/03 - 3/31/03 125,000
4/1/03 - 6/30/03 125,000
7/1/03 - 9/30/03 5,000,000
10/1/03 - 12/31/03 5,000,000
1/1/04 - 3/31/04 5,000,000
4/1/04 - 6/30/04 5,000,000
7/1/04 - 9/30/04 7,333,333.33
10/1/04 - 12/31/04 7,333,333.33
1/1/05 - 3/31/05 7,333,333.33
$ 45,000,000;
provided that the scheduled installments of principal of the Tranche B Term
Loans set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Term Loans in accordance with subsection 2.6 (as
provided in such subsection); and provided further that the Tranche B Term
Loans and all other amounts owed hereunder with respect to the Tranche B Term
Loans shall be paid in full no later than March 31, 2005, and the final
installment payable by the Borrower in respect of the Tranche B Term Loans on
such date shall be in an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by the Borrower under
this Agreement with respect to the Tranche B Term Loans.
(c) Scheduled Payments of Tranche C Term Loans. The Borrower
shall make principal payments on the Tranche C Term Loans on March 31, June 30,
September 30 and December 31 of each year, commencing on June 30, 1997, in the
amounts set forth opposite the corresponding Payment Period as follows:
Scheduled Repayment
Payment Period of Tranche C Term Loans
-------------- -----------------------
Closing Date - 6/30/97 $ 100,000
7/1/97 - 9/30/97 100,000
10/1/97 - 12/31/97 100,000
1/1/98 - 3/31/98 100,000
4/1/98 - 6/30/98 100,000
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7/1/98 - 9/30/98 125,000
10/1/98 - 12/31/98 125,000
1/1/99 - 3/31/99 125,000
4/1/99 - 6/30/99 125,000
7/1/99 - 9/30/99 125,000
10/1/99 - 12/31/99 125,000
1/1/00 - 3/31/00 125,000
4/1/00 - 6/30/00 125,000
7/1/00 - 9/30/00 125,000
10/1/00 - 12/31/00 125,000
1/1/01 - 3/31/01 125,000
4/1/01 - 6/30/01 125,000
7/1/01 - 9/30/01 125,000
10/1/01 - 12/31/01 125,000
1/1/02 - 3/31/02 125,000
4/1/02 - 6/30/02 125,000
7/1/02 - 9/30/02 125,000
10/1/02 - 12/31/02 125,000
1/1/03 - 3/31/03 125,000
4/1/03 - 6/30/03 125,000
7/1/03 - 9/30/03 125,000
10/1/03 - 12/31/03 125,000
1/1/04 - 3/31/04 125,000
4/1/04 - 6/30/04 125,000
7/1/04 - 9/30/04 125,000
10/1/04 - 12/31/04 125,000
1/1/05 - 3/31/05 125,000
4/1/05 - 6/30/05 125,000
7/1/05 - 9/30/05 8,666,666.66
10/1/05 - 12/31/05 8,666,666.67
1/1/06 - 3/31/06 8,666,666.67
$ 30,000,000;
provided that the scheduled installments of principal of the Tranche C Term
Loans set forth above shall be reduced in connection with any voluntary or
mandatory prepayments of the Term Loans in accordance with subsection 2.6 (as
provided in such subsection); and provided further that the Tranche C Term
Loans and all other amounts owed hereunder with respect to the Tranche C Term
Loans shall be paid in full no later than March 31, 2006, and the final
installment payable by the Borrower in respect of the Tranche C Term Loans on
such date shall be in an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by the Borrower under
this Agreement with respect to the Tranche C Term Loans.
(d) Payments on Revolving Credit and Swing Line Loans. The
Borrower hereby unconditionally promises to pay to the Administrative Agent on
the Revolving Credit Termination Date (or such earlier date on which the Loans
become due and payable pursuant to Section 8) (i) for the account of each
Revolving Credit Lender the then unpaid principal amount of each Revolving
Credit Loan of such Lender and (ii) for the account of the Swing
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Line Lender (and each other Revolving Credit Lender that has purchased a
participation in then outstanding Swing Line Loans) the then unpaid principal
amount of Swing Line Loans.
(e) Interest. The Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans from time to time
outstanding from the date such Loans are made until payment in full thereof at
the rates per annum, and on the dates, set forth in subsection 2.9.
(f) Recording. Each Lender shall maintain in accordance with
its usual practice an account or accounts evidencing indebtedness of the
Borrower to such Lender resulting from each Loan of such Lender from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.
(g) Register. The Administrative Agent shall maintain the
Register pursuant to subsection 10.6(d), and a subaccount therein for each
Lender, in which shall be recorded (i) the amount of each Loan and each
Obligation evidenced by a Note made hereunder, the Type thereof, whether each
such Loan is a Base Rate Loan or a Eurodollar Loan and each Interest Period
applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(h) Prima Facie Evidence. The entries made in the Register and
the accounts of each Lender maintained pursuant to subsection 2.5(g) shall, to
the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender or the Administrative Agent
to maintain the Register or any such account, or any error therein, shall not
in any manner affect the obligation of the Borrower to repay (with applicable
interest) the Loans made to the Borrower by such Lender in accordance with the
terms of this Agreement.
(i) Notes. The Borrower agrees that the Borrower will execute
and deliver to each Lender a promissory note of the Borrower evidencing (i) the
Tranche A Term Loans of such Lender, substantially in the form of Exhibit A-1
with appropriate insertions as to date and principal amount (a "Tranche A Term
Note"), (ii) the Tranche B Term Loans of such Lender, substantially in the form
of Exhibit A-2 with appropriate insertions as to date and principal amount (a
"Tranche B Term Note"), (iii) the Tranche C Term Loans of such Lender
substantially in the form of Exhibit A-3 with appropriate insertions as to date
and principal amount (a "Tranche C Term Note") and (iv) the Revolving Credit
Loans of such Lender, substantially in the form of Exhibit A-4 with appropriate
insertions as to date and principal amount ("Revolving Credit Note"). A Note
and the Obligation evidenced thereby may be assigned or otherwise transferred
in whole or in part only by registration of such assignment or transfer of such
Note and the Obligation evidenced thereby in the Register (and each Note shall
expressly so provide). Any assignment or transfer of all or part of an
Obligation evidenced by a Note shall be registered in the Register only upon
surrender for registration of assignment or transfer of the Note evidencing
such Obligation, duly endorsed by (or accompanied by a written instrument of
assignment or transfer duly executed by) the holder thereof, and thereupon one
or more new Notes shall be issued to the designated Assignee and the old Note
shall be returned by the Administrative Agent to the Borrower marked
"cancelled." No
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assignment of a Note and the Obligation evidenced thereby shall be effective
unless it shall have been recorded in the Register by the Administrative Agent
as provided in this subsection 2.5(i).
2.6 Optional Prepayments; Mandatory Prepayments and Reduction
of Commitments. (a) Subject to subsection 2.16, the Borrower may at any time
and from time to time prepay any Loans, in whole or in part, without premium or
penalty, upon irrevocable notice to the Administrative Agent prior to 11:00
A.M., New York City time, three Business Days prior to the date of prepayment,
specifying the date and amount of prepayment, the Type of Loan to be prepaid
(which loans shall be prepaid on a pro rata basis among the applicable Lenders)
and whether the prepayment is of Eurodollar Loans, Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Administrative Agent shall promptly
notify each applicable Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein, together with any amounts payable pursuant to subsection 2.16. Partial
prepayments shall be in an aggregate principal amount of $2,000,000 or a whole
multiple of $1,000,000 in excess thereof.
(b) (i) If, subsequent to the Closing Date, Holdings or any of
its Subsidiaries shall incur or permit the incurrence of any Indebtedness
(other than Indebtedness permitted pursuant to subsection 7.2) 100% of the Net
Proceeds thereof shall be promptly applied toward the prepayment of the Loans
and permanent reduction of the Commitments as set forth in clause (iv) of this
subsection 2.6(b). Nothing in this paragraph (b) shall be deemed to permit any
Indebtedness not permitted by subsection 7.2.
(ii) If, subsequent to the Closing Date, Holdings or any of
its Subsidiaries shall receive Net Proceeds from any Asset Sale, such Net
Proceeds shall be promptly applied toward the prepayment of the Loans and
permanent reduction of the Commitments as set forth in clause (iv) of this
subsection 2.6(b); provided that Net Proceeds from any Asset Sales shall not be
required to be so applied to the extent that such Net Proceeds are used by the
Borrower or such Subsidiary to acquire assets to be employed in the business of
the Borrower or its Subsidiaries within 365 days of receipt thereof, but if
such Net Proceeds are not so used, 100% of such Net Proceeds shall be applied
toward the prepayment of the Loans and the permanent reduction of the
Commitments as set forth in clause (iv) of this subsection 2.6(b) on the
earlier of (x) the 366th day after receipt of such Net Proceeds and (y) the
date on which the Borrower has determined that such Net Proceeds shall not be
so used.
(iii) If there is Excess Cash Flow for any fiscal year and
the Debt Ratio as of the last day of such fiscal year is greater than 3.5 to
1.0, 75% of such Excess Cash Flow shall be applied toward the prepayment of the
Loans and the permanent reduction of the Commitments as set forth in clause
(iv) of this subsection 2.6(b) on the Excess Cash Flow Payment Date for such
fiscal year. If there is Excess Cash Flow for any fiscal year and the Debt
Ratio as of the last day of such fiscal year is less than or equal to 3.5 to
1.0, 50% of such Excess Cash Flow shall be applied toward the prepayment of the
Loans and the permanent reduction of the Commitments as set forth in clause
(iv) of this subsection 2.6(b) on the Excess Cash Flow Payment Date for such
fiscal year.
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(iv) Any mandatory prepayments of the Loans pursuant to
subsection 2.6 shall be applied (x) to the Tranche A Term Loans, the Tranche B
Term Loans and the Tranche C Term Loans on a pro rata basis to reduce the
unpaid scheduled installments of principal of each such Tranche of Term Loans
on a pro rata basis, and (y) thereafter to the permanent reduction of the
Revolving Credit Commitment; provided that, in the case of Tranche B Term Loans
and Tranche C Term Loans, so long as any Tranche A Term Loans are outstanding,
each of the Tranche B Term Lenders and the Tranche C Term Lenders shall have
the right to waive such Lender's right to receive any portion of such
prepayment. The Administrative Agent shall notify the Tranche B Term Lenders
and the Tranche C Term Lenders of such receipt and the amount of the prepayment
to be applied to each such Lender's Term Loans; provided, that the Borrower
shall use its reasonable efforts to notify the Tranche B Term Lenders and the
Tranche C Term Lenders of such waivable mandatory prepayment three (3) Business
Days prior to the payment to the Administrative Agent of such waivable
mandatory prepayment (it being understood that the Borrower shall have no
liabilities for failing to so notify such Lenders). In the event any such
Tranche B Term Lender or Tranche C Term Lender desires to waive such Lender's
right to receive any such waivable mandatory prepayment, such Lender shall so
advise the Administrative Agent no later than the close of business on the
Business Day immediately following the date of such notice from the
Administrative Agent. In the event that any such Lender waives such Lender's
right to any such waivable mandatory prepayment, the Administrative Agent shall
apply 50% of the amount so waived by such Lender to prepay the Tranche A Term
Loans to reduce unpaid scheduled installments of principal of the Tranche A
Term Loans on a pro rata basis. The Administrative Agent shall return the
remainder of the amount so waived by such Lender to the Borrower. Revolving
Credit Commitment reductions made pursuant to subsections 2.6(b)(i), (ii) and
(iii) shall be applied to each Lender's Revolving Credit Commitment on a pro
rata basis and shall reduce permanently such Commitments.
(v) If after giving effect to any reduction of the Revolving
Credit Commitments under subsection 2.4, 2.5 or 2.6 the aggregate outstanding
principal amount of Swing Line Loans plus the aggregate outstanding principal
amount of Revolving Credit Loans plus the aggregate outstanding amount of L/C
Obligations shall exceed the aggregate amount of the Revolving Credit
Commitments, such reduction shall be accompanied by prepayment in the amount of
such excess to be applied (x) first, to the outstanding Swing Line Loans and
(y) second, to outstanding Revolving Credit Loans (in each case, together with
any amounts payable under subsection 2.16)); provided that if the aggregate
principal amount of Swing Line Loans and Revolving Credit Loans then
outstanding is less than the amount of such excess (because Letters of Credit
constitute a portion of such excess), the Borrower shall immediately, without
notice or demand, to the extent of the balance of such excess, replace
outstanding Letters of Credit and/or deposit an amount (but in no event greater
than such balance) in a cash collateral account satisfactory to the
Administrative Agent established for the benefit of the Revolving Credit
Lenders.
2.7 Conversion and Continuation Options. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans, by
giving the Administrative Agent prior irrevocable notice of such election on or
before 11:00 A.M. New York City time, on the Business Day immediately preceding
the date of the proposed conversion and of the amount and Type of Loan to be
converted, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto.
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The Borrower may elect from time to time to convert Base Rate Loans (other than
Swing Line Loans) to Eurodollar Loans by giving the Administrative Agent prior
irrevocable notice of such election on or before 11:00 A.M., New York City
time, on the third Business Day immediately preceding the date of the proposed
conversion and of the amount and Type of Loan to be converted. Any such notice
of conversion to Eurodollar Loans shall specify the length of the initial
Interest Period or Interest Periods therefor. Upon receipt of any such notice
the Administrative Agent shall promptly notify each applicable Lender thereof.
All or any part of outstanding Eurodollar Loans and Base Rate Loans may be
converted as provided herein, provided that (i) no Loan may be converted into a
Eurodollar Loan when any Event of Default has occurred and is then continuing
and (ii) no Loan may be converted into a Eurodollar Loan after the date that is
one month prior to the Termination Date with respect to such Loan.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection
1.1, of the length of the next Interest Period to be applicable to such Loans
and of the amount and Type of Loan to be converted, provided that no Eurodollar
Loan may be continued as such (i) when any Event of Default has occurred and is
then continuing or (ii) after the date that is one month prior to the
Termination Date with respect to such Loan and provided, further, that if the
Borrower shall fail to give such notice or if such continuation is not
permitted such Loans shall be automatically converted to Base Rate Loans on the
last day of such then expiring Interest Period.
(c) All notices given by Borrower under this subsection 2.7
may be made by telephonic notice promptly confirmed in writing.
2.8 Minimum Amounts and Maximum Number of Tranches. All
borrowings, conversions and continuations of Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of the Loans comprising each Eurodollar Tranche shall be equal to
$5,000,000 or a whole multiple of $1,000,000 in excess thereof. In no event
shall there be more than 10 Eurodollar Tranches outstanding at any time.
2.9 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii)
any interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per
annum which is (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this subsection plus
2% or (y) in the case of any such overdue interest, commitment fee or other
amount, the rate described in paragraph (b) of this
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subsection plus 2%, in each case from the date of such non-payment until such
overdue principal, interest, commitment fee or other amount is paid in full (as
well after as before judgment).
(d) Interest shall be payable with respect to each Loan in
arrears on each Interest Payment Date and on the Termination Date with respect
to such Loan, provided that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
2.10 Computation of Interest and Fees. (a) Interest on Base
Rate Loans and fees shall be calculated on the basis of a 365- (or 366-, as the
case may be) day year for the actual days elapsed; all other interest shall be
calculated on the basis of a 360-day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Lenders of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the Base Rate or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business on
the day on which such change becomes effective. The Administrative Agent shall
as soon as practicable notify the Borrower and the Lenders of the effective
date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Borrower,
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to subsection
2.9(a) or (c).
2.11 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the eurodollar market, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate
for such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such
Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the Lenders as soon as practicable thereafter. If such notice
is given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Loans that were to
have been converted on the first day of such Interest Period to Eurodollar
Loans shall be converted to or continued as Base Rate Loans and (z) any
outstanding Eurodollar Loans shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn in
writing by the Administrative Agent (which the Administrative Agent agrees to
do when the Administrative Agent has determined, or has been instructed by the
Required Lenders that, the circumstances that prompted the
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delivery of such notice no longer exist), no further Eurodollar Loans shall be
made or continued as such, nor shall the Borrower have the right to convert
Loans to Eurodollar Loans.
2.12 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Revolving Credit Lenders hereunder, each payment by the
Borrower on account of any commitment fee hereunder and any reduction of the
Revolving Credit Commitments of Revolving Credit Lenders shall be made pro rata
according to the respective Commitment Percentages of the Revolving Credit
Lenders. Each payment (including each prepayment) by the Borrower on account of
principal of and interest on any Term Loans or the Revolving Credit Loans shall
be made pro rata according to the respective outstanding principal amounts of
such Loans then held by the Lenders. All payments (including prepayments) to be
made by the Borrower hereunder in respect of any Loan, whether on account of
principal, interest, Reimbursement Obligations, fees or otherwise, shall be
made without set off or counterclaim and shall be made prior to 11:00 A.M., New
York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders with respect to such Loans, at the Administrative
Agent's office specified in subsection 10.2, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
applicable Lenders promptly upon receipt in like funds as received. If any
payment hereunder becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day, and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make
the amount that would constitute its Commitment Percentage of such borrowing
available to the Administrative Agent, the Administrative Agent may assume that
such Lender is making such amount available to the Administrative Agent on such
Borrowing Date, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Administrative Agent by the required time
on the Borrowing Date therefor, such Lender shall pay to the Administrative
Agent, on demand, such amount with interest thereon at a rate equal to the
daily average Federal Funds Effective Rate for the period until such Lender
makes such amount immediately available to the Administrative Agent. A
certificate of the Administrative Agent submitted to any Lender with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's Commitment Percentage of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans hereunder, on demand, from the Borrower. The failure of any
Lender to make any Loan to be made by it shall not relieve any other Lender of
its obligation hereunder to make its Loan on such Borrowing Date.
2.13 Illegality. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be cancelled and (b) such Lender's Loans then outstanding as
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Eurodollar Loans, if any, shall be converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect
to such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to subsection
2.16. If circumstances subsequently change so that any affected Lender shall
determine that it is no longer so affected, such Lender will promptly notify
the Borrower and the Administrative Agent, and upon receipt of such notice, the
obligations of such Lender to make or continue Eurodollar Loans or to convert
Base Rate Loans into Eurodollar Loans shall be reinstated.
2.14 Requirements of Law. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note, any Letter of
Credit, any Application or any Eurodollar Loan made by it, or change
the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by subsection 2.15 and changes
in the rate of net income taxes (including branch profits taxes and
minimum taxes) or franchise taxes (imposed in lieu of net income
taxes) of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender
upon written demand such additional amount or amounts as will compensate such
Lender for such increased cost or reduced amount receivable; provided that
before making any such demand, each Lender agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, in its reasonable
discretion, in any legal, economic or regulatory manner) to designate a
different Eurodollar lending office if the making of such designation would
allow the Lender or its Eurodollar lending office to continue to perform its
obligations to make Eurodollar Loans or to continue to fund or maintain
Eurodollar Loans and avoid the need for, or reduce the amount of, such
increased cost. If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Borrower, through the
Administrative Agent, of the event by reason of which it has become so
entitled. If the Borrower so
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notifies the Administrative Agent within five Business Days after any Lender
notifies the Borrower of any increased cost pursuant to the foregoing
provisions of this Section, the Borrower may convert all Eurodollar Loans of
such Lender then outstanding into Base Rate Loans in accordance with the terms
hereof. Each Lender shall notify the Borrower within 120 days after it becomes
aware of the imposition of such costs; provided that if such Lender fails to so
notify the Borrower within such 120-day period, such Lender shall not be
entitled to claim any additional amounts pursuant to this subsection for any
period ending on a date which is prior to 120 days before such notification.
(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Letter of Credit to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a prompt written request therefor, the Borrower shall promptly pay to
such Lender such additional amount or amounts as will compensate such Lender
for such reduction. Each Lender shall notify the Borrower within 120 days after
it becomes aware of the imposition of such additional amount or amounts;
provided that if such Lender fails to so notify the Borrower within such
120-day period, such Lender shall not be entitled to claim any additional
amount or amounts pursuant to this subsection for any period ending on a date
which is prior to 120 days before such notification.
(c) If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower
(with a copy to the Administrative Agent) of the event by reason of which it
has become so entitled. A certificate as to any additional amounts payable
pursuant to this subsection, showing the calculation thereof in reasonable
detail, submitted by such Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
2.15 Taxes. (a) Except as provided in this subsection 2.15,
all payments made by the Borrower under this Agreement and any Notes shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority
("Taxes"), excluding Taxes on net income (including, without limitation, branch
profits taxes and minimum taxes) and franchise taxes (imposed in lieu of net
income taxes) imposed on any Agent or any Lender as a result of a present or
former connection between any Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely
from such Agent or such Lender having
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executed, delivered or performed its obligations or received a payment under,
or enforced, this Agreement or any Note). If any such non-excluded taxes,
levies, imposts, duties, charges, fees deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
any Agent or any Lender hereunder or under any Note, the amounts so payable to
such Agent or such Lender shall be increased to the extent necessary to yield
to such Agent or such Lender (after payment of all Non-Excluded Taxes) interest
or any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement, provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof
with respect to any Taxes that are imposed on amounts payable to such Lender at
the time such Lender becomes a party to this Agreement or that are attributable
to such Lender's failure to comply with the requirements of paragraph (b) of
this subsection. Whenever any Non-Excluded Taxes are payable by the Borrower,
as promptly as possible thereafter, the Borrower shall send to the relevant
Agent for its own account or for the account of such Lender, as the case may
be, a certified copy of an original official receipt, if any, received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to the
relevant Agent the required receipts or other required documentary evidence,
the Borrower shall indemnify the Agents and the Lenders for any incremental
taxes, interest or penalties that may become payable by any Agent or any Lender
as a result of any such failure. The agreements in this subsection shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
(b) Each Lender, Assignee and Participant that is not a
citizen or resident of the United States of America, a corporation, partnership
created or organized in or under the laws of the United States of America, any
estate that is subject to U.S. federal income taxation regardless of the source
of its income or any trust which is subject to the supervision of a court
within the United States and the control of a United States fiduciary as
described in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall
deliver to the Borrower and the Administrative Agent, and if applicable, the
assigning Lender (or, in the case of a Participant, to the Lender from which
the related participation shall have been purchased) on or before the date on
which it becomes a party to this Agreement (or, in the case of a Participant,
on or before the date on which such Participant purchases the related
participation) either:
(A) two duly completed and signed copies of either Internal
Revenue Service Form 1001 (relating to such Non-U.S. Lender and
entitling it to a complete exemption from withholding of U.S. Taxes on
all amounts to be received by such Non-U.S. Lender pursuant to this
Agreement and the other Credit Documents) or Form 4224 (relating to
all amounts to be received by such Non-U.S. Lender pursuant to this
Agreement and the other Credit Documents), or successor and related
applicable forms, as the case may be; or
(B) in the case of a Non-U.S. Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and that does
not comply with the requirements of clause (A) hereof, (x) a statement
in the form of Exhibit F (or such other form of statement as shall be
reasonably requested by the Borrower from time to time) to the effect
that such Non-U.S. Lender is eligible for a complete
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exemption from withholding of U.S. Taxes under Code Section 871(h) or
881(c), and (y) two duly completed and signed copies of Internal
Revenue Service Form W-8 or successor and related applicable form (it
being understood and agreed that no Participant and, without the prior
written consent of the Borrower described in clause (B) of the proviso
to the first sentence of subsection 10.6(c), no Assignee shall be
entitled to deliver any forms or statements pursuant to this clause
(B), but rather shall be required to deliver forms pursuant to clause
(A) of this subsection 2.15(b)).
Further, each Non-U.S. Lender agrees (i) to deliver to the Borrower and the
Administrative Agent, and if applicable, the assigning Lender (or, in the case
of a Participant, to the Lender from which the related participation shall have
been purchased) two further duly completed and signed copies of such Forms 1001
or 4224, as the case may be, or successor and related applicable forms, on or
before the date that any such form expires or becomes obsolete and promptly
after the occurrence of any event requiring a change from the most recent
form(s) previously delivered by it to the Borrower (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) in accordance with applicable U.S. laws and regulations and (ii) in
the case of a Non-U.S. Lender that delivers a statement in the form of Exhibit
F (or such other form of statement as shall have been requested by the
Borrower), to deliver to the Borrower and the Administrative Agent, and if
applicable, the assigning Lender, such statement on an annual basis on the
anniversary of the date on which such Non-U.S. Lender became a party to this
Agreement and to deliver promptly to the Borrower and the Administrative Agent,
and if applicable, the assigning Lender, such additional statements and forms
as shall be reasonably requested by the Borrower from time to time unless, in
any such case, any change in law or regulation has occurred subsequent to the
date such Lender became a party to this Agreement (or in the case of a
Participant, the date on which such Participant purchased the related
participation) which renders all such forms inapplicable or which would prevent
such Lender (or Participant) from properly completing and executing any such
form with respect to it and such Lender promptly notifies the Borrower and the
Administrative Agent (or, in the case of a Participant, the Lender from which
the related participation shall have been purchased) if it is no longer able to
deliver, or if it is required to withdraw or cancel, any form or statement
previously delivered by it pursuant to this subsection 2.15(b). Each Non-U.S.
Lender agrees to indemnify and hold harmless the Borrower from and against any
taxes, penalties, interest or other costs or losses (including, without
limitation, reasonable attorneys' fees and expenses) incurred or payable by the
Borrower as a result of the failure of the Borrower to comply with its
obligations to deduct or withhold any U.S. Taxes from any payments made
pursuant to this Agreement to such Non-U.S. Lender or the Administrative Agent
which failure resulted from the Borrower's reliance on any form, statement,
certificate or other information provided to it by such Non-U.S. Lender
pursuant to clause (B) or clause (ii) of this subsection 2.15(b). The Borrower
hereby agrees that for so long as a Non-U.S. Lender complies with this
subsection 2.15(b), the Borrower shall not withhold any amounts from any
payments made pursuant to this Agreement to such Non-U.S. Lender, unless the
Borrower reasonably determines that it is required by law to withhold or deduct
any amounts from any payments made to such Non-U.S. Lender pursuant to this
Agreement. A Non-U.S. Lender shall not be required to deliver any form or
statement pursuant to the immediately preceding sentences in this subsection
2.15(b) that such Non-U.S. Lender is not legally able to deliver (it being
understood and agreed that the Borrower shall withhold or deduct such amounts
from any
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payments made to such Non-U.S. Lender that the Borrower reasonably determines
are required by law and that payments resulting from a failure to comply with
this paragraph (b) shall not be subject to payment or indemnity by the Borrower
pursuant to subsection 2.15(a)). If any Credit Party other than the Borrower
makes any payment to any Non-U.S. Lender under any Credit Document, the
foregoing provisions of this subsection 2.15 shall apply to such Non-U.S.
Lender and such Credit Party as if such Credit Party were the Borrower (but a
Non-U.S. Lender shall not be required to provide any form or make any statement
to any such Credit Party unless such Non-U.S. Lender has received a request to
do so from such Credit Party and has a reasonable time to comply with such
request).
(c) If a Lender shall become aware that it is entitled to
receive a refund (whether by way of a direct payment or by offset) in respect
of a Non-Excluded Tax paid by the Borrower, which refund, in the good faith
judgment of such Lender, is allocable to such payment made pursuant to this
Section, it shall promptly notify the Borrower of the availability of such
refund and shall, within 30 days after the receipt of a request from the
Borrower, apply for such refund at the Borrower's sole expense. If any Lender
receives such refund (as described in the preceding sentence), it shall repay
the amount of such refund (together with any interest received thereon) to the
Borrower if all the payments due under this Section has been paid in full.
2.16 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto (but excluding loss of margin). Such indemnification under this
subsection 2.16 may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans
provided for herein (but excluding loss of margin) over (ii) the amount of
interest (as reasonably determined by such Lender) which would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market. Each Lender
claiming any payment pursuant to this subsection 2.16 shall do so by giving
notice thereof to the Borrower and the Administrative Agent (showing
calculation of the amount claimed in reasonable detail) within 60 Business Days
after a failure to borrow, convert or continue Eurodollar Loans, or to prepay,
after notice or after a prepayment of Eurodollar Loans on a day which is not
the last day of an Interest Period therefor. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
2.17 Replacement of Lenders. If at any time (a) the Borrower
becomes obligated to pay additional amounts described in subsections 2.13, 2.14
or 2.15 as a result of any condition described in such
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subsections, or any Lender ceases to make Eurodollar Loans pursuant to
subsection 2.13, (b) any Lender becomes insolvent and its assets become subject
to a receiver, liquidator, trustee, custodian or other Person having similar
powers or (c) any Lender becomes a "Nonconsenting Lender" (hereinafter
defined), then the Borrower may, on ten Business Days' prior written notice to
the Administrative Agent and such Lender, replace such Lender by causing such
Lender to (and such Lender shall) assign pursuant to subsection 10.6 all of its
rights and obligations under this Agreement to a Lender or other entity
selected by the Borrower and acceptable to the Administrative Agent for a
purchase price equal to the outstanding principal amount of such Lender's Loans
and all accrued interest and fees and other amounts payable hereunder
(including amounts payable under subsection 2.16 as though such Loans were
being paid instead of being purchased); provided that (i) the Borrower shall
have no right to replace the Administrative Agent, (ii) neither the
Administrative Agent nor any Lender shall have any obligation to the Borrower
to find a replacement Lender or other such entity, (iii) in the event of a
replacement of a Nonconsenting Lender or a Lender to which the Borrower becomes
obligated to pay additional amounts pursuant to this subsection 2.17, in order
for the Borrower to be entitled to replace such a Lender, such replacement must
take place no later than 180 days after (A) the date the Nonconsenting Lender
shall have notified the Borrower and the Administrative Agent of its failure to
agree to any requested consent, waiver or amendment or (B) the Lender shall
have demanded payment of additional amounts under one of the subsections
described in this subsection 2.17, as the case may be, and (iv) in no event
shall the Lender hereby replaced be required to pay or surrender to such
replacement Lender or other entity any of the fees received by such Lender
hereby replaced pursuant to this Agreement. In the case of a replacement of a
Lender to which the Borrower becomes obligated to pay additional amounts
pursuant to this subsection 2.17, the Borrower shall pay such additional
amounts to such Lender prior to such Lender being replaced and the payment of
such additional amounts shall be a condition to the replacement of such Lender.
In the event that (x) the Borrower or the Administrative Agent has requested
the Lenders to consent to a departure or waiver of any provisions of the Credit
Documents or to agree to any amendment thereto, (y) the consent, waiver or
amendment in question requires the agreement of all Lenders in accordance with
the terms of subsection 10.1 and (z) the Required Lenders have agreed to such
consent, waiver or amendment, then any Lender who does not agree to such
consent, waiver or amendment shall be deemed a "Nonconsenting Lender."
2.18 Certain Fees. The Company agrees to pay to the
Administrative Agent, for its own account, a non-refundable administration fee
in an amount previously agreed to with the Administrative Agent, payable in
advance on the Closing Date and annually in advance on each anniversary thereof
prior to the earlier of (x) the Final Maturity Date and (y) the payment in full
of all Loans and all other amounts owing under this Agreement.
2.19 Certain Rules Relating to the Payment of Additional
Amounts. (a) Upon the request, and at the expense, of the Borrower, each Lender
to which the Borrower is required to pay any additional amount pursuant to
Section 2.14 or 2.15 shall reasonably afford the Borrower the opportunity to
contest, and reasonably cooperate with the Borrower in contesting, the
imposition of any Non-Excluded taxes giving rise to such payment; provided that
(i) such Lender shall not be required to afford the Borrower the opportunity to
so contest unless the Borrower shall have confirmed in writing to such Lender
its obligation to pay such amounts
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pursuant to this Agreement and (ii) the Borrower shall reimburse such Lender
for its reasonable attorneys' and accountants' fees and disbursements incurred
in so cooperating with the Borrower in contesting the imposition of such
Non-Excluded Taxes.
(b) Each Lender agrees that if it makes any demand for payment
under subsection 2.14 or 2.15(a), or if any adoption or change of the type
described in subsection 2.13 shall occur with respect to it, it will use
reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be
disadvantageous to it, as determined in its reasonable discretion) to designate
a different lending office if the making of such a designation would allow the
Lender to continue to make and maintain Eurodollar Loans and would reduce or
obviate the need for the Borrower to make payments under subsection 2.14 or
2.15(a), or would eliminate or reduce the effect of any adoption or change
described in subsection 2.13.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the Revolving
Credit Lenders set forth in subsection 3.4(a), agrees to issue letters of
credit ("Letters of Credit") for the account of the Borrower on any Business
Day during the Commitment Period in such form as may be approved from time to
time by the Issuing Lender; provided that the Issuing Lender shall have no
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the
Available Commitment with respect to Revolving Credit Loans of all Revolving
Credit Lenders less the aggregate principal amount of the Swing Line Loans then
outstanding would be less than zero.
(b) Each Letter of Credit shall (i) be denominated in Dollars,
(ii) be a standby letter of credit issued to support obligations of the
Borrower or any of its Subsidiaries, contingent or otherwise and (iii) expire
no later than the earlier of (x) the date that is 12 months after the date of
its issuance and (y) the fifth Business Day prior to the Revolving Loan
Termination Date; provided that any Letter of Credit with an expiration date
occurring up to twelve months after such Letter of Credit's date of issuance
may be automatically renewable for subsequent 12-month periods (but in no event
later than the fifth Business Day prior to the Revolving Loan Termination
Date).
(c) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.
(d) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any L/C Participant to exceed any limits imposed
by, any applicable Requirement of Law or any policies of the Issuing Lender.
3.2 Procedure for Issuance of Letters of Credit. The Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
at any time prior to the fifth Business Day prior to the Revolving Loan
Termination Date by delivering to the Issuing Lender with a copy to the
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Administrative Agent at its address for notices specified herein an Application
therefor, completed to the satisfaction of the Issuing Lender, and such other
certificates, documents and other papers and information as the Issuing Lender
may reasonably request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrower and the Administrative Agent (with copies
for each Lender) promptly following the issuance thereof.
3.3 Fees, Commissions and Other Charges. (a) The Borrower
shall pay to the Administrative Agent, for the account of the Issuing Lender
and the L/C Participants, a letter of credit fee with respect to each Letter of
Credit, computed for the period from and including the date of issuance of such
Letter of Credit to the expiration date of such Letter of Credit at a rate per
annum equal to the Applicable Margin then in effect for Eurodollar Loans, of
the aggregate face amount of Letters of Credit outstanding, payable in arrears
on each L/C Fee Payment Date and on the Revolving Loan Termination Date. Such
fee shall be payable to the Administrative Agent to be shared ratably among the
Revolving Credit Lenders in accordance with their respective Commitment
Percentages with respect to Revolving Credit Loans. In addition, the Borrower
shall pay to the Administrative Agent, for the sole account of the Issuing
Lender, a fee equal to 0.1250% per annum of the aggregate face amount of
outstanding Letters of Credit payable quarterly in arrears on each L/C Fee
Payment Date and on the Revolving Loan Termination Date.
(b) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by the Issuing Lender
in issuing, effecting payment under, amending or otherwise administering any
Letter of Credit.
(c) The Administrative Agent shall, promptly following its
receipt thereof, distribute to the Issuing Lender and the L/C Participants all
fees and commissions received by the Administrative Agent for their respective
accounts pursuant to this subsection.
3.4 L/C Participation. (a) The Issuing Lender irrevocably
agrees to sell and hereby sells to each L/C Participant, and, to induce the
Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases from
the Issuing Lender, on the terms and conditions hereinafter stated, for such
L/C Participant's own account and risk an undivided interest equal to such L/C
Participant's Commitment Percentage with respect to Revolving Credit Loans from
time to time in effect in the Issuing Lender's obligations and rights under
each Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not
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reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's then Commitment Percentage with respect to Revolving
Credit Loans of the amount of such draft, or any part thereof, which is not so
reimbursed; provided that, if such demand is made prior to 11:00 A.M., New York
City time, on a Business Day, such L/C Participant shall make such payment to
the Issuing Lender prior to the end of such Business Day and otherwise such L/C
Participant shall make such payment on the next succeeding Business Day.
(b) If any amount required to be paid by any L/C Participant
to the Issuing Lender pursuant to subsection 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit is paid to the Issuing Lender within three Business Days after the
date such payment is due, such L/C Participant shall pay to the Issuing Lender
on demand an amount equal to the product of (i) such amount, times (ii) the
daily average Federal funds rate, as quoted by the Issuing Lender, during the
period from and including the date such payment is required to the date on
which such payment is immediately available to the Issuing Lender, times (iii)
a fraction the numerator of which is the number of days that elapse during such
period and the denominator of which is 360. If any such amount required to be
paid by any L/C Participant pursuant to subsection 3.4(a) is not in fact made
available to the Issuing Lender by such L/C Participant within three Business
Days after the date such payment is due, the Issuing Lender shall be entitled
to recover from such L/C Participant, on demand, such amount with interest
thereon calculated from such due date at the rate per annum applicable to Base
Rate Loans hereunder. A certificate of the Issuing Lender submitted to any L/C
Participant with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant
its pro rata share of such payment in accordance with subsection 3.4(a), the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise, including proceeds of collateral
applied thereto by the Issuing Lender), or any payment of interest on account
thereof, the Issuing Lender will, if such payment is received prior to 11:00
A.M., New York City time, on a Business Day, distribute to such L/C Participant
its pro rata share thereof prior to the end of such Business Day and otherwise
the Issuing Lender will distribute such payment on the next succeeding Business
Day; provided, however, that in the event that any such payment received by the
Issuing Lender and distributed to the L/C Participants shall be required to be
returned by the Issuing Lender, each such L/C Participant shall return to the
Issuing Lender the portion thereof previously distributed by the Issuing Lender
to it.
3.5 Reimbursement Obligation of the Borrower. (a) The Borrower
agrees to reimburse the Issuing Lender on the same Business Day on which the
Issuing Lender notifies the Borrower of the date and amount of a draft
presented under any Letter of Credit and paid by the Issuing Lender provided
such notice is received by 1:00 P.M., New York City time, on such Business Day,
and the next Business Day if such notice is received after such time. The
Issuing Lender shall provide notice to the Borrower on each Business Day on
which a draft is presented and paid by the Issuing Lender indicating the amount
of (i) such draft so paid and (ii) any taxes, fees,
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charges or other costs or expenses incurred by the Issuing Lender in connection
with such payment. Each such payment shall be made to the Issuing Lender at its
address for notices specified herein in lawful money of the United States of
America and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining
unpaid by the Borrower under this subsection from the date a draft presented
under any Letter of Credit is paid by the Issuing Lender until payment in full
(i) at the rate which would be payable on any Loans that are Base Rate Loans at
such time until such payment is required to be made pursuant to subsection
3.5(a), and (ii) thereafter, at the rate which would be payable on any Loans
that are Base Rate Loans at such time which were then overdue.
3.6 Obligations Absolute. (a) The Borrower's obligations under
subsection 3.5(a) shall be absolute and unconditional under any and all
circumstances and irrespective of any set-off, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Lender, any
L/C Participant or any beneficiary of a Letter of Credit.
(b) The Borrower also agrees with the Issuing Lender that the
Issuing Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under subsection 3.5(a) shall not be affected by, among other
things, (i) the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged (unless the Issuing Lender has knowledge of such
invalidity, fraud or forgery), or (ii) any dispute between or among the
Borrower and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or (iii) any claims whatsoever
of the Borrower against any beneficiary of such Letter of Credit or any such
transferee.
(c) Neither the Issuing Lender nor any L/C Participant shall
be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except for errors or omissions caused by
the Issuing Lender's gross negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by
the Issuing Lender under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in
the Uniform Commercial Code of the State of New York, shall be binding on the
Borrower and shall not result in any liability of the Issuing Lender or any L/C
Participant to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented
for payment under any Letter of Credit, the Issuing Lender shall promptly
notify the Borrower and the Administrative Agent of the date and amount
thereof. If any draft shall be presented for payment under any Letter of
Credit, the responsibility of the Issuing Lender to the Borrower in connection
with such draft shall, in addition to any payment obligation expressly provided
for in such Letter of Credit, be limited to determining that the documents
(including each draft) delivered under such Letter of Credit in connection with
such presentment appear on their face to be in conformity with such Letter of
Credit.
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3.8 Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall govern and control.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents, the Issuing Lender, the Swing Line
Lender and the Lenders to enter into this Agreement and to make the Loans and
issue or participate in the Letters of Credit, the Borrower hereby represents
and warrants to the Agents, the Issuing Lender, the Swing Line Lender and each
Lender that:
4.1 Financial Condition. (a) The combined balance sheets of
the Lockheed Martin Predecessor Businesses as at December 31, 1996 and December
31, 1995 and the related combined statements of operations and changes in
invested equity and cash flows for each of the three years in the period ended
December 31, 1996, audited by Coopers & Lybrand L.L.P., copies of which have
heretofore been furnished to each Lender, present fairly, in all material
respects, in accordance with GAAP the combined financial condition of the
Lockheed Martin Predecessor Businesses as of such dates, and the combined
results of their operations and changes in invested equity and cash flows for
each of the years in the period ended December 31, 1996. All such financial
statements have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such auditors and as
disclosed therein). To the best of the Borrower's knowledge, none of the
Lockheed Martin Predecessor Businesses had, at the date of each balance sheet
referred to above, any material Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any material interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
foregoing statements or in the notes thereto or expressly permitted to be
incurred hereunder. To the best of the Borrower's knowledge, during the period
from December 31, 1996 to and including the date hereof there has been no sale,
transfer or other disposition by the Lockheed Martin Predecessor Businesses of
any material part of its business or property (except as disclosed in the
Transaction Documents) other than pursuant to the Asset Contribution and no
purchase or other acquisition of any business or property (including any
capital stock of any other Person) material in relation to the consolidated
financial condition of the Lockheed Martin Predecessor Businesses at December
31, 1996.
(b) The combined statements of operations and cash flows for
the three months ended March 31, 1996 and the years ended December 31, 1995 and
1994 of the Loral Acquired Businesses, audited by Coopers & Lybrand L.L.P.,
copies of which have heretofore been furnished to each Lender, present fairly,
in all material respects, in accordance with GAAP the combined results of
operations and cash flows of the Loral Acquired Businesses for the three months
ended March 31, 1996, and the years ended December 31, 1995 and 1994. All such
financial statements have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants and as disclosed therein). To the best of the Borrower's knowledge,
during the period from December 31, 1996 to and including the date hereof,
there has been no sale, transfer or other disposition by any of the Loral
Acquired Businesses of any material part of its business or property (except as
disclosed in the Transaction Documents) other than pursuant to the Asset
Contribution and no purchase or other acquisition of any business or property
(including any capital stock of any
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other Person) material in relation to the consolidated financial condition of
Loral Acquired Businesses at December 31, 1996.
(c) The unaudited pro forma condensed consolidated financial
statements of the Borrower, as of December 31, 1996 and for the year then
ended, certified by a Responsible Officer (the "Pro Forma Financial
Statements"), copies of which have been furnished to each Lender, comprise the
unaudited combined financial statements of (x) the Lockheed Martin Predecessor
Businesses as of December 31, 1996 and for the year then ended and (y) the
Loral Acquired Businesses for the three months ended March 31, 1996, adjusted
to give effect (as if such events had occurred on such dates) to the Asset
Contribution and each of the other transactions contemplated by the Transaction
Documents. The Pro Forma Financial Statements have been prepared based on good
faith assumptions in accordance with Regulation S-X under the Securities
Exchange Act of 1934, as amended, and based on the best information available
to the Borrower, as of the date of delivery thereof, and reflect on a pro forma
basis the financial position and results of operations of the Borrower and its
Subsidiaries, as of December 31, 1996, and for the year then ended.
4.2 No Change. Since December 31, 1996 there has been no
development, event or circumstance which has had or could reasonably be
expected to have a Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of
Holdings, the Borrower and its Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right,
to own and operate its property, to lease the property it operates as lessee
and to conduct the business in which it is currently engaged, (c) is, or will
be on or before the date set forth in subsection 6.12, duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except to the extent that the failure to
so qualify could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect and (d) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each of Holdings, the Borrower and its Subsidiaries has the corporate power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party and, in the case of the Borrower, to borrow
hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and to authorize the
execution, delivery and performance of such Credit Documents and Transaction
Documents. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents and Transaction
Documents to which the Borrower and each other Credit Party is a party, except
those referred to in subsections 4.17 and 6.13 and those set forth on Schedule
4.4. This Agreement has been, and each other Credit Document and Transaction
Document will be, duly executed and delivered on behalf of the Borrower and
each other Credit Party. This Agreement constitutes, and each other Credit
Document and Transaction Document to which it is a party when executed and
delivered will constitute,
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a legal, valid and binding obligation of each Credit Party thereto enforceable
against each such Credit Party, as the case may be, in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
4.5 No Legal Bar. Except as set forth on Schedule 4.5 or as
could not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect, the execution, delivery and performance of each Credit
Document, the borrowing and use of the proceeds of the Loans and the
consummation of the transactions contemplated by the Credit Documents and the
Transaction Documents: (a) will not violate any Requirement of Law or any
Contractual Obligation applicable to or binding upon Holdings, the Borrower or
any Subsidiary of the Borrower or any of their respective properties or assets
and (b) will not result in the creation or imposition of any Lien on any of its
properties or assets pursuant to any Requirement of Law applicable to it or any
of its Contractual Obligations, except for the Liens arising under the Security
Documents.
4.6 No Material Litigation. Except as set forth on Schedule
4.6, no litigation by, investigation by, or proceeding of or before any
arbitrator or any Governmental Authority is pending or, to the knowledge of the
Borrower, overtly threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective properties or revenues
(including after giving effect to the Asset Contribution and the other
transactions contemplated by the Transaction Documents) with respect to any
Credit Document or any of the transactions contemplated hereby or thereby or
which could reasonably be expected to have a Material Adverse Effect.
4.7 No Default. Neither Holdings, the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
4.8 Ownership of Property; Liens. Each of Holdings, the
Borrower and its Subsidiaries (i) has good record and insurable title in fee
simple to all the real property listed on Schedule 4.8, (ii) has good record
and insurable title in fee simple to, or a valid leasehold interest in, all its
other material real property, (iii) has good title to, or a valid leasehold
interest in, all its other material property and (iv) none of such property in
clauses (i) through (iii) is or shall be subject to any Lien except as
permitted by subsection 7.3.
4.9 Intellectual Property. Holdings, the Borrower and each of
its Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure to own or license
which could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). To the best of the Borrower's knowledge, and except
as set forth on Schedule 4.9, no claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim which could reasonably be
expected to have a Material Adverse
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Effect. The use of such Intellectual Property by Holdings, the Borrower and its
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
4.10 Taxes. Except as set forth on Schedule 4.10, each of
Holdings, the Borrower and its Subsidiaries has filed or caused to be filed all
material tax returns which, to the knowledge of the Borrower, are required to
be filed and has paid all taxes shown to be due and payable on said returns or
on any assessments made against it or any of its property and all other
material taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of Holdings, the Borrower or its Subsidiaries, as the case may be); no
tax Lien has been filed, and, to the knowledge of the Borrower, no claim is
being asserted, with respect to any such tax, fee or other charge.
4.11 Federal Regulations. No part of the proceeds of any Loans
will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation G or
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect.
4.12 ERISA. The Borrower has provided to the Agents a true and
correct copy of all Agreements, arrangements and understandings relating to the
transfer of Plans from the Seller to the Borrower (the "Transfer Agreements").
The Transfer Agreements are in full force and effect and have not been waived
or modified without the consent of the Agents (which shall not be unreasonably
withheld) except to the extent any such waiver or modification, singly or in
the aggregate, could not be reasonably expected to have a Material Adverse
Effect. Except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, no Reportable Event has occurred
with respect to any Single Employer Plan, all contributions required to be made
with respect to a Plan have been timely made; none of the Borrower or any of
its Subsidiaries nor any Commonly Controlled Entity has incurred any material
liability to or on account of a Plan pursuant to Section 409, 502(i), 502(1),
515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29),
4971, 4975 or 4980 of the Code or expects to incur any liability (including any
indirect, contingent or secondary liability) under any of the foregoing
Sections with respect to any Plan; no termination or, or institution of
proceedings to terminate or appoint a trustee to administer, a Single Employer
Plan has occurred; and each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code (except that with respect to any
Multiemployer Plan, such representation is deemed made only to the knowledge of
the Borrower). No "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA), extension of any amortization
period (within the meaning of Section 412 of the Code) or Lien in favor of the
PBGC or a Plan has arisen or has occurred during the five-year period prior to
the date on which this representation is made or deemed made with respect to
any Single Employer Plan. As of the last annual valuation date prior to the
date on which this representation is made or deemed made, the fair market value
of the assets available for benefits under each Single Employer Plan did not
exceed the actuarial present value of all accumulated benefit obligations under
such Plan by more than $20,000,000, all
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as determined in accordance with Statement of Financial Accounting Standards
No. 87. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan for which there is
any outstanding liability, and neither the Borrower nor any Commonly Controlled
Entity would become subject to any liability under ERISA if the Borrower or any
such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made in an amount which would be
reasonably likely to have a Material Adverse Effect. To the best knowledge of
the Borrower, no such Multiemployer Plan is in Reorganization or Insolvent.
4.13 Investment Company Act; Other Regulations. None of the
Borrower or any of its Subsidiaries is an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended. None of the Borrower or any of its
subsidiaries is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
4.14 Subsidiaries. After giving effect to the consummation of
the Transaction, the Subsidiaries of the Borrower and their respective
jurisdictions of incorporation shall be as set forth on Schedule 4.14.
4.15 Purpose of Loans. The proceeds of the Loans shall be used
by the Borrower (i) to finance a portion of the Transaction and related fees
and expenses in an aggregate amount not to exceed $185,000,000 and (ii) for
working capital purposes in the ordinary course of business of the Borrower and
its Subsidiaries.
4.16 Environmental Matters.
Except insofar as any exception to any of the following, or
any aggregation of such exceptions, is not reasonably likely to result in a
Material Adverse Effect:
(a) The facilities and properties owned, leased or operated
Holdings, by the Borrower or any of its Subsidiaries (the
"Properties") do not contain, and have not previously contained, any
Materials of Environmental Concern in amounts or concentrations which
(i) constitute or constituted a violation of, or (ii) could reasonably
be expected to give rise to liability under, any applicable
Environmental Law.
(b) None of Holdings, the Borrower nor any of its Subsidiaries
has received any written notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor does the Borrower
have knowledge or reason to believe that any such notice will be
received or is being threatened.
(c) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in
a manner or to a location which could reasonably be expected to give
rise to liability under, any applicable Environmental Law, nor have
any Materials of Environmental Concern been generated, treated,
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stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could reasonably be expected to give
rise to liability under, any applicable Environmental Law.
(d) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened,
under any Environmental Law to which Holdings, the Borrower or any
Subsidiary is or, to the knowledge of the Borrower, will be named as a
party or with respect to the Properties or the Business, nor are there
any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to
the Properties or the Business.
(e) There has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of Holdings, the Borrower or
any Subsidiary in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a
manner that could reasonably give rise to liability under any
applicable Environmental Laws.
(f) The Properties and all operations at the Properties are in
compliance, and have in the last 3 years been in compliance, in all
material respects with all applicable Environmental Laws, and there is
no contamination at, under or about the Properties or violation of any
applicable Environmental Law with respect to the Properties or the
business operated by Holdings, the Borrower or any of its Subsidiaries
(the "Business") which could materially interfere with the continued
operation of the Properties or materially impair the fair saleable
value thereof.
(g) Holdings, the Borrower and its Subsidiaries hold and are
in compliance with all Environmental Permits necessary for their
operations.
4.17 Collateral Documents. (a) Upon execution and delivery
thereof by the parties thereto, each of the Borrower Pledge and Security
Agreement, the Subsidiary Pledge and Security Agreement and the Parent Pledge
and Security Agreement will be effective to create in favor of the
Administrative Agent, for the ratable benefit of the Lenders, a legal, valid
and enforceable security interest in the pledged stock described therein and,
when stock certificates representing or constituting the pledged stock
described therein are delivered to the Administrative Agent, such security
interest shall, subject to the existence of Permitted Liens, constitute a
perfected first lien on, and security interest in, all right, title and
interest of the pledgor party thereto in the pledged stock described therein.
(b) Upon execution and delivery thereof by the parties
thereto, each of the Borrower Pledge and Security Agreement, the Subsidiary
Pledge and Security Agreement and the Parent Pledge and Security Agreement will
be effective to create in favor of the Administrative Agent, for the ratable
benefit of the Lenders, a legal, valid and enforceable security interest in the
collateral described therein. Uniform Commercial Code financing statements have
been filed in each of the jurisdictions listed on Schedule 4.17, each such
Agreement has been filed in each of the government
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offices listed on Schedule 4.17 or arrangements have been made for such filing
in such jurisdictions, and upon such filings, and upon the taking of possession
by the Administrative Agent of any such collateral the security interests in
which may be perfected only by possession, such security interests will,
subject to the existence of liens as permitted by the definition of Permitted
Liens, constitute perfected first priority liens on, and security interests in,
all right, title and interest of the debtor party thereto in the collateral
described therein, except, in the case of each of the Borrower Pledge and
Security Agreement, the Subsidiary Pledge and Security Agreement and the Parent
Pledge and Security Agreement, to the extent that a security interest cannot be
perfected therein by the filing of a financing statement or the taking of
possession under the Uniform Commercial Code of the relevant jurisdiction.
(c) Upon (a) execution and delivery of the Mortgages by the
parties thereto, (b) the recording of such Mortgages in the jurisdiction listed
on Schedule 4.17 and (c) the payment of any required mortgage recording taxes,
each of the Mortgages will be effective to create in favor of the
Administrative Agent, for the ratable benefit of the Lenders, a legal, valid
and enforceable lien on the real property described therein and such liens
will, as of the Closing Date, subject to the existence of liens as permitted by
clauses (a), (e), (f) and (g) of the definition of Permitted Liens, constitute
first priority liens on the real property described therein.
4.18 Accuracy and Completeness of Information. No fact is
known to Holdings, the Borrower or any of its Subsidiaries which has had or
could reasonably be expected to have a Material Adverse Effect, which has not
been disclosed to the Lenders by Holdings, the Borrower or its Subsidiaries in
writing prior to the date hereof. No document furnished or statement made in
writing to the Lenders by Holdings, the Borrower, any Subsidiary or any party
to any of the Transaction Documents in connection with the negotiation,
preparation or execution of this Agreement or any of the other Credit
Documents, taken as a whole, (including the Confidential Offering Memorandum
dated April 1997 relating to this facility but excluding all projections
(including industry forecasts and statistical data) and pro forma financial
statements (whether or not contained therein) which shall have been prepared in
good faith and based upon reasonable assumptions) contains any untrue statement
of a material fact or omits to state any such material fact necessary in order
to make the statements contained therein not misleading in the context in which
such statements are made. The Equity Documents constitute all of the agreements
relating to the Equity Investment and the Subordinated Debt Documents
constitute all of the agreements relating to the Subordinated Debt.
4.19 Solvency. On the Closing Date and after giving effect to
the Asset Contribution and the other transactions contemplated by the
Transaction Documents including borrowings hereunder on such date and the
incurrence of all other Indebtedness and Guarantee Obligations being incurred
on such date, the Borrower is "Solvent," in that (a) the property, at a fair
valuation, of Holdings and its Subsidiaries, individually and taken together as
a single entity, will exceed their debts, (b) the present fair salable value of
the assets of Holdings and its Subsidiaries, individually and taken together as
a single entity, is not less than the amount that will be required to pay their
probable liabilities as such debts become absolute and matured, and (c) the
Borrower does not intend to, and does not believe that Holdings and its
Subsidiaries, individually and taken together as a single
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entity, will, incur debts or liabilities beyond the their ability to pay as
such debts and liabilities mature. For purposes of this subsection, "debt"
means "liability on a claim" and "claim" means any (i) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.
4.20 Labor Matters. There are no strikes pending or, to the
Borrower's knowledge, overtly threatened against Holdings, the Borrower or any
of its Subsidiaries which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. The hours worked and payments
made to employees of Holdings, the Borrower and each of its Subsidiaries (and
their predecessors) have not been in violation of the Fair Labor Standards Act
or any other applicable Requirement of Law, except to the extent such
violations could not, or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
4.21 Transaction Documents. To the best of the Borrower's
knowledge, the representations and warranties contained in the Transaction
Documents, taken as a whole, are true and correct in all material respects as
of the Closing Date. On the Closing Date, the Asset Contribution will have been
consummated in accordance with the Transaction Documents.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Loans. The agreement of each Lender
to make the initial extension of credit requested to be made by it is subject
to the satisfaction, immediately prior to or concurrently with the making of
such extension of credit (including the making of any Loan or the issuance of
any Letter of Credit) on the Closing Date, of the following conditions
precedent:
(a) Credit Documents. The Administrative Agent shall have
received (i) this Agreement, (ii) the Guarantees, (iii) the Mortgages
and (iv) the Security Documents, in each case executed, duly
acknowledged and delivered by duly authorized officers of each party
thereto, with a counterpart or a conformed copy for each Lender.
Notwithstanding the foregoing, no Foreign Subsidiary of Holdings or
the Borrower shall be required to execute a Subsidiary Guarantee or
Subsidiary Pledge and Security Agreement, and no more than 65% of the
capital stock of or equity interests in any Foreign Subsidiary of the
Borrower, Holdings or any of their Subsidiaries, or any other of their
Subsidiaries if more than 65% of the assets of such Subsidiary are
securities of foreign companies (such determination to be made on the
basis of fair market value), shall be required to be pledged
hereunder.
(b) Related Agreements. The Administrative Agent shall have
received, with a copy for each Lender, true and correct copies,
certified as to authenticity by the Borrower, of each of the
Transaction Documents and such other documents or instruments as may
be reasonably requested by the Administrative Agent, including,
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without limitation, a copy of any debt instrument, security agreement
or other material contract to which the Borrower or any of its
Subsidiaries may be a party (after giving effect to the Asset
Contribution).
(c) Asset Contribution. The Asset Contribution shall have been
consummated pursuant to the Transaction Agreement, and no material
provision of the Transaction Agreement shall have been amended,
supplemented, waived or otherwise modified without the prior written
consent of the Agents. The Agents shall be reasonably satisfied with
the aggregate amount of fees and expenses payable by the Borrower and
its Subsidiaries in connection with the transactions contemplated
hereby and by the Transaction Documents.
(d) Capitalization; Capital Structure (i) After giving effect
to the Asset Contribution and the other transactions contemplated by
the Transaction Documents, the Borrower shall have the capital
structure set forth in the Pro Forma Financial Statements.
(ii) The Subordinated Debt Documents shall have been
executed and delivered by the parties thereto (and shall be in form
and substance reasonably satisfactory to the Agents), shall be in full
force and effect and none of the provisions thereof shall have been
amended, waived, supplemented or otherwise modified without the prior
written consent of the Agents; and the Borrower shall have issued the
Subordinated Debt in a principal amount, and received gross proceeds
in the amount of $225,000,000.
(iii) The Equity Documents shall have been executed and
delivered by the parties thereto (and shall be in form and substance
reasonably satisfactory to the Agents), shall be in full force and
effect and none of the provisions thereof shall have been amended,
waived, supplemented or otherwise modified without the prior written
consent of the Agents; and the Borrower shall have received at least
$79,850,000 in net cash proceeds in accordance with the terms of the
Equity Documents.
(e) Fees. The Agents, the Arranger and the Lenders shall have
received all fees, expenses and other consideration required to be
paid on or before the Closing Date.
(f) Lien Searches. The Administrative Agent shall have
received the results of a search of Uniform Commercial Code, tax and
judgment filings made with respect to each of the Borrower and its
Subsidiaries (after giving effect to the Asset Contribution) and,
without duplication, the Lockheed Martin Predecessor Businesses and
the Loral Acquired Businesses in the jurisdictions set forth on
Schedule 4.17 together with copies of financing statements disclosed
by such searches, and such searches shall disclose no Liens on any
assets encumbered by any Security Document, except for Liens permitted
hereunder or, if unpermitted Liens are disclosed, the Administrative
Agent shall have received satisfactory evidence of the release of such
Liens.
(g) Consents, Authorizations and Filings, etc. Except for the
financing statements contemplated by the Security Documents and
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the filing of the Security Documents and the Assignment Consent, all
consents, authorizations and filings, if any, required in connection
with the execution, delivery and performance by the Credit Parties,
and the validity and enforceability against the Credit Parties, of the
Credit Documents to which any of them is a party, shall have been
obtained or made, and such consents, authorizations and filings shall
be in full force and effect, except such consents, authorizations and
filings, the failure to obtain which would not have a Material Adverse
Effect.
(h) Insurance. The Lenders shall have received (i) a
reasonably satisfactory schedule describing all insurance maintained
by the Borrower and its Subsidiaries (after giving effect to the Asset
Contribution) pursuant to subsection 6.5, and (ii) binders (or other
customary evidence as to the obtaining and maintenance by the Borrower
and its Subsidiaries of such insurance) for each policy set forth on
such schedule insuring against casualty and other usual and customary
risks.
(i) Litigation. On the Closing Date, there shall be no
actions, suits or proceedings pending or threatened against any Credit
Party (a) with respect to this Agreement or any other Credit Document
or any Transaction Document or the transactions contemplated hereby or
thereby (including the Asset Contribution) or (b) which the Agents or
the Required Lenders shall determine could reasonably be expected to
have a Material Adverse Effect.
(j) Borrowing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of the
Borrower, dated the Closing Date, substantially in the form of Exhibit
E, with appropriate insertions and attachments, reasonably
satisfactory in form and substance to the Administrative Agent,
executed by the President or any Vice President and the Secretary or
any Assistant Secretary of the Borrower.
(k) Corporate Proceedings of the Borrower. The Administrative
Agent shall have received, with a counterpart for each Lender, a copy
of the resolutions, in form and substance reasonably satisfactory to
the Administrative Agent, of the Board of Directors of the Borrower
authorizing (i) the execution, delivery and performance of the Credit
Documents to which it is a party, (ii) the borrowings contemplated
hereunder, (iii) the granting by it of the Liens created pursuant to
the Security Documents to which it is a party and (iv) the execution,
delivery and performance of the Transaction Documents to which it is a
party, certified by the Secretary or an Assistant Secretary of the
Borrower as of the Closing Date, which certificate shall be in form
and substance reasonably satisfactory to the Administrative Agent and
shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(l) Borrower Incumbency Certificate. The Administrative Agent
shall have received, with a counterpart for each Lender, a Certificate
of the Borrower, dated the Closing Date, as to the incumbency and
signature of the officers of the Borrower executing any Credit
Document reasonably satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice
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President and the Secretary or any Assistant Secretary of the
Borrower.
(m) Corporate Proceedings of Other Credit Parties. The
Administrative Agent shall have received, with a counterpart for each
Lender, a copy of the resolutions, in form and substance satisfactory
to the Administrative Agent, of the Board of Directors of each Credit
Party (other than the Borrower) authorizing (i) the execution,
delivery and performance of the Credit Documents to which it is a
party, (ii) the granting by it of the Liens created pursuant to the
Security Documents to which it is a party and (iii) the execution,
delivery and performance of the Transaction Documents to which it is a
party, certified by the Secretary or an Assistant Secretary of each
such Credit Party as of the Closing Date, which certificate shall be
in form and substance reasonably satisfactory to the Administrative
Agent and shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded.
(n) Credit Party Incumbency Certificates. The Administrative
Agent shall have received, with a counterpart for each Lender, a
certificate of each Credit Party (other than the Borrower), dated the
Closing Date, as to the incumbency and signature of the officers of
such Credit Party executing any Credit Document, reasonably
satisfactory in form and substance to the Administrative Agent,
executed by the President or any Vice President and the Secretary or
any Assistant Secretary of each such Credit Party.
(o) Corporate Documents. The Administrative Agent shall have
received, with a counterpart for each Lender, true and complete copies
of the certificate of incorporation and by-laws of each Credit Party,
certified as of the Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of the such Credit
Party.
(p) Legal Opinions. The Administrative Agent shall have
received, with a counterpart for each Lender, the following executed
legal opinions:
(i) the executed legal opinion of each of
Simpson Thacher and Bartlett and Fried, Harris, Shriver &
Jacobson, counsel to the Borrower and the other Credit
Parties, substantially in the form of Exhibits D-1 and D-2,
respectively; and
(ii) the executed legal opinions of each of
Simpson Thacher and Bartlett and Miles & StockBridge, counsel
to the Seller delivered pursuant to the Transaction Agreement,
each accompanied by a reliance letter in favor of the Lenders.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agents may
reasonably require.
(q) Pledged Stock; Stock Powers. The Administrative Agent
shall have received the certificates representing the shares pledged
pursuant to each of the Security Documents together with an undated
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stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof.
(r) Actions to Perfect Liens. (i) The Administrative Agent
shall have received evidence in form and substance reasonably
satisfactory to it that all filings, recordings, registrations and
other actions, including, without limitation, the filing of duly
executed financing statements on form UCC-1, necessary or, in the
opinion of the Administrative Agent, desirable to perfect the Liens
created by the Security Documents shall have been completed. The
Borrower shall have delivered to the Administrative Agent (A) each
Mortgage, each executed and delivered by a duly authorized officer of
the mortgagor party thereto, with a counterpart or a conformed copy
for each Lender and (B) legal opinions from local counsel in the
jurisdictions of such Mortgage relating to such Mortgage and the
perfection of Liens created by the Security Documents on personal
property located in such jurisdiction, which opinions shall be in form
and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(ii) The Borrower shall have delivered to the
Administrative Agent and the title insurance company issuing
the policy referred to below (the "Title Insurance Company")
maps or plats of an as-built survey of the sites of the
property covered by each Mortgage (other than as set forth on
Schedule 6.10) certified to the Administrative Agent and the
Title Insurance Company in a manner satisfactory to them,
dated a date reasonably satisfactory to the Administrative
Agent and the Title Insurance Company by an independent
professional licensed land surveyor reasonably satisfactory to
the Administrative Agent and the Title Insurance Company,
which maps or plats and the surveys on which they are based
shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and
adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992, and,
without limiting the generality of the foregoing, there shall
be surveyed and shown on such maps, plats or surveys the
following: (A) the locations on such sites of all the
buildings, structures and other improvements and the
established building setback lines; (B) the lines of streets
abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites or necessary or desirable
to use the sites; (D) all roadways, paths, driveways,
easements, encroachments and overhanging projections and
similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise
known to the surveyor; (E) any encroachments on any adjoining
property by the building structures and improvements on the
sites; and (F) if the site is described as being on a filed
map, a legend relating the survey to said map.
(iii) The Borrower shall deliver to the
Administrative Agent in respect of each parcel covered by each
Mortgage (other than as set forth on Schedule 6.10) a
mortgagee's title policy (or policies) or marked up
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unconditional binder for such insurance dated a date
reasonably satisfactory to the Agents. Each such policy shall
(A) be in an amount reasonably satisfactory to the Agents; (B)
be issued at ordinary rates; (C) insure that the Mortgage
insured thereby creates a valid first Lien on such parcel free
and clear of all defects and encumbrances, except for liens
permitted by clauses (a), (e), (f) and (g) of the definition
of Permitted Liens and such other liens and defects as may be
approved by the Agents; (D) name the Administrative Agent for
the benefit of the Lenders as the insured thereunder; (E) be
in the form of ALTA Loan Policy - 1992; (F) contain such
endorsements and affirmative coverage as the Agents may
reasonably request and (G) be issued by title companies
satisfactory to the Agents (including any such title companies
acting as co-insurers or reinsures, at the option of the
Agents). The Administrative Agent shall have received evidence
reasonably satisfactory to it that all premiums in respect of
each such policy, and all charges for mortgage recording tax,
if any, have been paid.
(iv) If required pursuant to Regulation H of the
Board of Governors of the Federal Reserve System ("Regulation
H") the Borrower shall deliver to the Administrative Agent (A)
a policy of flood insurance which (1) covers any parcel of
improved real property which is encumbered by any Mortgage,
(2) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage
which is reasonably allocable to such real property or the
maximum limit of coverage made available with respect to the
particular type of property under the National Flood Insurance
Act of 1968, whichever is less, and (3) has a term ending not
earlier than the maturity of the indebtedness secured by such
Mortgage and (B) confirmation that the Borrower has received
the notice required pursuant to Section 208(e)(3) of
Regulation H.
(v) The Borrower shall deliver to the
Administrative Agent a copy of all recorded documents referred
to, or listed as exceptions to title in, the title policy or
policies referred to in this subsection 3.1(r) and a copy,
certified by such parties as the Agents may reasonably deem
appropriate, of all other documents affecting the property
covered by each Mortgage (other than as set forth on Schedule
6.10).
(vi) With respect to any parcel of real property
owned in fee by the Borrower or any Subsidiary on which
fixtures having an aggregate book value exceeding $250,000 are
located, take all actions that the Agents may reasonably
require, including (if such property is not covered by a
recorded Mortgage) the filing of UCC fixture filing financing
statements, to cause the security interest created by the
Security Documents in such fixtures to be perfected and with
respect to any parcel of real property leased by the Borrower
or any Subsidiary on which fixtures having an aggregate book
value exceeding $250,000 are
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located, use commercially reasonable efforts to obtain the
consent of the landlord of such property to the filing of UCC
fixture filing financing statements and make such filings if
such consent is obtained.
(s) Solvency Opinion. The Administrative Agent shall have
received, with a counterpart for each Lender, a solvency opinion
reasonably satisfactory to the Agents from an independent valuation
firm reasonably satisfactory to the Agents which shall document the
solvency of Holdings and its Subsidiaries (including the Borrower)
individually and taken together as a single entity, after giving
effect to the Asset Contribution, the making of the Loans, the
issuance of the Subordinated Debt and the other transactions
contemplated hereby and by the Transaction Documents.
(t) Environmental Report. The Administrative Agent shall have
received an environmental report prepared by H2M Associates, Inc.,
dated April 1997, regarding Holdings and its Subsidiaries, and a
letter that entitles the Administrative Agent, the other Agents and
the Lenders to rely on such report as if prepared for and addressed to
each of them.
(u) Business Plan. The Lenders shall have received a
reasonably satisfactory business plan for Holdings and its
Subsidiaries for the period beginning January 1, 1997 and ending
December 31, 2006, which plan shall include a written analysis of the
business and prospects of Holdings and its Subsidiaries.
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it on any
date (including, without limitation, its initial Loan but excluding Revolving
Credit Loans made to repay Refunded Swing Line Loans) is subject to the
satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Borrower and each Credit
Party in or pursuant to the Credit Documents shall be true and correct
in all material respects on and as of such date as if made on and as
of such date, except for any representation and warranty which is
expressly made as of an earlier date, which representation and
warranty shall have been true and correct in all material respects as
of such earlier date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or will occur or exist after
giving effect to the extensions of credit requested to be made on such
date.
(c) Additional Matters. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement and the other
Credit Documents shall be satisfactory in form and substance to the
Agents, and the Administrative Agent shall have received such other
documents and legal opinions in respect of any aspect or consequence
of the transactions contemplated hereby or thereby as it shall
reasonably request.
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Each borrowing by, and each Letter of Credit issued on behalf of, the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date thereof that the conditions contained in this subsection have been
satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect or any amount is owing to any Lender or any Agent hereunder or
under any other Credit Document, the Borrower shall and (except in the case of
delivery of financial information, reports and notices) shall cause each of its
Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative
Agent with copies for each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, (i) a copy of the
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of income and retained earnings and of cash flows for such
year, setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope
of the audit, by independent certified public accountants of
nationally recognized standing and (ii) an unaudited unconsolidated
balance sheet of Holdings prepared on an equity basis (without
footnote disclosure) certified by a Responsible Officer of Holdings as
being fairly stated in all material respects;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of
each fiscal year of the Borrower, the unaudited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end
of such quarter and the related unaudited consolidated statements of
income and retained earnings and of cash flows of the Borrower and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each
case in comparative form the figures for the previous year, certified
by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the
Administrative Agent with copies for each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that, in performing their audit, nothing came to their
attention that caused them to believe that the Borrower failed
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to comply with the provisions of subsection 7.1, except as specified
in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a) and (b), a certificate of a
Responsible Officer stating that, to the best of such Officer's
knowledge, during such period (i) no Subsidiary has been formed or
acquired (or, if any such Subsidiary has been formed or acquired, the
Borrower has complied with the requirements of subsection 6.10 with
respect thereto), (ii) none of Holdings, the Borrower nor any of its
Subsidiaries has changed its name, its principal place of business,
its chief executive office or the location of any material item of
tangible Collateral without complying with the requirements of this
Agreement and the Security Documents with respect thereto and (iii)
such Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate;
(c) concurrently with the delivery of financial statements
pursuant to subsection 6.1(a) or (b), a certificate of the chief
financial officer of the Borrower setting forth, in reasonable detail,
the computations, as applicable, of (i) the Debt Ratio, (ii) Excess
Cash Flow and (iii) the financial covenants set forth in subsection
7.1, as of such last day or for the fiscal period then ended, as the
case may be;
(d) not later than 60 days after the end of each fiscal year
of the Borrower, a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower and its
Subsidiaries for the succeeding fiscal year, such projections to be
accompanied by a certificate of a Responsible Officer to the effect
that such projections have been prepared on the basis of sound
financial planning practice and that such Officer has no reason to
believe they are incorrect or misleading in any material respect;
(e) within five days after the same are sent, copies of all
financial statements and reports which the Borrower or Holdings sends
to its stockholders, and within five days after the same are filed,
copies of all financial statements and other reports which the
Borrower or Holdings may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental
Authority; and
(f) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or its Subsidiaries, as the case may be;
provided that, notwithstanding the foregoing, the Borrower and each of its
Subsidiaries shall have the right not to pay any such obligation and in good
faith contest, by proper legal actions or proceedings, the invalidity or amount
of such claims.
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6.4 Conduct of Business and Maintenance of Existence. Except
as permitted by subsection 7.5 and subsection 7.6, continue to engage in
business of the same general type as now conducted by it (after giving effect
to the Transaction); preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business; and keep all property useful and necessary in its business in good
working order and condition except if (i) in the reasonable business judgment
of the Borrower or such Subsidiary, as the case may be, it is in its best
economic interest not to preserve and maintain such rights, privileges or
franchises, and (ii) such failure to preserve and maintain such privileges,
rights or franchises would not materially adversely affect the rights of the
Lenders hereunder or the value of the Collateral, and except as otherwise
permitted pursuant to subsection 7.5; comply with all Contractual Obligations
and Requirements of Law except to the extent that failure to comply therewith
could not, in the aggregate, be reasonably expected to have a Material Adverse
Effect.
6.5 Maintenance of Property; Insurance. (a) Maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but
including in any event public liability, cargo loss and business interruption)
as are usually insured against in the same general area by companies engaged in
the same or a similar business; and furnish to the Administrative Agent with
copies for each Lender, upon written request, full information as to the
insurance carried except to the extent that the failure to do any of the
foregoing with respect to any such property could not reasonably be expected to
materially adversely affect the value or usefulness of such property; provided
that in any event the Borrower will maintain, and will cause each of its
Subsidiaries to maintain, to the extent obtainable on commercially reasonable
terms, (i) property and casualty insurance on all real and personal property on
an all risks basis (including the perils of flood and quake), covering the
repair or replacement cost of all such property and consequential loss coverage
for business interruption and extra expense (which shall be limited to fixed
construction expenses and such other business interruption expenses as are
otherwise generally available to similar businesses), covering such risks, for
such amounts not less than those, and with deductible and self-insurance
amounts not greater than those, set forth in Schedule 6.5, (ii) public
liability insurance (including products liability coverage) covering such
risks, for such amounts no less than those, and with deductible amounts not
greater than those, set forth in Schedule 6.5 and (iii) such other insurance
coverage in such amounts and with respect to such risks as the Required Lenders
may reasonably request. All such insurance shall be provided by insurers or
reinsurers which (x) in the case of the United States insurers and reinsurers
have an A.M. Best policyholders rating of not less than A- with respect to
primary insurance and B+ with respect to excess insurance and (y) in the case
of non-United States insurers or reinsurers, the providers of at least 80% of
such insurance have either an ISI policyholders rating of not less than A, an
A.M. Best policyholders rating of not less than A- or a surplus of not less
than $500,000,000 with respect to primary insurance, and an ISI policyholders
rating of not less than BBB with respect to excess insurance, or, if the
relevant insurance is not available from such insurers, such other insurers as
the Administrative Agent may approve in writing. Such insurers may include a
Subsidiary of the Borrower; provided that such Subsidiary need not satisfy the
foregoing requirements if all but $15,000,000 of the insurance
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provided by such Subsidiary is reinsured by one or more reinsurers which
satisfy such requirements.
(b) The Borrower will deliver to the Administrative Agent on
behalf of the Lenders, (i) on the Closing Date, a certificate dated such date
showing the amount of coverage as of such date, (ii) upon request of any Lender
through the Administrative Agent from time to time full information as to the
insurance carried, (iii) promptly following receipt of notice from any insurer,
a copy of any notice of cancellation or material change in coverage from that
existing on the Closing Date, (iv) forthwith, notice of any cancellation or
nonrenewal of coverage by the Borrower or any Subsidiary, and (v) promptly
after such information is available to the Borrower, full information as to any
claim for an amount in excess of $2,500,000 which respect to any property and
casualty insurance policy maintained by the Borrower or any Subsidiary. The
Administrative Agent shall be named as additional insured on all property and
casualty insurance policies and a loss payee on all property insurance
policies. Any proceeds from any such insurance policy in respect of any claim,
or any condemnation award or other compensation in respect of a condemnation
(or any transfer or disposition of property in lieu of condemnation) for which
the Borrower or any of its Subsidiaries receives a condemnation award or other
compensation shall be paid to the Borrower or the Subsidiary; provided that:
(A) the Borrower or the Subsidiary will use such proceeds, condemnation award
or other compensation to repair, restore or replace the assets which were the
subject of such claim within 6 months (or in the case of real property, 12
months) after receipt thereof (and a Responsible Officer shall deliver a
certificate specifying in reasonable detail such usage not later than the last
day of such relevant period), and (B) if, at the time of the receipt of such
proceeds, condemnation award or other compensation, an Event of Default has
occurred and is continuing, the aggregate amount of all such proceeds,
condemnation award or other compensation shall be paid to the Administrative
Agent and held as collateral for application in accordance with the Security
Documents; and provided further that, to the extent that any amount of such
proceeds, condemnation award or other compensation are not used or committed
during the time periods specified in proviso (A) above, then, if requested by
notice from the Required Lenders to the Borrower, all such remaining
uncommitted proceeds, condemnation award or other compensation shall be paid to
the Administrative Agent and held as Collateral for application in accordance
with the Security Documents.
6.6 Inspection of Property; Books and Records; Discussions.
Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities; and
permit representatives of any Lender to visit and inspect any of its properties
and examine and make abstracts from any of its books and records (except to the
extent any such access is restricted by a Requirement of Law) at any reasonable
time on a Business Day and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition of the
Borrower and its Subsidiaries with officers and employees of the Borrower and
its Subsidiaries and with its independent certified public accountants;
provided that the Administrative Agent or such Lender shall notify the Borrower
prior to any contact with such accountants and give the Borrower the
opportunity to participate in such discussions; provided, further, that the
Borrower shall notify the Administrative Agent of any such visits, inspections
or discussions prior to each occurrence thereof.
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6.7 Notices. Promptly give notice to the Administrative Agent
and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries, (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect or (iii) any material asset sale (describing
in reasonable detail the assets sold, the consideration received
therefor and the proposed use of the proceeds thereof);
(c) any other litigation or proceeding affecting the Borrower
or any of its Subsidiaries in which the amount involved is $7,500,000
or more and not covered by insurance or in which injunctive or similar
relief is sought; and
(d) the following events, as soon as possible and in any event
within 45 days after the Borrower knows or has reason to know thereof:
(i) the incurrence of an accumulated funding deficiency or the filing
of an application to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under
Section 412 of the Code with respect to a Plan, the creation of any
Lien in favor of the PBGC or a Plan, the occurrence of any "Trigger
Event" (as defined in the Transfer Agreements) and the reassumption by
the Seller of sponsorship of any Single Employer Plan, (ii) except
where such event or liability could not reasonably be expected to have
a Material Adverse Effect, the occurrence or expected occurrence of
any Reportable Event with respect to any Plan (other than a Multiple
Employer Plan), or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan, or a failure
to make any required contribution to a Plan, (iii) the institution of
proceedings by the PBGC with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Single Employer Plan
or Multiemployer Plan or (iv) except as could not reasonably be
expected to have a Material Adverse Effect, the institution of
proceedings or the taking of any other action with respect to the
withdrawal from or termination of any Single Employer Plan;
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto.
6.8 Environmental Laws. (a)(i) Comply in all material respects
with all Environmental Laws applicable to it, and obtain, comply in all
material respects with and maintain any and all material Environmental Permits
necessary for its operations as conducted and as planned; and (ii) take all
reasonable efforts to ensure that all of its tenants, subtenants, contractors,
subcontractors, and invitees comply in all material respects with all
applicable Environmental Laws, and obtain, comply in all material
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respects with and maintain any and all material Environmental Permits,
applicable to any of them. Notwithstanding the foregoing, upon learning of any
actual or suspected noncompliance, the Borrower or one or more of its
Subsidiaries, as appropriate, shall promptly undertake all reasonable efforts
to achieve material compliance.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions in each case required
under applicable Environmental Laws and promptly comply in all material
respects with all lawful orders and directives of all Governmental Authorities
regarding applicable Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the pendency of
such proceedings could not be reasonably expected to have a Material Adverse
Effect.
6.9 Further Assurances. Upon the reasonable request of the
Administrative Agent, promptly perform or cause to be performed any and all
acts and execute or cause to be executed any and all documents (including,
without limitation, financing statements and continuation statements) for
filing under the provisions of the Uniform Commercial Code or any other
Requirement of Law which are necessary or advisable to maintain in favor of the
Administrative Agent, for the benefit of the Lenders, Liens on the Collateral
that are duly perfected in accordance with all applicable Requirements of Law.
6.10 Additional Collateral. (a) With respect to any assets
acquired after the Closing Date by the Borrower or any of its Subsidiaries
(including the Stock of newly created or acquired Subsidiaries) that are
intended to be subject to the Lien created by any of the Security Documents but
which are not so subject (other than (x) any assets described in paragraph (b)
of this Section and (y) immaterial assets a Lien on which cannot be perfected
by filing UCC-1 financing statements), promptly (and in any event within 30
days after the acquisition thereof): (i) execute and deliver to the
Administrative Agent such amendments to the relevant Security Documents or such
other documents as the Administrative Agent shall deem necessary or advisable
to grant to the Administrative Agent, for the benefit of the Lenders, a Lien on
such assets, (ii) take all actions necessary or advisable to cause such Lien to
be duly perfected in accordance with all applicable Requirements of Law,
including, without limitation, the filing of financing statements in such
jurisdictions as may be requested by the Administrative Agent, and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described in clauses (i) and (ii)
immediately preceding, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
(b) With respect to any Person that, subsequent to the Closing
Date, becomes a direct or indirect Subsidiary, promptly: (i) execute and
deliver to the Administrative Agent, for the benefit of the Lenders, such
amendments to the Subsidiary Pledge and Security Agreement as the
Administrative Agent shall deem necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a Lien on the Capital
Stock of such Subsidiary which is owned by the Borrower or any of its
Subsidiaries, (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock, together with undated stock powers executed
and delivered in blank by a duly authorized officer of the Borrower or such
Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become
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a party to the Subsidiary Pledge and Security Agreement, the Subsidiary
Guarantee and the Mortgages delivered pursuant to clause (B) below, in each
case pursuant to documentation which is in form and substance reasonably
satisfactory to the Administrative Agent, (B) to deliver to the Documentation
Agent Mortgages in form and substance reasonably satisfactory to the
Documentation Agent with respect to all real property of such Subsidiary, and
(C) to take all actions necessary or advisable to cause each Lien created by
the Subsidiary Pledge and Security Agreement and the Mortgages delivered
pursuant to clause (B) above to be duly perfected in accordance with all
applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be requested by the
Administrative Agent and (iv) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described in
clauses (i), (ii) and (iii) immediately preceding, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent. Notwithstanding the foregoing, no Foreign Subsidiary of
Holdings or the Borrower shall be required to execute a Subsidiary Guarantee or
Subsidiary Pledge and Security Agreement, and no more than 65% of the capital
stock of or equity interests in any Foreign Subsidiary of the Borrower,
Holdings or any of their Subsidiaries, or any other of their Subsidiaries if
more than 65% of the assets of such Subsidiary are securities of foreign
companies (such determination to be made on the basis of fair market value),
shall be required to be pledged hereunder.
(c) As promptly as practicable, but in any event within 120
days following the Closing Date, the Borrower shall have delivered to the
Administrative Agent (A) a Mortgage with respect the real property described in
Part I of Schedule 6.10, executed and delivered by a duly authorized officer of
the mortgagor party thereto, with a counterpart or a conformed copy for each
Lender and (B) legal opinions from local counsel in the jurisdiction of such
Mortgage relating to such Mortgage and the perfection of Liens created by the
Security Documents on personal property located in such jurisdiction, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(d) As promptly as practical, but in any event within 120 days
following the Closing Date, the Borrower shall have delivered to the
Administrative Agent and the Title Insurance Company maps or plats of an
as-built survey of the sites of the property covered by each Mortgage set forth
on Part II of Schedule 6.10 certified to the Administrative Agent and the Title
Insurance Company in a manner satisfactory to them, dated a date reasonably
satisfactory to the Administrative Agent and the Title Insurance Company by an
independent professional licensed land surveyor reasonably satisfactory to the
Administrative Agent and the Title Insurance Company, which maps or plats and
the surveys on which they are based shall be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly established
and adopted by the American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the generality of the
foregoing, there shall be surveyed and shown on such maps, plats or surveys the
following: (A) the locations on such sites of all the buildings, structures and
other improvements and the established building setback lines; (B) the lines of
streets abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites or necessary or desirable to use the sites;
(D) all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; (E) any
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encroachments on any adjoining property by the building structures and
improvements on the sites; and (F) if the site is described as being on a filed
map, a legend relating the survey to said map.
(e) As promptly as practical, but in any event within 120 days
following the Closing Date, the Borrower shall deliver to the Administrative
Agent in respect of each parcel covered by each Mortgage set forth on Part II
Schedule 6.10 a mortgagee's title policy (or policies) or marked up
unconditional binder for such insurance dated a date reasonably satisfactory to
the Agents. Each such policy shall (A) be in an amount reasonably satisfactory
to the Agents; (B) be issued at ordinary rates; (C) insure that the Mortgage
insured thereby creates a valid first Lien on such parcel free and clear of all
defects and encumbrances, except for liens permitted by clauses (a), (e), (f)
and (g) of the definition of Permitted Liens and such other liens and defects
as may be approved by the Agents; (D) name the Administrative Agent for the
benefit of the Lenders as the insured thereunder; (E) be in the form of ALTA
Loan Policy - 1992; (F) contain such endorsements and affirmative coverage as
the Agents may reasonably request and (G) be issued by title companies
satisfactory to the Agents (including any such title companies acting as
co-insurers or reinsures, at the option of the Agents). The Administrative
Agent shall have received evidence reasonably satisfactory to it that all
premiums in respect of each such policy, and all charges for mortgage recording
tax, if any, have been paid.
(f) As promptly as possible, but in any event within 120 days
following the Closing Date, the Borrower shall deliver to the Administrative
Agent a copy of all recorded documents referred to, or listed as exceptions to
title in, the title policy or policies referred to in subsection 6.10(d) and a
copy, certified by such parties as the Agents may reasonably deem appropriate,
of all other documents affecting the property covered by each Mortgage set
forth on Schedule 6.10.
(g) As promptly as possible, but in any event within 120 days
following the Closing Date, if required pursuant to Regulation H of the Board
of Governors of the Federal Reserve System ("Regulation H") the Borrower shall
deliver to the Administrative Agent (A) a policy of flood insurance which (1)
covers the parcel of improved real property which is encumbered by the Mortgage
with respect to the real property set forth on Part I of Schedule 6.10, (2) is
written in an amount not less than the outstanding principal amount of the
indebtedness secured by such Mortgage which is reasonably allocable to such
real property or the maximum limit of coverage made available with respect to
the particular type of property under the National Flood Insurance Act of 1968,
whichever is less, and (3) has a term ending not earlier than the maturity of
the Indebtedness secured by such Mortgage and (B) confirmation that the
Borrower has received the notice required pursuant to Section 208(e)(3) of
Regulation H.
(h) As promptly as possible, but in any event within 120 days
following the Closing Date, with respect to the parcel of real property
described in Part I of Schedule 6.10, the Borrower shall take all actions that
the Agents may reasonably require, including (if such property is not covered
by a recorded Mortgage) the filing of UCC fixture filing financing statements,
to cause the security interest created by the Security Documents in such
fixtures to be perfected and with respect to any parcel of real property leased
by the Borrower or any Subsidiary on which fixtures having an aggregate book
value exceeding $250,000 are located, use commercially reasonable efforts to
obtain the consent of the landlord of such property to
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the filing of Ucc fixture filing financing statements and make such filings if
such consent is obtained.
(i) Use reasonable efforts to take any action reasonably
requested by the Agents with respect to any ground lease still in effect on the
real property described in Part III of Schedule 6.10.
6.11 Interest Rate Protection. Within 180 days after the
Closing Date, obtain interest rate protection for a period through June 30,
1999 for a notional amount of at least $59,000,000 on terms and conditions
reasonably satisfactory to the Agents.
6.12 Foreign Jurisdictions. Within 60 days following the
Closing Date, (i) be duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except to the extent that the failure to so qualify could not,
in the aggregate, reasonably be expected to have a Material Adverse Effect, and
(ii) deliver to the Administrative Agent certificates of good standing issued
by the Secretary of State (or other relevant officers) of each jurisdiction
referred to in clause (i) of this subsection 6.12.
6.13 Novation; Federal Assignment of Claims. (a) (i) Use
commercially reasonable efforts to cause the Seller to perform its obligations
under subsection 7.08 of the Transaction Agreement, (ii) use best efforts to
perform its obligations under subsection 8.07 of the Transaction Agreement and
(iii) use its best efforts to obtain as soon as practicable after the Closing
Date the completion and effectiveness of the novation of each Government
Contract (as defined in the Transaction Agreement) and the consent under the
Assignment of Claims Act to the security interest of the Agents and the Lenders
in all of the right, title and interest of the Borrower and its Subsidiaries in
the Government Contracts (other than the Restricted Government Contracts) sold,
assigned, transferred and conveyed by the Seller under the Transaction
Agreement.
(b) Within ninety (90) days of the creation of a Government
Contract or, upon the occurrence and during the continuance of a Default or an
Event of Default, the Borrower and its Subsidiaries shall notify the
Administrative Agent thereof, which notice shall set forth (i) each GC Notice
Recipient with respect to such Government Contract and (ii) the anticipated
annual gross revenue under such Government Contract and shall execute and
deliver to the Administrative Agent all documents, in form and substance
reasonably satisfactory to the Administrative Agent, and take all such other
action (other than the transmittal of the notice of assignment to the U.S.
Government) reasonably required by the Administrative Agent to assign the
Receivables arising under such Government Contract (other than any Restricted
Government Contract), to the Administrative Agent pursuant to the Assignment of
Claims Act. The Borrower agrees that promptly upon obtaining knowledge that any
of the information provided pursuant to the first sentence of subsection
6.13(b) has changed, it shall give written notice of such change to the
Administrative Agent. Upon the occurrence and during the continuance of an
Event of Default, the Administrative Agent may, and shall at the direction of
the Required Lenders, transmit any such notice of assignment received by it
from the Borrower and its Subsidiaries to the U.S. Government.
(c) The Borrower and its Subsidiaries shall apply for and
maintain all material facility security clearances and personnel security
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clearances required of the Borrower under all Requirements of Law to perform
and deliver under any and all Government Contracts and as otherwise may be
necessary to continue to perform the business of the Borrower and its
Subsidiaries.
6.14 Maintenance of Collateral; Alterations. Refrain from
committing any waste on any Collateral, except in the ordinary course of its
business, or make any material change in the use of any Collateral, provided
that any Credit Party may sell or lease to any other Person all or any portion
of any item of Collateral that the Borrower has determined in good faith is not
used or useful in such Credit Party's operating business. Each Credit Party
granting a security interest in Collateral constituting real property
represents and warrants that, to the best of its knowledge: (a) such Collateral
is served by all utilities required or necessary for the current use thereof;
(b) all streets (or public rights-of-way) necessary to serve such Collateral
are completed and serviceable and have been dedicated and accepted as such by
the appropriate governmental entities or such Collateral is served by insurable
easements (or rights-of-way) for ingress and egress to and from such streets
(or rights-of-way); and (c) such Credit Party has access to such Collateral
from public roads (or rights-of-way), either directly or by insurable easements
(or rights-of-way), sufficient to allow such Credit Parties to conduct its
business at such Collateral in accordance with sound commercial and industrial
practices. The Credit Parties shall, at all times, maintain all non-possessory
collateral and all real estate collateral that is materially useful or
necessary in their respective businesses, in good operating order, condition
and repair, ordinary wear and tear and damage by fire and/or other casualty or
taking by condemnation excepted, and in accordance with all applicable laws,
rules and regulations, (including, without limitation, Environmental Laws) the
failure to comply with which would have a material adverse effect on the value
or usefulness of such Collateral, except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings. Each Credit
Party shall do what is deemed commercially reasonable to maintain and preserve
the value of the Collateral.
6.15 Arrangements with the Seller.
(a) As promptly as practicable, but in any event within 90
days following the Closing Date, the Borrower shall have delivered to
the Administrative Agent the Supply Agreement, the License Agreement
and the Interim Services Agreement (each as defined in the Transaction
Agreement) executed and delivered by the Seller and the Borrower which
shall be reasonably satisfactory in form and substance to the Agents;
and
(b) As promptly as practicable, but in any event within 120
days following the Closing Date, the Borrower shall have delivered to
the Administrative Agent the executed consents of the lessors of the
real property leased by the Seller (which leaseholds constitute
Transferred Assets (as defined in the Transaction Agreement)) to the
transfer of such leaseholds to the Borrower, which consents shall be
reasonably satisfactory in form and substance to the Agents.
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SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any portion of the
Commitments remain in effect or any amount is owing to any Lender or any of the
Agents hereunder or under any other Credit Document, the Borrower shall not,
and (except with respect to subsection 7.1), shall not permit any of its
Subsidiaries to, directly or indirectly:
7.1 Financial Condition Covenants.
(a) Debt Ratio. Permit the Debt Ratio at the last day of any
fiscal quarter to be greater than the ratio set forth below opposite
the fiscal quarter during which such fiscal quarter occurs:
Fiscal Quarter Ending Ratio
--------------------- -----
September 30, 1997 5.75
December 31, 1997 5.50
March 31, 1998 5.50
June 30, 1998 5.50
September 30, 1998 5.25
December 31, 1998 5.25
March 31, 1999 5.25
June 30, 1999 5.25
September 30, 1999 4.75
December 31, 1999 4.75
March 31, 2000 4.75
June 30, 2000 4.75
September 30, 2000 4.25
December 31, 2000 4.25
March 31, 2001 4.25
June 30, 2001 4.25
September 30, 2001 3.60
December 31, 2001 3.60
March 31, 2002 3.60
June 30, 2002 3.60
September 30, 2002 3.10
December 31, 2002 3.10
March 31, 2003 3.10
June 30, 2003 3.10
September 30, 2003 3.10
December 31, 2003 3.10
March 31, 2004 3.10
June 30, 2004 3.10
September 30, 2004 3.10
December 31, 2004 3.10
March 31, 2005 3.10
June 30, 2005 3.10
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September 30, 2005 3.10
December 31, 2005 3.10
and thereafter
(b) Interest Coverage. Permit the ratio of (i) Consolidated
EBITDA to (ii) Consolidated Cash Interest Expense during any Test
Period to be less than the ratio set forth opposite such period below
(such ratio, the "Interest Coverage Ratio"):
Test Period Interest Coverage Ratio
----------- -----------------------
7/1/97 - 9/30/97 1.50
10/1/97 - 12/31/97 1.85
1/1/98 - 3/31/98 1.85
4/1/98 - 6/30/98 1.85
7/1/98 - 9/30/98 1.90
10/1/98 - 12/31/98 1.90
1/1/99 - 3/31/99 1.90
4/1/99 - 6/30/99 1.90
7/1/99 - 9/30/99 2.15
10/1/99 - 12/31/99 2.15
1/1/00 - 3/31/00 2.15
4/1/00 - 6/30/00 2.15
7/1/00 - 9/30/00 2.35
10/1/00 - 12/31/00 2.35
1/1/01 - 3/31/01 2.35
4/1/01 - 6/30/01 2.35
7/1/01 - 9/30/01 2.75
10/1/01 - 12/31/01 2.75
1/1/02 - 3/31/02 2.75
4/1/02 - 6/30/02 2.75
7/1/02 - 9/30/02 3.10
10/1/02 - and thereafter 3.10
7.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness (including in respect of Interest
Rate Agreements, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of the Borrower incurred to finance the
acquisition of fixed or capital assets (whether pursuant to a loan, a
Financing Lease or otherwise) in an aggregate principal amount not
exceeding $15,000,000 at any time outstanding;
(c) Indebtedness of a corporation which becomes a Subsidiary
after the date hereof, provided that (i) such indebtedness existed at
the time such corporation became a Subsidiary and was not created in
anticipation thereof and (ii) immediately after giving
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effect to the acquisition of such corporation by the Borrower no
Default or Event of Default shall have occurred and be continuing;
(d) additional Indebtedness of the Borrower not exceeding
$15,000,000 in aggregate principal amount at any one time outstanding;
(e) Indebtedness of the Borrower in respect of not more than
$225,000,000 principal amount of Subordinated Debt issued on the
Closing Date;
(f) the Indebtedness of the Borrower and its Subsidiaries
outstanding on the Closing Date and reflected on Schedule 7.2(f), and
refundings or refinancings thereof, provided that no such refunding or
refinancing shall shorten the maturity or increase the principal
amount of the original Indebtedness;
(g) Indebtedness in respect of the Interest Rate Agreements
required by subsection 6.11;
(h) Guarantee Obligations permitted by subsection 7.4;
(i) the incurrence by any Credit Party of intercompany
Indebtedness between or among the Credit Parties; provided, however,
that if the Borrower is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations;
(j) Indebtedness secured by Permitted Liens;
(k) Up to $25,000,000 of purchase money Indebtedness the
proceeds of which are utilized to acquire the real property (including
improvements thereon) and related assets currently utilized by the
Wide Band Systems division in Salt Lake City, Utah, on terms
reasonably satisfactory to the Lenders.
7.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers
under insurance or self-insurance arrangements;
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(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, zoning restrictions, other
restrictions and other similar encumbrances previously or hereafter
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower or
such Subsidiary, or which are set forth in title insurance policies or
commitments delivered to Administrative Agent pursuant to the terms of
this Agreement;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by subsection 7.2(f), provided
that no such Lien is expanded to cover any additional property (other
than after-acquired title in or on such property and proceeds of the
existing collateral in accordance with the instrument creating such
Lien) after the Closing Date and that the amount of Indebtedness
secured thereby is not increased and extensions, renewals or
replacements thereof provided that no such extension, renewal or
replacement shall shorten the fixed maturity or increase the principal
amount of the original Indebtedness; and provided, further, that the
assets of the Borrower and its Subsidiaries encumbered by such Liens
are existing equipment and other existing tangible assets;
(g) Liens securing Indebtedness of the Borrower and its
Subsidiaries permitted by subsection 7.2(b) and subsection 7.2(k)
incurred to finance the acquisition of fixed or capital assets,
provided that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets,
(ii) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness (other than after acquired
title in or on such property and proceeds of the existing collateral
in accordance with the instrument creating such Lien) and (iii) the
principal amount of Indebtedness secured by any such Lien shall at no
time exceed 100% of the original purchase price of such property of
such property at the time it was acquired;
(h) Liens on the property or assets of a corporation which
becomes a Subsidiary after the date hereof securing Indebtedness
permitted by subsection 7.2(c), provided that (i) such Liens existed
at the time such corporation became a Subsidiary and were not created
in anticipation thereof, (ii) any such Lien is not expanded to cover
any property or assets of such corporation after the time such
corporation becomes a Subsidiary (other than after acquired title in
or on such property and proceeds of the existing collateral in
accordance with the instrument creating such Lien), and (iii) the
amount of Indebtedness secured thereby is not increased;
(i) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to the Borrower and all Subsidiaries)
$2,500,000 in aggregate amount at any time outstanding;
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(j) Liens created pursuant to the Security Documents;
(k) Liens on the property of the Borrower or any of its
Subsidiaries in favor of landlords securing licenses, subleases or
leases entered into in the ordinary course of business;
(l) licenses, leases or subleases permitted hereunder granted
to other Persons not interfering in any material respect in the
business of the Borrower or any of its Subsidiaries;
(m) so long as no Default or Event of Default shall have
occurred and be continuing under subsection 8(h), attachment or
judgment Liens in an aggregate amount outstanding at any one time not
in excess of $7,500,000;
(n) Liens arising from precautionary Uniform Commercial Code
financing statement filings with respect to operating leases or
consignment arrangements entered into by the Borrower, or any of its
subsidiaries in the ordinary course of business; and
(o) Liens in favor of a banking institution arising by
operation of law encumbering deposits (including the right of set-off)
held by such banking institutions incurred in the ordinary course of
business and which are within the general parameters customary in the
banking industry.
7.4 Limitation on Guarantee Obligations. Create, incur, assume
or suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and
listed on Schedule 7.4 and extensions, renewals and replacements
thereof, provided, however, that no such extension, renewal or
replacement shall shorten the fixed maturity or increase the principal
amount of the Indebtedness guaranteed by the original guarantee;
(b) Guarantee Obligations incurred after the date hereof in an
aggregate amount not to exceed $15,000,000 at any one time outstanding
for the Borrower and its Subsidiaries;
(c) guarantees made by the Subsidiaries of the Borrower
pursuant to the Subordinated Debt Documents;
(d) Guarantee Obligations under the Credit Documents;
(e) the L/C Obligations;
(f) Guarantee Obligations of the Borrower or any Subsidiary in
respect of obligations of a Subsidiary permitted to be incurred by
such Subsidiary by this Agreement;
(g) Guarantee Obligations in respect of surety bonds which
shall not exceed $10,000,000 at any time;
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(h) indemnities in favor of the companies issuing title
insurance policies insuring the Mortgages to induce such issuance; and
(i) indemnities made in the Commitment Letter, the Credit
Documents and the Transaction Documents and in the Constitutional
Documents of the Borrower and its Subsidiaries.
7.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, or make any material change in its present method of
conducting business, except:
(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
one or more wholly owned Subsidiaries of the Borrower (provided that
the wholly owned Subsidiary or Subsidiaries shall be the continuing or
surviving corporations);
(b) any wholly owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any other wholly owned
Subsidiary of the Borrower that is a Credit Party; and
(c) the Asset Contribution.
7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person other than the
Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of obsolete or worn out
property in the ordinary course of business;
(b) the sale of any property or assets not otherwise permitted
by this Section 7.6; provided that the Net Proceeds thereof shall be
applied pursuant to subsection 2.6(b)(ii); provided, further, that (i)
the aggregate amount of proceeds of all such Asset Sales does not
exceed (x) $20,000,000 in fiscal year 1997 or (y) $30,000,000 since
the date of this Agreement and (ii) the aggregate amount of non-cash
consideration received from such Asset Sales under shall not exceed
$5,000,000 since the date of this Agreement;
(c) as permitted pursuant to subsection 7.5(b);
(d) the sale, lease, transfer or exchange of inventory in the
ordinary course of business;
(e) subject to subsection 6.5, transfers resulting from any
casualty or condemnation of property or assets;
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(f) intercompany sales or transfers of assets made in the
ordinary course of business;
(g) licenses, leases or subleases of tangible property in the
ordinary course of business;
(h) any consignment arrangements or similar arrangements for
the sale of assets in the ordinary course of business;
(i) the sale or discount of overdue accounts receivable
arising in the ordinary course of business, but only in connection
with the compromise or collection thereof; and
(j) (i) the sale of the real property used by the Borrower's
Aviation Recorder Division on the date hereof (including all
improvements thereto) in Sarasota, Florida, solely for cash proceeds
of at least $7,500,000 and (ii) the sale of all or substantially all
of the assets of the Borrower's Hycor Division (as constituted on the
date hereof) solely for cash proceeds of at least $5,000,000, provided
that (x) the first $20,000,000 of the proceeds of such sales are
applied pursuant to subsection 2.6(b)(ii) and (y) to the extent the
aggregate proceeds of asset sales permitted by this clause (j) exceed
$20,000,000, the Borrower shall utilize such excess proceeds for the
prepayment of Loans and the reduction of Commitments pursuant to
subsection 2.6(b)(ii) (without giving effect to the proviso thereto).
7.7 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of the Borrower) on, or
make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Capital Stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
the Borrower or any Subsidiary other than Permitted Stock Payments.
7.8 Limitation on Capital Expenditures. Make or commit to make
(by way of the acquisition of securities of a Person or otherwise) any
expenditure in respect of the purchase or other acquisition of fixed or capital
assets (excluding any such asset acquired in connection with normal replacement
and maintenance programs properly charged to current operations) except for
capital expenditures in the ordinary course of business not exceeding, in the
aggregate for the Borrower and its Subsidiaries during any of the fiscal years
of the Borrower set forth below, the amount set forth opposite such fiscal year
below:
Fiscal Year Amount
----------- ------
1997 $18,500,000
1998 27,500,000
1999 27,500,000
2000 30,000,000
2001 32,500,000
2002 32,500,000
2003 35,000,000
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2004 37,500,000
2005 and thereafter 40,000,000;
provided, that up to 25% of any such amount not so expended in the fiscal year
for which it is permitted above may be carried over for expenditure in the next
following fiscal year.
7.9 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person
("Investments"), except :
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) loans to officers of the Borrower listed on Schedule
7.9(c) in aggregate principal amounts outstanding not to exceed the
respective amounts set forth for such officers on said Schedule;
(d) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business in an aggregate amount for the Borrower
and its Subsidiaries not to exceed $1,000,000 at any one time
outstanding;
(e) investments by the Borrower in its Subsidiaries that are
Credit Parties and investments by such Subsidiaries in the Borrower
and in other Subsidiaries that are Credit Parties;
(f) so long as no Event of Default has occurred and is
continuing, loans by the Borrower to its employees (other than any
Principals or their Related Parties) in connection with (i) management
incentive plans and (ii) management stock purchase plans, in an
aggregate amount not to exceed $3,000,000;
(g) Investments in existence on the Closing Date set forth on
Schedule 7.9(g) and extensions, renewals, modifications or
restatements or replacements thereof; provided that no such extension,
renewal, modification or restatement shall increase the amount of the
original loan, advance or investment;
(h) promissory notes and other similar non-cash consideration
received by the Borrower and its Subsidiaries in connection with the
dispositions permitted by subsection 7.6(b);
(i) Investments required by subsection 6.11 and Investments
permitted by subsection 7.6(b) and subsection 7.6(j);
(j) Investments (including debt obligations and Capital Stock)
received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations
of, and other disputes with, customers and suppliers arising in the
ordinary course of business; and
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(k) so long as no Event of Default has occurred and is
continuing, in addition to the foregoing, Investments in an aggregate
amount not exceeding $15,000,000 (at cost, without regard to any write
down or write up thereof) at any one time outstanding.
7.10 Limitation on Optional Payments and Modifications of
Instruments and Agreements. (a) Make any optional payment or prepayment on or
redemption or purchase of, or deliver any funds to any trustee for the
prepayment, redemption or defeasance of, any Subordinated Debt or (b) amend,
modify or change, or consent or agree to any amendment, modification or change
to any of the material terms of any such Subordinated Debt Documents (other
than any such amendment, modification or change which would extend the maturity
or reduce the amount of any payment of principal thereof or which would reduce
the rate or extend the date for payment of interest thereon).
(b) Amend its Constitutional Documents in any manner which
could adversely affect the rights of the Lenders under the Credit Documents or
their ability to enforce the same.
(c) Modify or amend, or waive any provision or condition
contained in, any of the Transaction Documents in any manner that could
reasonably be expected to be adverse to the Lenders.
7.11 Limitation on Transactions with Affiliates. (a) Enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate
unless such transaction is (i) otherwise permitted under this Agreement, (ii)
in the ordinary course of the Borrower's or such Subsidiary's business and
(iii) upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate.
(b) In addition, notwithstanding the foregoing, the Borrower
and its Subsidiaries shall be entitled to make the following payments and/or to
enter into the following transactions:
(i) the payment of reasonable and customary fees and
reimbursement of expenses payable to directors of the Borrower;
(ii) the employment arrangements with respect to the
procurement of services of directors, officers and employees in the
ordinary course of business and the payment of reasonable fees in
connection therewith;
(iii) payments to directors and officers of the Borrower
and its Subsidiaries in respect of the indemnification of such Persons
in such respective capacities from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements, as the case may
be, pursuant to the Constitutional Documents or other corporate action
of the Borrower or its Subsidiaries, respectively, or pursuant to
applicable law; and
(iv) transactions described in the Transaction Documents.
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7.12 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or such
Subsidiary; provided that the Borrower may enter into a sale and leaseback
transaction if the Borrower could have (a) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
and (b) incurred a Lien to secure such Indebtedness, in each case in accordance
with the restrictions contained in this Agreement and the other Credit
Documents.
7.13 Limitation on Changes in Fiscal Year. Permit the fiscal
year of the Borrower to end on a day other than December 31.
7.14 Limitation on Negative Pledge Clauses. Enter into with
any Person any agreement, other than (a) this Agreement, (b) the Subordinated
Debt Documents and (c) any industrial revenue bonds, purchase money mortgages
or Financing Leases permitted by this Agreement (in which cases, any
prohibition or limitation shall only be effective against the assets financed
thereby other than after acquired title in or on such property and proceeds of
the existing collateral in accordance with the instrument creating such Lien),
which prohibits or limits the ability of the Borrower or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired.
7.15 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for Similar Businesses.
7.16 Designated Senior Debt. Designate any Indebtedness or
other obligation, other than Indebtedness under the Credit Documents, as
"Designated Senior Debt," as such term is defined in the Indenture as in effect
on the Closing Date, or any comparable designation that confers upon the
holders of such Indebtedness or other obligation (or any Person acting on their
behalf) the right to initiate blockage periods under the Indenture or any other
Indebtedness or other obligation of the Borrower and its Subsidiaries(other
than as a result of a payment default).
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or any Reimbursement Obligation when due in accordance with the terms
thereof or hereof; or the Borrower shall fail to pay any interest on
any Loan, or any other amount payable hereunder, within five days
after any such interest or other amount becomes due in accordance with
the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Credit Party herein or in any other Credit
Document or which is contained in any certificate, document or
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financial or other statement furnished by it at any time under or in
connection with this Agreement or any such other Credit Document shall
prove to have been incorrect in any material respect on or as of the
date made or deemed made; or
(c) The Borrower or any other Credit Party shall default in
the observance or performance of any agreement contained in Section 7
or subsection 6.5(a) of this Agreement, Section 4 of the Parent
Guarantee, Section 4 of the Subsidiary Guarantee, Section 4 of the
Parent Pledge and Security Agreement, Section 4 of the Borrower Pledge
and Security Agreement, or Section 4 of the Subsidiary Pledge and
Security Agreement; or
(d) The Borrower or any other Credit Party shall default in
the observance or performance of any other agreement contained in this
Agreement or any other Credit Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default
(x) in any payment of principal of or interest of any Indebtedness
(other than the Loans, the L/C Obligations and any intercompany debt)
or Interest Rate Agreement Obligations or (y) in the payment of any
Guarantee Obligation (excluding any guaranties of the Obligations),
beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness, Interest Rate Agreement
Obligation or Guarantee Obligation was created; or (ii) default in the
observance or performance of any other agreement or condition relating
to any such Indebtedness, Interest Rate Agreement Obligation or
Guarantee Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice
if required, such Indebtedness to become due prior to its stated
maturity or such Guarantee Obligation to become payable; provided,
however, that no Default or Event of Default shall exist under this
paragraph unless (i) the aggregate amount of Indebtedness, Interest
Rate Agreement Obligations and/or Guarantee Obligations in respect of
which any default or other event or condition referred to in this
paragraph shall have occurred shall be equal to at least $7,500,000
and (ii) such default continues for a period in excess of 10 days; or
(f) (i) Holdings, the Borrower or any of its Subsidiaries
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or Holdings, the Borrower or any of
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its Subsidiaries shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against Holdings, the
Borrower or any of its Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results
in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the
Holdings, Borrower or any of its Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief
which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv)
Holdings, the Borrower or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) Holdings, the Borrower or any of its Subsidiaries
shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion
of the Required Lenders, reasonably likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in
the reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other similar
event or condition shall occur or exist with respect to a Plan that is
not in the ordinary course; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
Holdings, the Borrower or any of its Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance (which
coverage has been acknowledged by the appropriate insurers)) of
$7,500,000 or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 60
days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any
reason, to be in full force and effect (unless released by the
Administrative Agent at the direction of the requisite Lenders or as
otherwise permitted under this Agreement or the other Credit
Documents), or the Borrower or any other Credit Party which is a
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party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be
created thereby (and, if such invalidity is such so as to be amenable
to cure without materially disadvantaging the position of the
Administrative Agent and the Lenders, as the case may be, as secured
parties thereunder, the Credit Party shall have failed to cure such
invalidity within 30 days after notice from the Administrative Agent);
or
(j) the Guarantee Obligation of any Credit Party under the
Credit Documents shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full
force and effect or any Credit Party or any Person acting on behalf of
any Credit Party, shall deny or disaffirm its obligations under such
Guarantee Obligation;
(k) There shall have occurred a Change in Control; or
(l) either (i) the novation of any Government Contract
existing on the date of this Agreement shall not be complete and
effective prior to October 31, 1998 if such failures, individually or
in the aggregate, could reasonably be expected to have a Material
Adverse Effect, (ii) the consent to assignment of claims under any
Government Contract (other than any Restricted Government Contract)
existing on the date of this Agreement to the Administrative Agent on
behalf of the Lenders shall not have been obtained prior to October
31, 1998 if such failures, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, or (iii) the
Governmental Authority authorized to approve any such novation or
consent to any such assignment requires a condition to the
effectiveness to any such novation or consent which, if agreed to by
the Company, could reasonably be expected to have a Material Adverse
Effect;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section above with respect to
the Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters
of Credit shall have presented the documents required thereunder) and the Notes
shall immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken: (i)
with the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by notice
to the Borrower declare the Commitments to be terminated forthwith, whereupon
the Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice of default to the
Borrower, declare the Loans hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) and the Notes to be due and payable forthwith, whereupon the same
shall immediately become due and payable.
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With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit. The
Borrower hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in such cash
collateral to secure all obligations of the Borrower under this Agreement and
the other Credit Documents. Amounts held in such cash collateral account shall
be applied by the Administrative Agent to the payment of drafts drawn under
such Letters of Credit, and the unused portion thereof after all such Letters
of Credit shall have expired or been fully drawn upon, if any, shall be applied
to repay other obligations of the Borrower hereunder and under the Notes. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations
of the Borrower hereunder and under the Notes shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrower. The Borrower shall execute and deliver to the Administrative Agent,
for the account of the Issuing Lender and the L/C Participants, such further
documents and instruments as the Administrative Agent may request to evidence
the creation and perfection of the within security interest in such cash
collateral account.
EXCEPT AS EXPRESSLY PROVIDED ABOVE IN THIS SECTION, PRESENTMENT,
DEMAND, PROTEST AND ALL OTHER NOTICES OF ANY KIND ARE HEREBY EXPRESSLY
WAIVED.
SECTION 9. THE AGENTS; THE ARRANGER
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints each of the Agents as the agent of such Lender under this Agreement
and the other Credit Documents, and each such Lender irrevocably authorizes
each of the Agents, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Credit Documents and to exercise
such powers and perform such duties as are expressly delegated to such Agent by
the terms of this Agreement and the other Credit Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, none of the Agents shall
have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Credit Document or otherwise exist against any
of the Agents.
9.2 Delegation of Duties. The Agents may execute any of their
duties under this Agreement and the other Credit Documents by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. None of the Agents shall be responsible for
the negligence or misconduct of any agents or attorneys in-fact selected by it
with reasonable care.
9.3 Exculpatory Provisions. Neither any of the Agents nor any
of their officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
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other Credit Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any officer thereof contained in this Agreement or any other Credit Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by such Agent under or in connection with, this Agreement
or any other Credit Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Credit Document or for any failure of the Borrower to perform its obligations
hereunder or thereunder. None of the Agents shall be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Credit Document, or to inspect the properties, books or records of the
Borrower.
9.4 Reliance by Agents. The Agents shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by such Agent. The Agents may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with such
Agent. Except as expressly provided in this Agreement, the Agents shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Credit Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agents shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Credit
Documents in accordance with a request of the Required Lenders, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all future holders of the Loans.
9.5 Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that any Agent
receives such a notice, such Agent shall give notice thereof to the Lenders.
Each Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders; provided that
unless and until such Agent shall have received such directions, such Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither any of the Agents nor any of their
officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by any of the
Agents hereafter taken, including any review of the affairs of the Borrower,
shall be deemed to constitute any representation or warranty by any of the
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Agents to any Lender. Each Lender represents to each of the Agents that it has,
independently and without reliance upon any of the Agents or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and credit worthiness of the Borrower and made
its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon any of the Agents or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Credit Documents, and to make such investigation
as it deems necessary to inform itself as to the business, operations,
property, financial and other condition and credit worthiness of the Borrower.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by any of the Agents hereunder (or copies of which
have been provided to the Administrative Agent pursuant to this Agreement),
none of the Agents shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or credit worthiness of
the Borrower which may come into the possession of such Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify each of
the Agents in their respective capacities as such (to the extent not reimbursed
by the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Commitment Percentages with respect to
all Types of Loans in effect on the date on which indemnification is sought,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted
against any of the Agents in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any of the
Agents under or in connection with any of the foregoing provided that no Lender
shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from such Agent's gross negligence
or willful misconduct. The agreements in this subsection shall survive the
payment of the Loans and all other amounts payable hereunder.
9.8 Agents, in Their Individual Capacities. The Agents and
their respective Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrower as though the Agents
were not acting in such capacities hereunder and under the other Credit
Documents. With respect to the Loans made or renewed by it and any Note issued
to it and with respect to any Letter of Credit issued or participated in by it,
each Agent shall have the same rights and powers under this Agreement and the
other Credit Documents as any Lender and may exercise the same as though it
were not an Agent, and the terms "Lender" and "Lenders" shall include the
Agents in their individual capacities.
9.9 Successor Administrative Agent, Syndication Agents and
Documentation Agent. The Administrative Agent, the Syndication Agent or the
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Documentation Agent may resign as Administrative Agent, Syndication Agent or
Documentation Agent, as the case may be, upon 30 days' notice to the Lenders.
If the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Credit Documents or if Syndication Agent or the
Documentation Agent shall resign as Syndication Agent or Documentation Agent
under this Agreement and the other Credit Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent (provided that it shall have been approved by the Borrower,
which approval shall not be unreasonably withheld), shall succeed to the
rights, powers and duties of the Administrative Agent or a Syndication Agent or
the Documentation Agent, as the case may be, hereunder. Effective upon such
appointment and approval, the term "Administrative Agent" or a "Syndication
Agent" or "Documentation Agent," as the case may be, shall mean or include such
successor agent, and the former Administrative Agent's or Syndication Agent's
or Documentation Agent's, as the case may be, rights, powers and duties as
Administrative Agent or Syndication Agent or Documentation Agent, as the case
may be, shall be terminated, without any other or further act or deed on the
part of such former Administrative Agent or Syndication Agent or Documentation
Agent, as the case may be, or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's or Syndication
Agent's or Documentation Agent's resignation as Administrative Agent or
Syndication Agent or Documentation Agent, as the case may be, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent or Syndication Agent or
Documentation Agent, as the case may be, under this Agreement and the other
Credit Documents.
9.10 The Arranger. Except as expressly set forth herein, the
Arranger, in its capacity as such, shall have no duties or responsibilities,
and shall incur no liabilities, under this Agreement or the other Credit
Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any
other Credit Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Required Lenders may, or, with the written consent of the
Required Lenders, the Administrative Agent may, from time to time, (a) enter
into with the Borrower written amendments, supplements or modifications hereto
and to the other Credit Documents for the purpose of adding any provisions to
this Agreement or the other Credit Documents or changing in any manner the
rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive,
on such terms and conditions as the Required Lenders or the Administrative
Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the other Credit Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (i) reduce the amount
or extend any scheduled date of maturity of any Loan, extend the expiration of
any Letter of Credit beyond the Revolving Credit Termination Date, or reduce
the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof, in each case without the consent of each
Lender affected thereby, or increase the commitment of any Lender or extend the
expiry of the commitment of any Lender without the consent of such Lender, or
(ii) amend, modify or waive any
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provision of this subsection or reduce the percentage specified in the
definition of Required Lenders or Requisite Class Lenders, or consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement and the other Credit Documents, in each case without the
written consent of all the Lenders, or (iii) release all or substantially all
of the Collateral or release all or substantially all of the Credit Parties
from their Guarantee Obligations under the Credit Document without the consent
of all Lenders, or (iv) amend, modify or waive any provision of Section 9
without the written consent of the then Agents, (v) amend, modify or waive any
provision of subsection 2.1(b), any other provision of this Agreement relating
to the Swing Line Loans or the Swing Line Note without the written consent of
the Swing Line Lender, or (vi) amend, modify or waive any provision of this
Agreement or any other Credit Document which would directly and adversely
affect the Arrangers or the Agents or the Issuing Lender or the Swing Line
Lender without the written consent of the Arranger, the Agents or the Issuing
Lender or the Swing Line Lender, as the case may be. In addition to the
foregoing, no amendment, modification, termination or waiver of any provision
of subsection 2.5 or subsection 2.6 which has the effect of changing any
interim scheduled payments, voluntary or mandatory prepayments (or the
applications thereof) or Commitment reductions applicable to any Class (an
"Affected Class") in a manner that disproportionately disadvantages such Class
relative to the other Class shall be effective without the written concurrence
of the Requisite Class Lenders of the Affected Class (it being understood and
agreed that any amendment, modification, termination or waiver of any provision
which only postpones or reduces any interim scheduled payment, voluntary or
mandatory prepayment or Commitment reduction from those set forth in subsection
2.6 with respect to only one Class shall be deemed to not disproportionately
disadvantage the other Class and, therefore, shall not require the consent of
Requisite Class Lenders of such other Class). Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Borrower, the Lenders, the Agents and the
Issuing Lender and all future holders of the Loans. Any extension of a Letter
of Credit by the Issuing Lender shall be treated hereunder as issuance of a new
Letter of Credit. In the case of any waiver, the Borrower, the Lenders and the
Agents and the Issuing Lender shall be restored to their former positions and
rights hereunder and under the other Credit Documents, and any Default or Event
of Default waived shall be deemed to be cured and not continuing; no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrower, the Administrative Agent, the Syndication
Agent and the Documentation Agent, and as set forth in Schedule I in the case
of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto:
The Borrower or
any of its
Subsidiaries: L-3 Communications Corporation
600 Third Avenue, 34th Floor
New York, NY 10016
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Attention: Robert LaPenta
Fax: (212) 805-5470
Simpson Thacher & Bartlett
425 Lexington Avenue, 14th Floor
New York, NY 10017-3954
Attention: Marissa C. Wesely, Esq.
Fax: (212) 455-2502
The Administrative
Agent: Bank of America NT & SA
335 Madison Avenue
New York, NY 10017
Attention: Linda Carper
Fax: (212) 503-7502
The Documentation
Agent: Lehman Commercial Paper Inc.
3 World Financial Center, 9th Floor
New York, New York 10285
Attention: Michelle Swanson
Fax: (212) 528-0819
The Syndication
Agent: Lehman Commercial Paper Inc.
3 World Financial Center, 9th Floor
New York, New York 10285
Attention: Michelle Swanson
Fax: (212) 528-0819
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsection 2.2, 2.4, 2.6, 2.7, 2.12 or 3.2 shall not
be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of any Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Credit Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Credit Documents
and in any document, certificate or statement delivered pursuant hereto or in
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connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to
pay or reimburse each of the Agents for all its reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Credit Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation,
the reasonable fees, charges and disbursements of a single counsel for the
Lenders (in addition to any local counsel), (b) to pay or reimburse each Lender
and each Agent for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the other
Credit Documents and any such other documents, including, without limitation,
the fees and disbursements of counsel to each Lender and of counsel to any
Agent, (c) to pay, indemnify, and hold each Lender and each Agent and each
Issuing Lender harmless from, any and all recording and filing fees and any and
all liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes, if any, which may be payable or determined to
be payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Credit Documents and any such other documents, and
(d) to pay, indemnify, and hold each Lender and each Arranger, each Agent and
each Issuing Lender harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement or the other Credit Documents or the use of the proceeds of the Loans
in connection with the Transaction, including, without limitation, any of the
foregoing relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the operations of the Borrower, any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), it being understood that the
Borrower shall have an obligation hereunder to the Lender or any Agent with
respect to any indemnified liabilities incurred by any Agents, Arranger or the
Issuing Lender or any Lender as a result of any Materials of Environmental
Concern that are first manufactured, emitted, generated, treated, released,
spilled, stored or disposed of on, at or from any Property or any violation of
any Environmental Law, which in any case first occurs on or with respect to
such Property (i) after the Property is transferred to any Agent, Arranger,
Issuing Lender or any Lender or their successors or assigns by foreclosure
sale, deed in lieu of foreclosure, or similar transfer or, following such
transfer, (ii) in connection with, but prior to, the sale, leasing or other
transfer of such Property by such Agent, Arranger, Issuing Lender, or any
Lender or their successors or assigns to one or more third parties; provided,
however, that the Borrower shall have no obligation hereunder to any Agent or
the Issuing Lender or any Lender with respect to otherwise indemnified
liabilities arising from the gross negligence or willful misconduct of such
Agent or the Issuing Lender or any such Lender, or with respect to otherwise
indemnified liabilities following the sale, leasing or other transfer of such
Property to one or more third parties. The agreements in this subsection shall
survive repayment of the Loans and all other amounts payable hereunder.
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10.6 Successors and Assigns; Participation and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Agents and their respective successors and assigns,
except that the Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time sell to one or more banks or
other entities ("Participants") participating interests in any Loan owing to
such Lender or any other interest of such Lender hereunder and under the other
Credit Documents. In the event of any such sale by a Lender of a participating
interest to a Participant, such Lender's obligations under this Agreement to
the other parties to this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender shall remain
the holder of any such Loan for all purposes under this Agreement and the other
Credit Documents, and the Borrower and the Agents shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Credit Documents. No Lender
shall be entitled to create in favor of any Participant, in the participation
agreement pursuant to which such Participant's participating interest shall be
created or otherwise, any right to vote on, consent to or approve any matter
relating to this Agreement or any other Credit Document except for those
specified in clauses (i) and (ii) of the proviso to subsection 10.1. The
Borrower agrees that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement; provided that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in subsection 10.7(a)
as fully as if it were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16
with respect to its participation in the Letters of Credit, the Commitments and
the Loans outstanding from time to time as if it was a Lender; provided that in
the case of subsection 2.15, such Participant shall have complied with the
requirements of said Section; provided, further, that no Participant shall be
entitled to receive any greater amount pursuant to any such subsection than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time and from time to time assign to
any Lender, any affiliate thereof or, in the case of Lender that is an
investment fund which is regularly engaged in making, purchasing or investing
in loans or securities, any other such fund which is under common management
with such Lender, or, with the consent of the Borrower and the Agents (which in
each case shall not be unreasonably withheld), to an additional bank, fund
which is regularly engaged in making, purchasing or investing in loans or
securities, or financial institution (an "Assignee") all or any part of its
rights and obligations under this Agreement and the other Credit Documents
pursuant to an Assignment and Acceptance, substantially in the form of Exhibit
G, executed by such Assignee, such
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assigning Lender (and, in the case of an Assignee that is not then a Lender or
an affiliate thereof, by the Borrower and the Agents) and delivered to the
Administrative Agent for its acceptance and recording in the Register with a
copy to the Syndication Agent, provided that, in the case of any such
assignment to an additional bank or financial institution, (A) either (x) such
assignment is of all the rights and obligations of the assigning Lender or (y)
the sum of the aggregate principal amount of the Loans, the aggregate amount of
the L/C Obligations and the aggregate amount of the unused Commitments being
assigned and, if such assignment is of less than all of the rights and
obligations of the assigning Lender, the sum of the aggregate principal amount
of the Loans, the aggregate amount of the L/C Obligations and the aggregate
amount of the unused Commitments remaining with the assigning Lender are each
not less than $5,000,000 (or such lesser amount as may be agreed to by the
Borrower and the Agents) and (B) each Assignee which is a Non-U.S. Lender shall
comply with the provisions of clause (A) of subsection 2.15(b) hereof, or, with
the prior written consent of the Borrower, which shall not be unreasonably
withheld, the provisions of clause (B) of subsection 2.15(b) hereof (and, in
either case, with all of the other provisions of subsection 2.15(b) hereof).
Upon such execution, delivery, acceptance and recording, from and after the
effective date determined pursuant to such Assignment and Acceptance, (x) the
Assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment as set forth therein and (y) the assigning Lender
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto). Notwithstanding any provision of this
paragraph (c) and paragraph (f) of this subsection, the consent of the Borrower
shall not be required for any assignment which occurs at any time when any of
the events described in Section 8(f) shall have occurred and be continuing.
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in subsection
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
and Commitments of and principal amounts of the Loans of each Type owing to,
each Lender from time to time and the registered owners of the Obligations
evidenced by the Notes. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of a Loan, a Note or other Obligation hereunder as the owner thereof for
all purposes of this Agreement and the other Credit Documents, notwithstanding
any notice to the contrary. Any assignment of any Loan or other obligation
evidenced by a Note shall be effective only upon appropriate entries with
respect thereto being made in the Register. Any assignment or transfer of all
or part of an Obligation evidenced by a Note shall be registered in the
Register only upon surrender for registration of assignment or transfer of the
Note evidencing such Obligation, duly endorsed by (or accompanied by a written
instrument of assignment or transfer duly executed by) the holder thereof, and
thereupon one or more new Notes shall be issued to the designated Assignee and
the old Note shall be returned by the Administrative Agent to the Borrower
marked "cancelled."
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(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, by the Borrower and the Agents)
together with payment to the Administrative Agent of a registration and
processing fee of $3,000 (provided that no such payment shall be required
whenever LCPI or BOA is the assigning Lender), the Administrative Agent shall
(i) promptly accept such Assignment and Acceptance and (ii) on the effective
date determined pursuant thereto record the information contained therein in
the Register and give notice of such acceptance and recordation to the Lenders
and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
subject to the provisions of subsection 10.15, any and all financial
information in such Lender's possession concerning the Borrower and its
Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement.
(g) If, pursuant to this subsection 10.6, any interest in this
Agreement or any Loan is transferred to any Transferee which would be a
Non-U.S. Lender upon the effectiveness of such transfer, the assigning Lender
shall cause such Transferee, concurrently with the effectiveness of such
transfer, (i) to represent to the assigning Lender (for the benefit of the
assigning Lender, the Administrative Agent and the Borrower) that under
applicable law and treaties no U.S. Taxes will be required to be withheld by
the Administrative Agent, the Borrower or the assigning Lender with respect to
any payments to be made to such Transferee in respect of the Loans, (ii) to
furnish to the assigning Lender (and, in the case of any Assignee registered in
the Register, the Administrative Agent and the Borrower such Internal Revenue
Service Forms required to be furnished pursuant to subsection 2.15(b) and (iii)
to agree (for the benefit of the assigning Lender, the Administrative Agent and
the Borrower) to be bound by the provisions of subsection 2.15(b).
(h) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its Loans or
the Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature referred to in Section
8(f), or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Loans or the Reimbursement Obligations owing to it, or interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders
a participating interest in such portion of each such other Lender's Loans or
the Reimbursement Obligations owing to it, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to
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share the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
set-off and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and application.
10.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be lodged with the
Borrower and the Administrative Agent.
10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Credit
Documents represent the agreement of the Borrower, the Agents and the Lenders
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by any Agent or any Lender relative
to subject matter hereof not expressly set forth or referred to herein or in
the other Credit Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS
TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;
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(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT
OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT
AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN SUBSECTION 10.2
OR AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE
BEEN NOTIFIED PURSUANT THERETO;
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.
10.13 Acknowledgements. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit
Documents;
(b) none of the Arrangers, the Agents nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or
in connection with this Agreement or any of the other Credit
Documents, and the relationship between any of the Agents and the
Lenders, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE
ARRANGERS, THE LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
10.15 Confidentiality. Each Lender agrees to keep confidential
all non-public information provided to it by the Borrower pursuant to this
Agreement that is designated by the Borrower in writing as confidential;
provided that nothing herein shall prevent any Lender from disclosing any such
information (i) to any Agent or any other Lender or any of its Affiliates, (ii)
to any Transferee or prospective Transferee or to any direct or indirect
contractual counterparties in swap agreements or such contractual
counterparties' professional advisors which receives such information and
agrees to be bound by the confidentiality provisions hereof,
92
<PAGE>
(iii) to its employees, directors, agents, attorneys, accountants and other
professional advisors, (iv) upon the request or demand of any Governmental
Authority having jurisdiction over such Lender, (v) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (vi) which has been publicly disclosed
other than in breach of this Agreement, or (vii) in connection with the
exercise of any remedy hereunder.
93
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
L-3 Communications Corporation
By:__________________________________
Title:
Lehman Commercial Paper Inc.,
as Documentation Agent, Syndication Agent,
Arranger and as a Lender
By:__________________________________
Title:
Bank of America NT & SA
as Administrative Agent
and as a Lender
By:__________________________________
Title:
CITIBANK, N.A.
as a Lender
By:__________________________________
Title:
CREDIT LYONNAIS, NEW YORK BRANCH
as Co-Agent and as a Lender
By:__________________________________
Title:
FLEET NATIONAL BANK,
as Co-Agent and Lender
By:__________________________________
Name:
Title:
94
<PAGE>
MARINE MIDLAND BANK
as Co-Agent and as a Lender
By:__________________________________
Title:
BANK OF NOVA SCOTIA
as Co-Agent and as a Lender
By:__________________________________
Name:
Title:
BANKBOSTON, N.A.
By:__________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON
as Co-Agent and as a Lender
By:__________________________________
Title:
THE FIRST NATIONAL BANK OF CHICAGO
as Co-Agent and as a Lender
By:__________________________________
Title:
THE FUJI BANK, LIMITED NEW YORK BRANCH
as Co-Agent and as a Lender
By:__________________________________
Title:
95
<PAGE>
CANADIAN IMPERIAL BANK OF COMMERCE
By:__________________________________
Name:
Title:
CITIBANK, N.A.
as Co-Agent and as a Lender
By:__________________________________
Title:
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
as a Lender
By:__________________________________
Title:
KZH HOLDING CORPORATION II
By:__________________________________
Name:
Title:
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC., as a Lender
By:__________________________________
Title:
KZH HOLDING CORPORATION
By:__________________________________
Name:
Title:
METROPOLITAN LIFE INSURANCE COMPANY
By:__________________________________
Name:
Title:
96
<PAGE>
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By:__________________________________
Name:
Title:
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (a unit of the Chase
Manhattan Bank)
By:__________________________________
Name:
Title:
PARIBAS CAPITAL FUNDING LLC
as a Lender
By:__________________________________
Title:
PILGRIM AMERICA PRIME RATE TRUST
as a Lender
By:__________________________________
Title:
PRIME INCOME TRUST
as a Lender
By:__________________________________
Title:
ROYALTON COMPANY
as a Lender
By:__________________________________
Title:
97
<PAGE>
CRESCENT/MACHI PARTNERS L.P.
By TCW Asset Management Company
its Investment Manager,
as a Lender
By:__________________________________
Name:
Title:
TCW Asset Management Company
as Attorney-in Fact for United
Companies Life Insurance Company,
as a Lender
By:__________________________________
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By:__________________________________
Name:
Title:
BANK OF MONTREAL
as a Lender
By:__________________________________
Title:
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
as a Lender
By:__________________________________
Title:
98
<PAGE>
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
BHF BANK AKTIENGESELLSCHAFT
GRAND CAYMAN BRANCH
By:__________________________________
Name:
Title:
CORESTATES BANK, N.A.
as a Lender
By:__________________________________
Title:
GOLDMAN SACHS CREDIT PARTNERS, L.P.
as a Lender
By:__________________________________
Title:
PNC BANK, NATIONAL ASSOCIATION
as a Lender
By:__________________________________
Name:
Title:
99
<PAGE>
SKANDINAVISKA ENSKILDA BANKEN
CORPORATION
as a Lender
By:__________________________________
Title:
SOCIETE GENERALE, NEW YORK BRANCH
By:__________________________________
Name:
Title:
THE SUMITOMO BANK, LIMITED
as a Lender
By:__________________________________
Title:
THE BANK OF NEW YORK
as a Lender
By:__________________________________
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
as a Lender
By:__________________________________
Title:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By:__________________________________
Name:
Title:
U.S. BANK
as a Lender
By:__________________________________
Title:
100
<PAGE>
L-3 COMMUNICATIONS CORPORATION
FIRST AMENDMENT
TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT")
is dated as of August 13, 1997 and entered into by and among L-3
COMMUNICATIONS CORPORATION, a Delaware corporation (the "BORROWER") which is
wholly owned by L-3 COMMUNICATIONS HOLDINGS, INC., a Delaware corporation
("HOLDINGS"), the Lenders party to the Credit Agreement referred to below on
the date hereof (the "LENDERS"), LEHMAN COMMERCIAL PAPER INC. ("LCPI") as
arranger (in such capacity, the "ARRANGER"), LCPI, as syndication agent (in
such capacity, the "SYNDICATION AGENT"), LCPI, as documentation agent (in such
capacity, the "DOCUMENTATION AGENT") and BANK OF AMERICA NT & SA ("BOA"), as
administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE
AGENT"). All capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Arranger, the
Syndication Agent, the Documentation Agent and the Administrative Agent are
parties to the Credit Agreement dated as of April 30, 1997 (the "CREDIT
AGREEMENT"); and
WHEREAS, the parties hereto wish to amend the Credit
Agreement as herein provided.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto
agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT
1.1. The definition of L/C Commitment in Section 1.1 of the
Credit Agreement is hereby stricken and amended to read as follows:
""L/C Commitment": $30,000,000."
1.2. The second sentence of Section 2.2 of the Credit
Agreement is hereby stricken and amended to read as follows:
"Each borrowing under the Commitments shall be in
an amount equal to (x) in the case of Base Rate Loans (other than
Swing Line Loans), $2,000,000 or a whole multiple of $100,000 in
excess thereof (or, if the then Available Commitments are less than
$2,000,000, such lesser amount), (y) in the case of Swing Line Loans,
as provided in subsection 2.1(b)(i) and (z) in the case of Eurodollar
Loans, $5,000,000 or a whole multiple of $100,000 in excess thereof."
1.3. The last sentence of Section 2.6(a) of the Credit
Agreement is hereby stricken and amended to read as follows:
"Partial prepayments shall be in an aggregate
principal amount of $2,000,000 or a whole multiple of $100,000 in
excess thereof."
1.4. Section 2.6(b)(iv) of the Credit Agreement is hereby
amended by adding the
<PAGE>
following sentence to the end of the Section:
"Mandatory prepayments shall not be subject to any
minimum amount requirement."
1.5. Section 2.8 of the Credit Agreement is hereby stricken
and amended to read as follows:
"2.8 Minimum Amounts and Maximum Number of
Tranches. All borrowings, conversions and continuations of Loans
hereunder and all selections of Interest Periods hereunder shall be
in such amounts and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount of the Loans
comprising each Eurodollar Tranche shall be equal to $5,000,000 or a
whole multiple of $100,000 in excess thereof. All Loans hereunder may
be converted or continued into Base Rate Loans without reference to
the minimum principal amount requirements for new Base Rate
borrowings set forth in Section 2.2 above. In no event shall there be
more than 15 Eurodollar Tranches outstanding at any time.
1.6. The second sentence of Section 3.5(a) of the Credit
Agreement is hereby stricken and amended to read as follows:
"The Issuing Lender shall provide notice to the
Borrower on each Business Day on which a draft is presented
indicating the amount of (i) such draft so paid and (ii) any taxes,
fees, charges or other costs or expenses incurred by the Issuing
Lender in connection with such payment."
1.7. Section 6.1 of the Credit Agreement is hereby
stricken and amended to read as follows:
"(a) as soon as available, but in any event within
95 days after the end of each fiscal year of the Borrower, (i) a copy
of the consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statements of income and retained earnings and of cash
flows for such year, setting forth in each case in comparative form
the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising
out of the scope of the audit, by independent certified public
accountants of nationally recognized standing and (ii) an unaudited
unconsolidated balance sheet of Holdings prepared on an equity basis
(without footnote disclosure) certified by a Responsible Officer of
Holdings as being fairly stated in all material respects;
(b) as soon as available, but in any event not
later than 50 days after the end of each of the first three quarterly
periods of each fiscal year of the Borrower, the unaudited
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated statements of income and retained earnings and of cash
flows of the Borrower and its consolidated Subsidiaries for such
quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end
audit adjustments)."
1.8. Exhibit G to the Credit Agreement is hereby stricken an
amended to read as Exhibit A hereto.
2
<PAGE>
SECTION 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon
the satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "FIRST
AMENDMENT EFFECTIVE DATE"):
2.1. On or before the First Amendment Effective Date, the
Borrower shall have delivered to Administrative Agent executed copies of this
Amendment.
2.2. On or before the First Amendment Effective Date, the
Required Lenders shall have delivered to the Administrative Agent an executed
original or facsimile of a counterpart of this Amendment.
2.3. The Boards of Directors of Holdings and the Borrower
shall have duly authorized the execution, delivery and performance of this
Amendment.
SECTION 3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and
to amend the Credit Agreement in the manner provided herein, the Borrower
represents and warrants to each Lender that the following statements are true,
correct and complete:
3.1. Corporate Power and Authority. The Borrower has all
requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
3.2. Authorization of Amendment. The execution and delivery
of this Amendment has been duly authorized by all necessary corporate action
on the part of the Borrower.
3.3. No Conflict. The execution and delivery by the Borrower
of this Amendment and the performance by the Borrower of the Amended Agreement
by the Borrower does not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to the Borrower or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of the
Borrower or any of its Subsidiaries or any order, judgment or decree of any
court or other agency of government binding on the Borrower or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any contractual
obligation of the Borrower or any of its Subsidiaries, (iii) result in or
require the creation or of any Lien upon any of the properties or assets of
the Borrower or any of its Subsidiaries (other than Liens created under any of
the Credit Documents in favor of the Administrative Agent on behalf of
Lenders), or (iv) require any approval of stockholders or any approval or
consent of any Person under any contractual obligation of the Borrower or any
of its Subsidiaries.
3.4. Governmental Consents. The execution and delivery by
the Borrower of this Amendment and the performance by the Borrower of the
Amended Agreement by the Borrower does not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body.
3.5. Binding Obligation. This Amendment and the Amended
Agreement have been
3
<PAGE>
duly executed and delivered by the Borrower and, when executed and delivered,
will be the legally valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
3.6. Incorporation of Representations and Warranties From
Credit Agreement. The representations and warranties contained in Section 4 of
the Credit Agreement are and will be true, correct and complete in all
material respects on and as of the First Amendment Effective Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in
which case they were true, correct and complete in all material respects on
and as of such earlier date.
3.7. Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default or a
potential Event of Default.
SECTION 4. MISCELLANEOUS
4.1. Reference to and Effect on the Credit Agreement and the
other Credit Documents.
(a) On and after the First Amendment Effective
Date, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import referring to
the Credit Agreement, and each reference in the other Credit
Documents to the "Credit Agreement", "thereunder", "thereof" or words
of like import referring to the Credit Agreement shall mean and be a
reference to the Amended Agreement.
(b) Except as specifically amended by this
Amendment, the Credit Agreement and the other Credit Documents shall
remain in full force and effect and are hereby ratified and
confirmed.
(c) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute
a waiver of any provision of, or operate as a waiver of any right,
power or remedy of the Administrative Agent or any Lender under, the
Credit Agreement or any of the other Credit Documents.
4.2. Fees and Expenses. The Borrower acknowledges that all
costs, fees and expenses as described in Section 9 of the Credit Agreement
incurred by Administrative Agent and its counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of the Borrower.
4.3. Headings. Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
4.4. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
4
<PAGE>
4.5. SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER
CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE
COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY
BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN
SECTION 10.2 OF THE CREDIT AGREEMENT OR AT SUCH OTHER ADDRESS OF
WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT
THERETO;
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.
4.6. Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the
negotiation, execution and delivery of this Agreement;
(b) none of the Arrangers, the Agents nor any
Lender has any fiduciary relationship with or duty to the Borrower
arising out of or in connection with this Agreement, and the
relationship between any of the Agents and the Lenders, on one hand,
and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or otherwise
exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders.
4.7. WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE
ARRANGERS, THE LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
5
<PAGE>
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
4.8. Confidentiality. Each Lender agrees to keep
confidential all non-public information provided to it by the Borrower
pursuant to this Agreement that is designated by the Borrower in writing as
confidential (excluding any such information already in the possession of such
Lender or provided to such Lender by a third party not in violation of this
Agreement which, in either case, is not, to the knowledge of such Lender,
subject to a confidentiality agreement); provided that nothing herein shall
prevent any Lender from disclosing any such information (i) to any Agent or
any other Lender or any of its Affiliates, (ii) to any Transferee or
prospective Transferee or to any direct or indirect contractual counterparties
in swap agreements or such contractual counterparties' professional advisors
which receives such information and agrees to be bound by the confidentiality
provisions hereof, (iii) to its employees, directors, agents, attorneys,
accountants and other professional advisors, (iv) upon the request or demand
of any Governmental Authority having jurisdiction over such Lender, (v) in
response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (vi) which has been
publicly disclosed other than in breach of this Agreement, or (vii) in
connection with the exercise of any remedy hereunder.
4.9. Counterparts; Effectiveness. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but
one and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all
signature pages are physically attached to the same document. This Amendment
shall become effective upon the execution of a counterpart hereof by the
Borrower, the Required Lenders, the Arranger, the Syndication Agent, the
Documentation Agent and the Administrative Agent and receipt by the Borrower
and the Administrative Agent of written or telephonic notification of such
execution and authorization of delivery thereof.
6
<PAGE>
In WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
L-3 COMMUNICATIONS CORPORATION
By: /s/ Lawrence W. O'Brien
-----------------------
Name: Lawrence O'Brien
Title: Vice President & Treasurer
LEHMAN COMMERCIAL PAPER INC.,
as Documentation Agent, Syndication
Agent, Arranger and as a Lender
By: /S/ Michele Swenson
-----------------------
Name: Michele Swenson
Title: Authorized Signatory
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent
By: /s/ Dietmar Schiel
-----------------------
Name: Dietmar Schiel
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Lender
By: /s/ Linda A. Carper
-----------------------
Name: Linda A. Carper
Title: Managing Director
7
<PAGE>
CREDIT LYONNAIS, NEW YORK BRANCH
as Co-Agent and as a Lender
By: /s/ Attila Koc
-----------------------
Name: Attila Koc
Title:
FLEET NATIONAL BANK,
as Co-Agent and Lender
By: /s/ Roger C. Boucher
-----------------------
Name: ROGER C. BOUCHER
Title: VICE PRESIDENT
MARINE MIDLAND BANK
as Co-Agent and as a Lender
By:/s/ JB Lyons
-----------------------
Name: JB Lyons
Title:
BANK OF NOVA SCOTIA,
as Co-Agent and as a Lender
By: /s/ J.R. Trimble
-----------------------
Name: J.R. Trimble
Title: Senior Relationship Manager
KZH - CRESCENT CORPORATION
By: /s/ Virginia R. Conway
-----------------------
Name: Virginia R. Conway
Title: Authorized Agent
8
<PAGE>
BANKBOSTON, N.A.
By: /s/ Gregory R.D. Clark
-----------------------
Name: Gregory R.D. Clark
Title: Managing Director
THE FIRST NATIONAL BANK OF CHICAGO
as Co-Agent and as a Lender
By: /s/ Amy L. Golz
-----------------------
Name: Amy L. Golz
Title: Vice President
THE FUJI BANK, LIMITED NEW YORK BRANCH
as Co-Agent and as a Lender
By: /s/ Teiji Teramoto
-----------------------
Name: Teiji Teramoto
Title: Vice President & Manager
CITIBANK, N.A.
as Co-Agent and as a Lender
By: /s/ Hans L. Christensen
-----------------------
Name: Hans L. Christensen
Title: Vice President
9
<PAGE>
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
as a Lender
By:
-----------------------
Name:
Title:
KZH - ING-1 CORPORATION
By: /s/ Virginia R. Conway
-----------------------
Name: Virginia R. Conway
Title: Authorized Agent
KZH - SOLEIL CORPORATION
By: /s/ Virginia R. Conway
-----------------------
Name: Virginia R. Conway
Title: Authorized Agent
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.,
as a Lender
By:
-----------------------
Name:
Title:
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ James R. Dingler
-----------------------
Name: James R. Dingler
Title: Assistant Vice President
10
<PAGE>
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By:
-----------------------
Name:
Title:
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (a unit of the Chase
Manhattan Bank)
By: /s/ Richard W. Stewart
-----------------------
Name: Richard W. Stewart
Title: Managing Director
PARIBAS CAPITAL FUNDING LLC
as a Lender
By:
-----------------------
Name:
Title:
PRIME INCOME TRUST
as a Lender
By:
-----------------------
Name:
Title:
11
<PAGE>
ROYALTON COMPANY, By Pacific
Investment Management Company, as its
Investment Advisor
By: /s/ Ray Kennedy
-----------------------
Name: Ray Kennedy
Title: Vice President
CRESCENT/MACHI PARTNERS L.P.
By: TCW Asset Management Company,
its Investment Manager,
as a Lender
By: /s/ Justin L. Driscoll
-----------------------
Name: Justin L. Driscoll
Title: Senior Vice President
TCW ASSET MANAGEMENT COMPANY
as Attorney-in-Fact for United
Companies Life Insurance Company, as
a Lender
By:
-----------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
-----------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
12
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
as a Lender
By: /s/ Paul P. Malecki
-----------------------
Name: Paul P. Malecki
Title: Vice President
NATEXIS BANQUE BFCE F/K/A
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: G.K. DT
-----------------------
Name: Kevin Dooley
Title: Vice President
By: FL
-----------------------
Name: VP
Title: VP
BHF BANK AKTIENGESELLSCHAFT
GRAND CAYMAN BRANCH
By: /s/ John Sykes /s/ Hans Sholz
-----------------------------
Name: John Sykes Hans Sholz
Title: AVP AVP
CORESTATES BANK, N.A.
as a Lender
By: /s/ Matthew T. Panarzse
-----------------------
Name: Matthew T. Panarzse
Title: Vice President
13
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS, L.P.
as a Lender
By:
-----------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
as a Lender
By:
-----------------------
Name:
Title:
SKANDINAVISKA ENSKILDA BANKEN
CORPORATION
as a Lender
By: /s/ Sveriger Johansson
-----------------------
Name: Sveriger Johansson
Title: Vice President
SOCIETE GENERALE, NEW YORK BRANCH
By: /s/ Alan ZJ Zinser
-----------------------
Name: Alan ZJ Zinser
Title: Vice President
THE SUMITOMO BANK, LIMITED
as a Lender
By: /s/ Suresh S. Tata
-----------------------
Name: Suresh S. Tata
Title: Senior Vice President
14
<PAGE>
THE BANK OF NEW YORK
as a Lender
By: /s/ Kenneth P. Sneider, Jr
--------------------------
Name: Kenneth P. Sneider, Jr
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION
as a Lender
By: /s/ Toshihiro Hayashi
-----------------------
Name: Toshihiro Hayashi
Title: Senior Vice President
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Perry Vavoules
-----------------------
Name: Perry Vavoules
Title: Senior Vice President
U.S. BANK
as a Lender
By: /s/ Monica J. Treacy
-----------------------
Name: Monica J. Treacy
Title: Assistant Vice President
INDOSUEZ CAPITAL FUNDING II, LTD.
by Indosuez Capital as Portfolio Advisor
By: /s/ Francoise Berthelot
-----------------------
Name: Francoise Berthelot
Title: Vice President
15
<PAGE>
SENIOR DEBT PORTFOLIO
c/o BOSTON MANAGEMENT AND RESEARCH
as Investment Advisor
By: /s/ Payson F. Swaffield
-----------------------
Name: Payson F. Swaffield
Title: Vice President
PAMCO CAYMAN LTD.
By: Protective Asset Management, L.L.C.,
as Collateral Manager
By: /s/ James Dondero
-----------------------
Name: James Dondero
Title: CFA, CPA President Protective
Asset Management Company
FLOATING RATE PORTFOLIO
By: Chancellor LGT Senior Secured
Management, Inc., as attorney in
fact
By: /s/ Gregory L. Smith
-----------------------
Name: Gregory L. Smith
Title: Vice President
16
<PAGE>
[BANK OF AMERICA LOGO]
January 13, 1998
To: Lender Group Via Facsimile
Lawrence O'Brien, Vice President and Treasurer
L-3 Communications Corporation
REF: L-3 COMMUNICATIONS CORPORATION
Please be advised that the Second Amendment to the Credit Agreement dated
April 30, 1997 among L-3 Communications Corporation (the "Borrower"), the
Lenders party to the Credit Agreement,
Lehman Commercial Paper Inc. as Arranger, Syndication Agent and Documentation
Agent and Bank of America NT&SA as Administrative Agent, was executed by the
Required Lenders, the Borrower and the Agents and became effective as of
January 12, 1998.
An executed copy of the Second Amendment will be sent to you shortly.
Regards,
/s/ Dietmar Schiel
Dietmar Schiel
Vice President
(415) 436-2769
cc: Jacques McChesney, Latham & Watkins
<PAGE>
L-3 COMMUNICATIONS CORPORATION
SECOND AMENDMENT
TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT")
is dated as of January 12, 1998 and entered into by and among L-3
COMMUNICATIONS CORPORATION, a Delaware corporation (the "BORROWER") which is
wholly owned by L-3 COMMUNICATIONS HOLDINGS, INC., a Delaware corporation
("HOLDINGS"), the Lenders party to the Credit Agreement referred to below on
the date hereof (the "LENDERS"), LEHMAN COMMERCIAL PAPER INC. ("LCPI") as
arranger (in such capacity, the "ARRANGER"), LCPI, as syndication agent (in
such capacity, the "SYNDICATION AGENT"), LCPI, as documentation agent (in such
capacity, the "DOCUMENTATION AGENT") and BANK OF AMERICA NT & SA ("BOA"), as
administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE
AGENT"). All capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Arranger, the
Syndication Agent, the Documentation Agent and the Administrative Agent are
parties to the Credit Agreement dated as of April 30, 1997, as amended August
13, 1997, (the "CREDIT AGREEMENT"); and
WHEREAS, the parties hereto wish to amend the Credit
Agreement as herein provided.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT
1.1. The definition of L/C Commitment in Section 1.1 of the
Credit Agreement is hereby stricken and amended to read as follows:
""L/C Commitment": $50,000,000."
1.2. Section 7.9 of the Credit Agreement is hereby stricken
and amended to read as follows:
"7.9 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person
("Investments"), except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
<PAGE>
(c) loans to officers of the Borrower listed on Schedule
7.9(c) in aggregate principal amounts outstanding not to exceed the
respective amounts set forth for such officers on said Schedule;
(d) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business in an aggregate amount for the Borrower
and its Subsidiaries not to exceed $1,000,000 at any one time
outstanding;
(e) investments by the Borrower in its Subsidiaries that are
Credit Parties and investments by such Subsidiaries in the Borrower
and in other Subsidiaries that are Credit Parties;
(f) so long as no Event of Default has occurred and is
continuing, loans by the Borrower to its employees (other than any
Principals or their Related Parties) in connection with (i) management
incentive plans and (ii) management stock purchase plans, in an
aggregate amount not to exceed $3,000,000;
(g) Investments in existence on the Closing Date set forth on
Schedule 7.9(g) and extensions, renewals, modifications or
restatements or replacements thereof; provided that no such extension,
renewal, modification or restatement shall increase the amount of the
original loan, advance or investment;
(h) promissory notes and other similar non-cash consideration
received by the Borrower and its Subsidiaries in connection with the
dispositions permitted by subsection 7.6(b);
(i) Investments required by subsection 6.11 and Investments
permitted by subsection 7.6(b) and subsection 7.6(j);
(j) Investments (including debt obligations and Capital
Stock) received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations
of, and other disputes with, customers and suppliers arising in the
ordinary course of business;
(k) so long as no Event of Default has occurred and is
continuing, in addition to the foregoing, Investments in an aggregate
amount not exceeding $15,000,000 (at cost, without regard to any write
down or write up thereof) at any one time outstanding;
(l) Investments in an aggregate amount not exceeding (i)
$80.0 million in cash and (ii) the assumption or replacement of $20.0
million of letters of credit for performance (in each case, at cost,
without regard to any write down or write up thereof) at any one time
outstanding made pursuant to the Asset Purchase Agreement dated
December 22, 1997 between the Borrower and Allied Signal pursuant to
which the Borrower is purchasing all of the assets of Ocean Systems, a
division of Allied Signal ("OCEAN SYSTEMS"); and
(m) Investments in an aggregate amount not exceeding (i)
$27.0 million in cash and (ii) the assumption or replacement of $22.0
million of letters of credit for performance (in each case, at cost,
without regard to any write down or write up thereof) at any one time
outstanding made pursuant to the Asset Purchase Agreement dated
December 19, 1997 between the Borrower and
2
<PAGE>
California Microwave Inc. pursuant to which the Borrower is purchasing
all of the assets of Satellite Transmission Systems, a division of
California Microwave Inc. ("TRANSMISSION SYSTEMS"); and
SECTION 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon
the satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "SECOND
AMENDMENT EFFECTIVE DATE"):
2.1. On or before the Second Amendment Effective Date, the
Borrower shall have delivered to Administrative Agent executed copies of this
Amendment.
2.2. On or before the Second Amendment Effective Date, the
Required Lenders shall have delivered to the Administrative Agent an executed
original or facsimile of a counterpart of this Amendment.
2.3 On or before the Second Amendment Effective Date, the
Borrower shall have delivered executed copies of all documents required in
order to comply with the requirements of Section 6.10 of the Credit Agreement
(without giving effect to the 30 day delivery period referenced in such Section
6.10).
2.4. The Boards of Directors of Holdings and the Borrower
shall have duly authorized the execution, delivery and performance of this
Amendment.
SECTION 3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and
to amend the Credit Agreement in the manner provided herein, the Borrower
represents and warrants to each Lender that the following statements are true,
correct and complete:
3.1. Corporate Power and Authority. The Borrower has all
requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Credit Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
3.2. Authorization of Amendment. The execution and delivery
of this Amendment has been duly authorized by all necessary corporate action on
the part of the Borrower.
3.3. No Conflict. The execution and delivery by the Borrower
of this Amendment and the performance by the Borrower of the Amended Agreement
by the Borrower does not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to the Borrower or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of the
Borrower or any of its Subsidiaries or any order, judgment or decree of any
court or other agency of government binding on the Borrower or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any contractual obligation of
the Borrower or any of its Subsidiaries, (iii) result in or require the
creation or of any Lien upon any of the properties or assets of
3
<PAGE>
the Borrower or any of its Subsidiaries (other than Liens created under any of
the Credit Documents in favor of the Administrative Agent on behalf of
Lenders), or (iv) require any approval of stockholders or any approval or
consent of any Person under any contractual obligation of the Borrower or any
of its Subsidiaries.
3.4. Governmental Consents. The execution and delivery by the
Borrower of this Amendment and the performance by the Borrower of the Amended
Agreement by the Borrower does not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.
3.5. Binding Obligation. This Amendment and the Amended
Agreement have been duly executed and delivered by the Borrower and, when
executed and delivered, will be the legally valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
3.6. Incorporation of Representations and Warranties From
Credit Agreement. The representations and warranties contained in Section 4 of
the Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Second Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
3.7. Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default or a
potential Event of Default.
SECTION 4. MISCELLANEOUS
4.1. Reference to and Effect on the Credit Agreement and the
other Credit Documents.
(a) On and after the Second Amendment Effective
Date, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import referring to
the Credit Agreement, and each reference in the other Credit Documents
to the "Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a reference
to the Amended Agreement.
(b) Except as specifically amended by this
Amendment, the Credit Agreement and the other Credit Documents shall
remain in full force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of any right, power
or remedy of the Administrative Agent or any Lender under, the Credit
Agreement or any of the other Credit Documents.
4
<PAGE>
4.2. Fees and Expenses. The Borrower acknowledges that all
costs, fees and expenses as described in Section 9 of the Credit Agreement
incurred by Administrative Agent and its counsel with respect to this Amendment
and the documents and transactions contemplated hereby shall be for the account
of the Borrower.
4.3. Headings. Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.
4.4. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
4.5. SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER CREDIT
DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT
OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY
BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN
SECTION 10.2 OF THE CREDIT AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH
THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.
5
<PAGE>
4.6. Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement;
(b) none of the Arrangers, the Agents nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or
in connection with this Agreement, and the relationship between any of
the Agents and the Lenders, on one hand, and the Borrower, on the
other hand, in connection herewith or therewith is solely that of
debtor and creditor; and
(c) no joint venture is created hereby or otherwise exists by
virtue of the transactions contemplated hereby among the Lenders or
among the Borrower and the Lenders.
4.7. WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE
ARRANGERS, THE LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
4.8. Confidentiality. Each Lender agrees to keep confidential
all non-public information provided to it by the Borrower pursuant to this
Agreement that is designated by the Borrower in writing as confidential
(excluding any such information already in the possession of such Lender or
provided to such Lender by a third party not in violation of this Agreement
which, in either case, is not, to the knowledge of such Lender, subject to a
confidentiality agreement); provided that nothing herein shall prevent any
Lender from disclosing any such information (i) to any Agent or any other
Lender or any of its Affiliates, (ii) to any Transferee or prospective
Transferee or to any direct or indirect contractual counterparties in swap
agreements or such contractual counterparties' professional advisors which
receives such information and agrees to be bound by the confidentiality
provisions hereof, (iii) to its employees, directors, agents, attorneys,
accountants and other professional advisors, (iv) upon the request or demand of
any Governmental Authority having jurisdiction over such Lender, (v) in
response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (vi) which has been
publicly disclosed other than in breach of this Agreement, or (vii) in
connection with the exercise of any remedy hereunder.
4.9. Counterparts; Effectiveness. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original (whether by facsimile or otherwise, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document. This Amendment shall become effective upon the
execution of a counterpart hereof by the Borrower, the Required Lenders, the
Arranger, the Syndication Agent, the Documentation Agent and the Administrative
Agent and receipt by the Borrower and the Administrative Agent of written or
telephonic notification of such execution and authorization of delivery
thereof.
[Signature Page(s) Follow]
6
<PAGE>
L-3 COMMUNICATIONS CORPORATION
By: /s/ Lawrence W. O'Brien
----------------------------------------
Name: Lawrence W. O'Brien
Title: Vice President and Treasurer
LEHMAN COMMERCIAL PAPER INC.,
as Documentation Agent, Syndication Agent,
Arranger and as a Lender
By: /s/ Michele Swanson
----------------------------------------
Name: Michele Swanson
Title: Authorized Signatory
BANK OF AMERICA NT & SA
as Administrative Agent
and as a Lender
By: /s/ Linda A. Carper
----------------------------------------
Name: Linda a. Carper
Title: Managing Director
<PAGE>
BANKBOSTON N.A.
By: /s/ Gregory R.D. Clark
----------------------------------------
Name: Gregory R.D. Clark
Title: Managing Director
<PAGE>
THE BAK OF NEW YORK
as a Lender
By: /s/ Kenneth P. Sneider, Jr.
----------------------------------------
Name: Kenneth P. Sneider, Jr.
Title: Vice President
<PAGE>
BHF-BANK AKTIEGESELLSCHAFT
By: /s/ Dan Dobrjanskyj
----------------------------------------
Name: Dan Dobrjanskyj
Title: Assistant Vice President
By: /s/ Anthony Heyman
----------------------------------------
Name: Anthony Heyman
Title: A.T.
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
as a Lender
By: /s/ David McLaughlin
----------------------------------------
Name: David Mclaughlin
Title: Vice President
<PAGE>
CITIBANK, N.A.
as Co-Agent and as a Lender
By: /s/ Hans L. Christensen
----------------------------------------
Name: Hans L. Christensen
Title: Vice President
<PAGE>
CORESTATES BANK, N.A.
as a Lender
By: /s/ John D. Brady
----------------------------------------
Name: John D. Brady
Title: Vice President
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
as Co-Agent and as a Lender
By: /s/ Vladimir Labun
----------------------------------------
Name: Vladimir Labun
Title: First Vice President-Manager
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
as Co-Agent and as a Lender
By: /s/ Amy L. Robbins
----------------------------------------
Name: Amy L. Robbins
Title: Vice President
<PAGE>
FLEET NATIONAL BANK
as Co-Agent and Lender
By: /s/ Roger C. Boucher
----------------------------------------
Name: Roger C. Boucher
Title: Vice President
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS, L.P.
as a Lender
By: /s/ John Lubein
----------------------------------------
Name: John Lubein
Title:
<PAGE>
KZH-CRESCENT CORPORATION
By: /s/ Virginia R. Conway
----------------------------------------
Name: Virginia R. Conway
Title: Authorized Agent
<PAGE>
KZH-ING-1 CORPORATION (formerly
known as
KZH HOLDING CORPORATION II)
By: Virginia R. Conway
----------------------------------------
Name: Virginia R. Conway
Title: Aurthorized Agent
<PAGE>
KZH-SOLEIL CORPORATION (formerly
known as
KZH HOLDING CORPORATION)
By: Virginia R. Conway
----------------------------------------
Name: Virginia R. Conway
Title: Authorized Agent
<PAGE>
LEHMAN SYNDICATED LOANS, INC.
By: /s/ Dennis J. Dee
----------------------------------------
Name: Dennis J. Dee
Title: Vice President
<PAGE>
MARINE MIDLAND BANK
as Co-Agent and as a Lender
By: /s/ M.F. Brown
----------------------------------------
Name: M.F. Brown
Title: Authorized Signatory
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ James R. Dingler
----------------------------------------
Name: James R. Dingler
Title: Director
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION
as a Lender
By: /s/ Beatrice Kossodo
----------------------------------------
Name: Beatrice Kossodo
Title: Senior Vice President
<PAGE>
NATEXIS BANQUE BFCE, Formerly
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /s/ G.K. DJ
--------------
Name: Kevin Dooley
Title: Vice President
By: /s/ Jordan Sadler
----------------------------------------
Name: Jordan Sadler
Title: Associate
<PAGE>
PAMCO CAYMAN LTD.
By: Protective Asset Management, L.L.C.,
as Collateral Manager
By: /s/ James Dondero
----------------------------------------
Name: James Dondero CFA, CPA
Title: President Protective Asset Management
Company
<PAGE>
PRIME INCOME TRUST
as a Lender
By: /s/
----------------------------------------
Name:
Title:
<PAGE>
ROYALTON COMPANY
as a Lender
By: /s/ Raymond Kennedy
----------------------------------------
Name: Raymond Kennedy
Title: Vice President
<PAGE>
SENIOR DEBT PORTFOLIO
c/o BOSTON MANAGEMENT AND RESEARCH
as Investment Advisor
By: /s/ Payson F. Swaffield
----------------------------------------
Name: Payson F. Swaffield
Title: Vice President
<PAGE>
SKANDINAVISKA ENSKILDA BANKEN
CORPORATION
as a Lender
By: /s/ Sveriger Johansson
----------------------------------------
Name: Sveriger Johansson
Title: Vice President
By: /s/ Philip A. Montenuero
----------------------------------------
Name: Philip A. Montenuero
Title: Vice President
<PAGE>
SOCIETE GENERALE, NEW YORK BRANCH
By: /s/ Alan Zinser
----------------------------------------
Name: Alan Zinser
Title: Vice President
<PAGE>
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Perry Vavoules
----------------------------------------
Name: Perry Vavoules
Title: Senior Vice President
<PAGE>
U.S. BANK National Association
as a Lender
By: /s/ Greg Wilson
----------------------------------------
Name: Greg Wilson
Title: Commercial Banking Officer
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
----------------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
<PAGE>
VAN KAMPEN CLO1, LIMITED
BY: VAN KAMPEN AMERICAN
CAPITAL MANAGEMENT, INC.
as Collateral Manager
By: /s/ Jeffrey W. Maillet
----------------------------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
<PAGE>
L-3 COMMUNICATIONS CORPORATION
THIRD AMENDMENT
TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated
as of February 19, 1998 and entered into by and among L-3 COMMUNICATIONS
CORPORATION, a Delaware corporation (the "BORROWER"), certain of the Lenders
party to the Credit Agreement referred to below on the date hereof (the
"REQUIRED LENDERS"), LEHMAN COMMERCIAL PAPER INC. ("LCPI"), as arranger (in
such capacity, the "ARRANGER"), LCPI, as syndication agent (in such capacity,
the "SYNDICATION AGENT"), LCPI, as documentation agent (in such capacity, the
"DOCUMENTATION AGENT"), and BANK OF AMERICA NT & SA ("BOA"), as administrative
agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT") and as
Issuing Lender (in such capacity, the "Issuing Lender"). All capitalized terms
used herein without definition shall have the same meanings herein as set forth
in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders, the Arranger, the Syndication
Agent, the Documentation Agent, the Administrative Agent and the Issuing Lender
are parties to the Credit Agreement, dated as of April 30, 1997, as previously
amended by that certain First Amendment to Credit Agreement, dated as of August
13, 1997, and that certain Second Amendment to Credit Agreement, dated as of
January 12, 1998 (collectively, the "CREDIT AGREEMENT"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
herein provided.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT
(a) The definition of "Business Day" in subsection 1.1 of the Credit
Agreement is hereby amended by adding the words "or Foreign L/Cs" after the
phrase "relates to Eurodollar Loans" therein.
(b) The definition of "Consolidated EBITDA" in subsection 1.1 of the
Credit Agreement is hereby stricken and amended to read as follows:
""Consolidated EBITDA": as of the last day of any fiscal quarter,
Consolidated Net Income of the Borrower, its Subsidiaries and, without
duplication, the Acquired Businesses (excluding, without duplication,
(x) extraordinary gains and losses in accordance with GAAP, (y) gains
and losses in connection with asset dispositions
<PAGE>
whether or not constituting extraordinary gains and losses and (z)
gains or losses on discontinued operations) for such period, plus (i)
Consolidated Interest Expense of the Borrower, its Subsidiaries and,
without duplication, the Acquired Businesses for such period, plus
(ii) to the extent deducted in computing such Consolidated Net Income
of the Borrower, its Subsidiaries and, without duplication, the
Acquired Businesses, the sum of income taxes, depreciation and
amortization for the four fiscal quarters ended on such date; provided
that for any calculation of Consolidated EBITDA for any fiscal period
ending during the first three full fiscal quarters following March 31,
1997, Consolidated EBITDA shall be deemed to be Consolidated EBITDA
from March 31, 1997 to the last day of such period multiplied by a
fraction the numerator of which is 365 and the denominator of which is
the number of days from March 31, 1997 to the last day of such
period."
(c) The definition of "Consolidated Net Income" in subsection 1.1 of
the Credit Agreement is hereby stricken and amended to read as follows:
""Consolidated Net Income": for any Person and for any fiscal period,
net income of such Person, determined on a consolidated basis in accordance
with GAAP."
(d) The definition of "Excess Cash Flow" in subsection 1.1 of the
Credit Agreement is hereby amended by deleting each reference to "Consolidated
Net Income" and inserting the words "Consolidated Net Income for the Borrower
and its Subsidiaries" therefor.
(e) The definition of "L/C Commitment" in subsection 1.1 of the Credit
Agreement is hereby stricken and amended to read as follows:
""L/C Commitment": $200,000,000."
(f) The definition of "L/C Obligations" in subsection 1.1 of the
Credit Agreement is hereby amended by inserting the words "the Dollar
Equivalent of" at the beginning of each of clause (a) and clause (b) of such
definition.
(g) The definition of "Revolving Credit Commitment" in subsection 1.1
of the Credit Agreement is hereby amended by (i) deleting the word "initially"
in the last line of such definition and (ii) deleting the reference to
"$100,000,000" in the last line of such definition and inserting "$200,000,000"
therefor.
(h) The definition of "Revolving Credit Loan Exposure" in subsection
1.1 of the Credit Agreement is hereby stricken and amended to read as follows:
""Revolving Credit Loan Exposure": with respect to any Lender as of
date of determination, (i) if there are no outstanding Letters of
Credit or Revolving Credit Loans, that Lender's Revolving Credit
Commitment, and (ii) otherwise, the sum of (a) the aggregate
outstanding principal amount of the Revolving Credit Loans of that
Lender
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plus (b) in the event that Lender is an Issuing Lender, the Dollar
Equivalent of the aggregate stated or face amount in respect of all
Letters of Credit issued by that Lender and outstanding (in each case
net of any participations purchased by other Lenders in such Letters
of Credit or any unreimbursed drawings thereunder) plus (c) in the
event that such Lender is the Swing Line Lender, the aggregate
principal amount of Swing Line Loans made by such Lender then
outstanding (net of any participations purchased by other Lenders in
such Swing Line Loans) plus (d) the Dollar Equivalent of the aggregate
amount of all participations purchased by that Lender in any
outstanding Swing Line Loans or Letters of Credit or any unreimbursed
drawings under any Letters of Credit."
(i) The definition of "Subordinated Debt" in subsection 1.1 of the
Credit Agreement is hereby amended by inserting at the end of such definition
the following: "and indebtedness outstanding under the New Subordinated Notes,
if any"
(j) The definition of "Transaction Documents" in subsection 1.1 of the
Credit Agreement is hereby stricken and amended to read as follows:
"Transaction Documents": (i) the Transaction Agreement, the
Schedules thereto and the documents set forth on Schedule IV hereto,
(ii) the Equity Documents, (iii) the Subordinated Debt Documents and
(iv) following the issuance of the New Subordinated Notes, the New
Subordinated Debt Documents."
(k) The following definitions are hereby inserted in subsection 1.1 of
the Credit Agreement in the appropriate alphabetical order:
""Acquired Business": a company or business unit acquired by the
Borrower or any of its Subsidiaries, provided that the Borrower has
delivered to the Administrative Agent historical financial statements
of such company or business unit prepared in accordance with GAAP.
""Agreement Currency": as defined in subsection 10.16(b)."
"Alternative Currency": any currency which as of the time of any
issuance or renewal, as applicable, of a Foreign L/C is freely
tradeable and convertible into Dollars and has been approved as an
"Alternative Currency" for the purposes of this Agreement by the
Issuing Bank."
"Applicable Creditor: as defined in subsection 10.16(b)."
"Calculation Date": with respect to each Foreign L/C, during the
period that such Foreign L/C is outstanding (or the Reimbursement
Obligation in connection therewith has not been fully satisfied) (i)
the last Business Day of a fiscal month, (ii) the date on which such
Letter of Credit is to be issued or renewed by the Issuing Bank, (iii)
the date on
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which any draft presented under such Letter of Credit is paid by the
Issuing Bank, (iv) such other dates as the Borrower may reasonably
request from time to time, and (v) such other dates as the Issuing
Bank or the Administrative Agent may select from time to time,
provided that the Borrower receives prompt notice thereof."
""Consolidated Interest Expense": for any Person, as of the last day
of any fiscal quarter, the amount of interest expense of such Person
for such period, determined on a consolidated basis in accordance
with GAAP for the four fiscal quarters ended on such date; provided
that for any calculation of Consolidated Interest Expense for any
fiscal period ending during the first three full fiscal quarters
following March 31, 1997, Consolidated Interest Expense shall be
deemed to be Consolidated Interest Expense from March 31, 1997 to the
last day of such period multiplied by a fraction the numerator of
which is 365 and the denominator of which is the number of days from
March 31, 1997 to the last day of such period."
""Dollar Equivalent": at any time, (a) as to any amount denominated
in Dollars, the amount thereof at such time, and (b) as to any amount
denominated in an Alternative Currency, the equivalent amount in
Dollars as determined on the basis of the Exchange Rate for the
purchase of Dollars with such Alternative Currency as of the most
recent Calculation Date."
""Domestic L/C": a Letter of Credit denominated in Dollars."
""Exchange Rate": on any day, with respect to any Alternative
Currency, the spot rate at which Dollars are offered on such day by
the Issuing Bank in San Francisco, California for such Alternative
Currency."
""Federal Funds Effective Rate": for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the FRB (including any such
successor, "H.15(519)") for such day opposite the caption "Federal
Funds (Effective)". If on any relevant day the appropriate rate for
such previous day is not yet published in H.15(519), the rate for
such day will be the arithmetic mean of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m.
(New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the
Administrative Agent."
""Foreign L/C": a Letter of Credit denominated in an Alternative
Currency."
""Foreign L/C Obligations": at any time, an amount equal to the sum
of (i) the Dollar Equivalent of the aggregate then undrawn and
unexpired face amount of all then outstanding Foreign L/Cs and (ii)
the Dollar Equivalent of the aggregate amount of all drawings under
Foreign L/Cs which have not then been reimbursed pursuant to
subsection 3.5.
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""Foreign L/C Overdrawn Amount": as defined in subsection 6.16."
""Foreign L/C Sublimit": $30,000,000."
""Judgment Currency": as defined in subsection 10.16 (b)."
""New Subordinated Debt Documents": the documents that govern the
terms of the New Subordinated Notes, if issued."
""New Subordinated Notes": the Borrower's (i) notes issued within six
months of February 19, 1998 pursuant to a public offering registered
under the Securities Act or (ii) notes ("Initial New Subordinated
Notes") issued within six months of February 19, 1998 pursuant to
Rule 144A under the Securities Act or similar exemption from the
registration requirements under the Securities Act and any notes,
having the same terms as the Initial New Subordinated Notes, issued
in exchange for the Initial New Subordinated Notes as contemplated by
the documents governing the issuance of the Initial New Subordinated
Notes, in each case expressly subordinate by their terms to the
obligations of the Credit Parties under this Agreement and each other
Credit Document and otherwise in form and substance satisfactory to
the Agents in all respects."
""Reimbursement Amount": as defined in subsection 3.5(a)."
""Securities Act": Securities Act of 1933, as amended."
""Wide Band Assets": as defined in subsection 7.2(k)."
(l) Subsection 2.6(b)(v) of the Credit Agreement is hereby stricken
and amended to read as follows:
"(v) If after giving effect to (i) any reduction of the
Revolving Credit Commitments under subsection 2.4, 2.5 or 2.6 or (ii)
any recalculation of the Exchange Rate pursuant to subsection 3.9, the
aggregate outstanding principal amount of Swing Line Loans plus the
aggregate outstanding principal amount of Revolving Credit Loans plus
the aggregate outstanding amount of L/C Obligations shall exceed the
aggregate amount of the Revolving Credit Commitments, such reduction
or recalculation shall be accompanied by prepayment in the amount of
such excess to be applied (x) first, to the outstanding Swing Line
Loans and (y) second, to outstanding Revolving Credit Loans (in each
case, together with any amounts payable under subsection 2.16));
provided that if the aggregate principal amount of Swing Line Loans
and Revolving Credit Loans then outstanding is less than the amount of
such excess (because Letters of Credit constitute a portion of such
excess), the Borrower shall immediately, without notice or demand, to
the extent of the balance of such excess, replace outstanding Letters
of Credit and/or deposit an amount (but in no event greater than such
balance) in a cash collateral account opened by the Administrative
Agent for the benefit of the Revolving Credit Lenders
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(such deposit to be in Dollars with respect to Domestic L/Cs and the
applicable Alternative Currency with respect to Foreign L/Cs). The
Borrower hereby grants to the Administrative Agent, for the benefit of
the Issuing Lender and the L/C Participants, a security interest in
such cash collateral to secure all obligations of the Borrower under
this Agreement and the other Credit Documents. Any amounts deposited
in such accounts shall be released to the Borrower on any Calculation
Date on which the aggregate outstanding principal amount of Swing Line
Loans plus the aggregate outstanding principal amount of Revolving
Credit Loans plus the aggregate outstanding amount of L/C Obligations
equals or is less than the aggregate amount of the Revolving Credit
Commitments; provided that no Default or Event of Default has occurred
and is continuing."
(m) Subsection 2.12(a) of the Credit Agreement is hereby amended by
(i) deleting the phrase ", fees or otherwise," in the third sentence of such
subsection and inserting the phrase "(whether in respect of Domestic L/Cs or
Foreign L/Cs), fees, expenses or otherwise," therefor and (ii) inserting at the
end of the third sentence of such subsection the phrase "; provided, that, with
respect to any Reimbursement Obligations of the Borrower arising from the
presentment to the Issuing Lender of a draft under a Foreign L/C, the Borrower
may make payment in the applicable Alternative Currency if such payment is
received by the Issuing Bank on the date such draft is paid by the Issuing
Bank".
(n) Section 3 of the Credit Agreement is hereby stricken in its
entirety and amended to read as follows:
"SECTION 3 LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and
conditions hereof, the Issuing Lender, in reliance on the agreements
of the Revolving Credit Lenders set forth in subsection 3.4(a), agrees
to issue letters of credit ("Letters of Credit") for the account of
the Borrower on any Business Day during the Commitment Period in such
form as may be approved from time to time by the Issuing Lender;
provided that the Issuing Lender shall have no obligation to issue any
Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment, (ii) the Foreign L/C
Obligations would exceed the Foreign L/C Sublimit or (iii) the
Available Commitment with respect to Revolving Credit Loans of all
Revolving Credit Lenders less the aggregate principal amount of the
Swing Line Loans then outstanding would be less than zero.
(b) Each Domestic L/C shall (i) be denominated in
Dollars, (ii) be a standby letter of credit issued to support
obligations of the Borrower or any of its Subsidiaries, contingent or
otherwise and (iii) expire no later than the fifth Business Day prior
to the Revolving Loan Termination Date.
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(c) Each Foreign L/C shall (i) be denominated in an
Alternative Currency, (ii) be a standby letter of credit issued to
support obligations of the Borrower or any of its Subsidiaries,
contingent or otherwise, and (iii) expire no later than the fifth
Business Day prior to the Revolving Loan Termination Date. For
purposes of this Agreement, the amount deemed outstanding under each
Foreign L/C at any time, and the amount of the Borrower's
Reimbursement Obligations under subsection 3.5 for any amounts paid by
the Issuing Lender in connection with any Foreign L/C, shall be the
Dollar Equivalent, as determined on the most recent Calculation Date,
of (x) such Letter of Credit or (y) the Reimbursement Amount (as
defined in Subsection 3.5(a)), as applicable.
(d) Each Letter of Credit shall be subject to the
Uniform Customs and, to the extent not inconsistent therewith,
Domestic L/Cs shall also be subject to the laws of the State of New
York.
(e) The Issuing Lender shall not at any time be
obligated to issue any Letter of Credit hereunder if (i) such issuance
would conflict with, or cause the Issuing Lender or any L/C
Participant to exceed any limits imposed by, any applicable
Requirement of Law or any policies of the Issuing Lender or (ii) in
the case of any Foreign L/C, it has determined that it cannot provide
such Letter of Credit in the applicable Alternative Currency.
3.2 Procedure for Issuance of Letters of Credit. The
Borrower may from time to time request that the Issuing Lender issue a
Letter of Credit at any time prior to the fifth Business Day prior to
the Revolving Loan Termination Date by delivering to the Issuing
Lender with a copy to the Administrative Agent at its address for
notices specified herein an Application therefor, completed to the
satisfaction of the Issuing Lender, and such other certificates,
documents and other papers and information as the Issuing Lender may
reasonably request. Upon receipt of any Application, the Issuing
Lender will process such Application and the certificates, documents
and other papers and information delivered to it in connection
therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event
shall the Issuing Lender be required to issue any Letter of Credit
earlier than three Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such
Letter of Credit to the beneficiary thereof or as otherwise may be
agreed by the Issuing Lender and the Borrower. The Issuing Lender
shall furnish a copy of such Letter of Credit to the Borrower and the
Administrative Agent (with copies for each Lender) promptly following
the issuance thereof.
3.3 Fees, Commissions and Other Charges. (a) The
Borrower shall pay to the Administrative Agent, for the account of the
Issuing Lender and the L/C Participants, a letter of credit fee with
respect to each Letter of Credit, computed for the period from and
including the date of issuance of such Letter of Credit to the
expiration
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date of such Letter of Credit at a rate per annum equal to the
Applicable Margin then in effect for Eurodollar Loans, of the Dollar
Equivalent of the aggregate face amount of Letters of Credit
outstanding, payable in arrears on each L/C Fee Payment Date and on
the Revolving Loan Termination Date; provided, that, with respect to
any Foreign L/C, the Dollar Equivalent of the face amount of such
Letter of Credit shall be recalculated on each Calculation Date during
the period that such Letter of Credit is outstanding. Such fee shall
be payable to the Administrative Agent to be shared ratably among the
Revolving Credit Lenders in accordance with their respective
Commitment Percentages with respect to Revolving Credit Loans. In
addition, the Borrower shall pay to the Issuing Lender, for its sole
account, a fee equal to 0.1250% per annum of the Dollar Equivalent of
the aggregate face amount of outstanding Letters of Credit payable
quarterly in arrears on each L/C Fee Payment Date and on the Revolving
Loan Termination Date; provided, that, with respect to any Foreign
L/C, the Dollar Equivalent of the face amount of such Letter of Credit
shall be recalculated on each Calculation Date during the period that
such Letter of Credit is outstanding.
(b) In addition to the foregoing fees and
commissions, the Borrower shall pay or reimburse the Issuing Lender
for such normal and customary costs and expenses as are incurred or
charged by the Issuing Lender in issuing, effecting payment under,
amending or otherwise administering any Letter of Credit.
(c) The Administrative Agent shall, promptly
following its receipt thereof, distribute to the Issuing Lender and
the L/C Participants all fees and commissions received by the
Administrative Agent for their respective accounts pursuant to this
subsection.
3.4 L/C Participation. (a) The Issuing Lender
irrevocably agrees to sell and hereby sells to each L/C Participant,
and, to induce the Issuing Lender to issue Letters of Credit
hereunder, each L/C Participant irrevocably agrees to accept and
purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such
L/C Participant's Commitment Percentage with respect to Revolving
Credit Loans from time to time in effect in the Issuing Lender's
obligations and rights under each Letter of Credit issued hereunder
and the amount of each draft paid by the Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Lender that, if a draft is paid under any Letter of Credit for
which the Issuing Lender is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand in Dollars at the Issuing
Lender's address for notices specified herein an amount equal to such
L/C Participant's then Commitment Percentage with respect to Revolving
Credit Loans of the Dollar Equivalent of the amount of such draft
(determined on the date such draft is paid), or any part thereof,
which is not so reimbursed; provided that, if such demand is made
prior to 11:00 A.M., New York City time, on a Business Day, such L/C
Participant shall make such payment to the Issuing Lender prior to the
end of
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such Business Day and otherwise such L/C Participant shall make such
payment on the next succeeding Business Day.
(b) If any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to subsection 3.4(a) in
respect of any unreimbursed portion of any payment made by the Issuing
Lender under any Letter of Credit is paid to the Issuing Lender within
three Business Days after the date such payment is due, such L/C
Participant shall pay to the Issuing Lender on demand an amount equal
to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate, as quoted by the Issuing Lender, during
the period from and including the date such payment is required to the
date on which such payment is immediately available to the Issuing
Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant
pursuant to subsection 3.4(a) is not in fact made available to the
Issuing Lender by such L/C Participant within three Business Days
after the date such payment is due, the Issuing Lender shall be
entitled to recover from such L/C Participant, on demand, such amount
with interest thereon calculated from such due date at the rate per
annum applicable to Base Rate Loans hereunder. A certificate of the
Issuing Lender submitted to any L/C Participant with respect to any
amounts owing under this subsection shall be conclusive in the absence
of manifest error.
(c) Whenever, at any time after the Issuing Lender
has made payment under any Letter of Credit and has received from any
L/C Participant its pro rata share of such payment in accordance with
subsection 3.4(a), the Issuing Lender receives any payment related to
such Letter of Credit (whether directly from the Borrower or
otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the
Issuing Lender will, if such payment is received prior to 11:00 A.M.,
New York City time, on a Business Day, distribute to such L/C
Participant its pro rata share thereof prior to the end of such
Business Day and otherwise the Issuing Lender will distribute such
payment on the next succeeding Business Day; provided, however, that
in the event that any such payment received by the Issuing Lender and
distributed to the L/C Participants shall be required to be returned
by the Issuing Lender, each such L/C Participant shall return to the
Issuing Lender the portion thereof previously distributed by the
Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. (a)
The Borrower agrees to reimburse the Issuing Lender on the same
Business Day on which the Issuing Lender notifies the Borrower of the
date and amount of a draft presented under any Letter of Credit and
paid by the Issuing Lender provided such notice is received by 1:00
P.M., New York City time, on such Business Day, and the next Business
Day if such notice is received after such time. The Issuing Lender
shall provide notice to the Borrower on each Business Day on which a
draft is presented indicating the Dollar Equivalent of the amount of
(i) such draft so paid (and, in the case of a Foreign L/C, the amount
of such draft so paid stated in the applicable Alternative Currency)
and (ii) any
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taxes, fees, charges or other costs or expenses incurred by the
Issuing Lender in connection with such payment ((i) and (ii)
collectively with any interest accruing pursuant to paragraph (b)
below, the "Reimbursement Amount"). Each such payment shall be made to
the Issuing Lender at its address for notices specified herein in
lawful money of the United States of America and in immediately
available funds; provided, that, with respect to any Reimbursement
Obligations of the Borrower arising from the presentment to the
Issuing Lender of a draft under a Foreign L/C, the Borrower may make
payment in the applicable Alternative Currency if such payment is
received by the Issuing Bank on the date such draft is paid by the
Issuing Bank.
(b) Interest shall be payable on the Dollar
Equivalent of any and all amounts remaining unpaid by the Borrower
under this subsection from the date a draft presented under any Letter
of Credit is paid by the Issuing Lender until payment in full (i) at
the rate which would be payable on any Loans that are Base Rate Loans
at such time until such payment is required to be made pursuant to
subsection 3.5(a), and (ii) thereafter, at the rate which would be
payable on any Loans that are Base Rate Loans at such time which were
then overdue.
(c) For the avoidance of doubt, subject to the
provisos in the third sentence of subsection 2.12(a) and the last
sentence of subsection 3.5(a) of this Agreement, all payments due from
the Borrower hereunder in respect of Foreign L/Cs (and Reimbursement
Obligations in connection therewith) shall be made in Dollars as
provided in subsection 2.12 of this Agreement.
3.6 Obligations Absolute. (a) The Borrower's
obligations under subsection 3.5(a) shall be absolute and
unconditional under any and all circumstances and irrespective of any
set-off, counterclaim or defense to payment which the Borrower may
have or have had against the Issuing Lender, any L/C Participant or
any beneficiary of a Letter of Credit.
(b) The Borrower also agrees with the Issuing Lender
that the Issuing Lender shall not be responsible for, and the
Borrower's Reimbursement Obligations under subsection 3.5(a) shall not
be affected by, among other things, (i) the validity or genuineness of
documents or of any endorsements thereon, even though such documents
shall in fact prove to be invalid, fraudulent or forged (unless the
Issuing Lender has knowledge of such invalidity, fraud or forgery),
(ii) any dispute between or among the Borrower and any beneficiary of
any Letter of Credit or any other party to which such Letter of Credit
may be transferred, or (iii) any claims whatsoever of the Borrower
against any beneficiary of such Letter of Credit or any such
transferee.
(c) Neither the Issuing Lender nor any L/C
Participant shall be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with any Letter of Credit, except
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for errors or omissions caused by the Issuing Lender's gross
negligence or willful misconduct.
(d) The Borrower agrees that any action taken or
omitted by the Issuing Lender under or in connection with any Letter
of Credit or the related drafts or documents, if done in the absence
of gross negligence or willful misconduct and in accordance with the
standards of care specified in the Uniform Commercial Code of the
State of New York, shall be binding on the Borrower and shall not
result in any liability of the Issuing Lender or any L/C Participant
to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the Issuing Lender
shall promptly notify the Borrower and the Administrative Agent of the
date and the Dollar Equivalent of the amount thereof (and, in the case
of a Foreign L/C, the amount thereof stated in the applicable
Alternative Currency). If any draft shall be presented for payment
under any Letter of Credit, the responsibility of the Issuing Lender
to the Borrower in connection with such draft shall, in addition to
any payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such
presentment appear on their face to be in conformity with such Letter
of Credit.
3.8 Application. To the extent that any provision of
any Application related to any Letter of Credit is inconsistent with
the provisions of this Section 3, the provisions of this Section 3
shall govern and control.
3.9 Determination of Exchange Rate. On each
Calculation Date with respect to each outstanding Foreign L/C, the
Issuing Bank shall determine the Exchange Rate as of such Calculation
Date with respect to the applicable Alternative Currency and shall
promptly notify the Administrative Agent and the Borrower thereof and
of the Dollar Equivalent of all Foreign L/Cs outstanding on such
Calculation Date. The Exchange Rate so determined shall become
effective on such Calculation Date and shall remain effective until
the next succeeding Calculation Date."
(o) Subsection 4.21 of the Credit Agreement is hereby amended by
inserting at the end of the first sentence of such subsection the phrase "and,
upon consummation of the issuance of the New Subordinated Notes, the
representations and warranties contained in the New Subordinated Debt Documents
will be true and correct in all material respects as of the date of the
respective agreements".
(p) Subsection 5.2(a) of the Credit Agreement is hereby amended by
inserting immediately following the words "as if made on and as of such date"
in such subsection the parenthetical "(including, without limitation, the
representation and warranty set forth in subsection 4.7 of this Agreement with
respect to each of the Subordinated Debt Documents)".
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(q) Subsection 6.2(c) of the Credit Agreement is hereby amended by
deleting the reference to "the chief financial officer" therein and inserting
the words "a Responsible Officer" therefor.
(r) The following shall be added to the Credit Agreement as subsection
6.16 of the Credit Agreement:
"6.16 Foreign L/Cs. Within one (1) Business Day of any day
that the Foreign L/C Obligations exceed the Foreign L/C Sublimit based
on the most recent Calculation Date (such excess, the "Foreign L/C
Overdrawn Amount"), deposit an amount equal to the Foreign L/C
Overdrawn Amount in Dollars in a cash collateral account opened by the
Administrative Agent established for the benefit of the Revolving
Credit Lenders; provided, that the Borrower shall not be required to
make such deposits in such cash collateral account if (i) the Foreign
L/C Overdrawn Amount is equal to or less than 10% of the Foreign L/C
Sublimit, (ii) the Available Commitments with respect to Revolving
Credit Loans of all Revolving Credit Lenders less the aggregate
principal amount of the Swing Line Loans then outstanding exceeds such
Foreign L/C Overdrawn Amount and (iii) the Borrower is otherwise in
compliance with its obligations under this Agreement. The Borrower
hereby grants to the Administrative Agent, for the benefit of the
Issuing Lender and the L/C Participants, a security interest in such
cash collateral to secure all obligations of the Borrower under this
Agreement and the other Credit Documents. Any amounts deposited in
such accounts shall be released to the Borrower on any Calculation
Date on which the Foreign L/C Obligations equal or are less than the
Foreign L/C Sublimit."
(s) The following shall be added to the Credit Agreement as subsection
6.17 of the Credit Agreement:
"6.17 New Subordinated Debt Documents. At least ten Business
Days prior to the date of issuance of the New Subordinated Notes, the
Borrower shall deliver to the Agents copies of the New Subordinated
Debt Documents. The New Subordinated Debt Documents shall be in form
and substance satisfactory to the Agents."
(t) Subsection 7.2(e) of the Credit Agreement is hereby stricken and
amended to read as follows:
"(e) Indebtedness of the Borrower in respect of not more than
(i) $225,000,000 principal amount of Subordinated Notes issued on the
Closing Date and (ii) $150,000,000 principal amount of New
Subordinated Notes; provided that, to the extent that any of the Net
Proceeds of the New Subordinated Notes are used by the Borrower to
prepay any of the Loans, such prepayments shall be subject to the
provisions of Subsection 2.6(iv) of this Agreement (notwithstanding
the fact that such Net Proceeds are not otherwise required to be
applied to the prepayment of the Loans);"
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(u) Subsection 7.2(k) of the Credit Agreement is hereby stricken and
amended to read as follows:
"(k) Up to $30,000,000 of purchase money Indebtedness the
proceeds of which are utilized to acquire the real property (including
improvements thereon) and related assets currently utilized by the Wide Band
Systems division in Salt Lake City, Utah (the "Wide Band Assets"), on terms
reasonably satisfactory to the Agents."
(v) Subsection 7.4(c) of the Credit Agreement is hereby stricken and
amended to read as follows:
"(c) guarantees made by the Subsidiaries of the Borrower
pursuant to the Subordinated Debt Documents and the New Subordinated
Debt Documents; provided, that any guarantee of the New Subordinated
Notes shall be expressly subordinated to all obligations of the Credit
Parties under this Agreement and each other Credit Document;"
(w) Subsection 7.4(g) of the Credit Agreement is hereby amended by
deleting the reference to "$10,000,000" in the last line of such subsection and
inserting "$30,000,000" therefor.
(x) Subsection 7.8 of the Credit Agreement is hereby amended by
deleting the reference to "27,500,000" for Fiscal Year 1998 and inserting
"35,000,000" therefor.
(y) Subsection 7.9(l) of the Credit Agreement is hereby amended by (i)
deleting the words "for performance" in clause (ii) of such subsection, (ii)
adding at the end of such subsection the phrase "; provided, the aggregate
amount of the Investment pursuant to this subsection 7.9(l) (cash plus assumed
letters of credit and/or other indebtedness) may exceed $100.0 million by $10.0
million" immediately following the phrase "Allied Signal ("Ocean Systems")"
therein, and (iii) deleting the word "and".
(z) Subsection 7.9 of the Credit Agreement is hereby further amended
by (i) replacing the period at the end of subsection 7.9(m) with a semi-colon
and (ii) adding the following to the end of subsection 7.9:
"(n) Investments in an aggregate amount not exceeding $59.4
million (including all fees and expenses related thereto) made to
acquire substantially all of the assets of ILEX Systems Inc. pursuant
to the Asset Purchase Agreement between the Borrower and FAP Trust,
dated as of February 9, 1998;
(o) Investments in an aggregate amount not exceeding $30.0
million (including all fees and expenses related thereto) made to
acquire the Wide Band Assets, on terms reasonably satisfactory to the
Agents; and
13
<PAGE>
(p) Investments made to acquire (i) all of the Capital Stock,
or all or substantially all of the assets, of any Person (other than
the Borrower or any of its Subsidiaries) that is engaged in a Similar
Business, or (ii) all or substantially all of the assets of any
division of any Person (other than the Borrower or any of its
Subsidiaries) that is engaged in a Similar Business; provided, that at
the time of each such Investment (both before and after giving effect
to such Investment), there shall exist no Default or Event of Default
and the aggregate consideration paid in connection with all
Investments made pursuant to this subsection 7.9(p) shall not exceed
$100,000,000; provided, further, that in connection with each
individual, or series of related, Investments made pursuant to this
subsection 7.9(p) with an aggregate consideration (i) equal to or less
than $35,000,000, the Borrower shall deliver to the Administrative
Agent, on or prior to the date which is ten Business Days prior to the
consummation of such Investment or Investments, a certificate of a
Responsible Officer that sets forth calculations that demonstrate the
Borrower's compliance, after giving pro forma effect to such
Investment or Investments, with each of the covenants set forth in
this subsection 7 and (ii) greater than $35,000,000, the Borrower
shall provide the Lenders, on or prior to the consummation of such
Investment or Investments, with information and pro forma calculations
in connection with such Investment or Investments as the Lenders may
reasonably request and the Borrower shall have received the prior
written consent of the Required Lenders regarding the making of such
Investment or Investments."
(aa) Subsection 7.10(a) of the Credit Agreement is hereby amended by
(i) deleting the reference to "(b)" after the words "any Subordinated Debt or"
therein and (ii) inserting the words "or New Subordinated Debt Documents"
immediately following the reference to "Subordinated Debt Documents" therein.
(ab) Subsection 7.14 of the Credit Agreement is hereby amended by
inserting the words "and the New Subordinated Debt Documents" immediately
following the reference to "Subordinated Debt Documents" therein.
(ac) Subsection 7.16 of the Credit Agreement is hereby amended by
inserting the parenthetical "(including, without limitation, the New
Subordinated Debt Documents)" immediately following the fourth reference to
"Indebtedness" therein.
(ad) Subsection 8(c) of the Credit Agreement is hereby amended by
deleting the phrase "subsection 6.5(a)" therein and inserting the phrase
"subsections 6.5(a) or 6.16" therefor.
(ae) The penultimate paragraph of Section 8 of the Credit Agreement is
hereby amended by inserting the words "the Dollar Equivalent of" immediately
following the words "an amount equal to" in the first sentence of such
paragraph.
14
<PAGE>
(af) The following shall be added to the Credit Agreement as
subsection 10.16 thereof:
"10.16 Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum
owing hereunder in one currency into another currency, each party
hereto agrees, to the fullest extent that it may effectively do so,
that the rate of exchange used shall be that at which in accordance
with normal banking procedures in the relevant jurisdiction the first
currency could be purchased with such other currency on the Business
Day immediately preceding the date on which final judgment is given.
(b) The obligations of the Borrower in respect of any sum due
to any party hereto or any holder of the obligations owing hereunder
(the "Applicable Creditor") shall, notwithstanding any judgment in a
currency (the "Judgment Currency") other than the currency in which
such sum is stated to be due hereunder (the "Agreement Currency"), be
discharged only to the extent that, on the Business Day following
receipt by the Applicable Creditor of any sum adjudged to be so due in
the Judgment Currency, the Applicable Creditor may in accordance with
normal banking procedures in the relevant jurisdiction purchase the
Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to
the Applicable Creditor in the Agreement Currency, the Borrower
agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Applicable Creditor against such loss. The
obligations of the Borrower contained in this subsection 10.16 shall
survive the termination of this Agreement and the payment of all other
amounts owing hereunder."
(ag) Schedule I to the Credit Agreement is hereby replaced with the
amended Schedule I attached hereto.
SECTION 2. WAIVERS
The Required Lenders hereby waive compliance by the Borrower with (i)
the provisions of subsection 2.6(b)(iii) of the Credit Agreement for the fiscal
year of the Borrower ended December 31, 1997 and (ii) the Borrower's obligation
to deliver to the Administrative Agent the Supply Agreement and the Interim
Services Agreement pursuant to subsection 6.15(a) of the Credit Agreement.
SECTION 3. CONDITIONS TO EFFECTIVENESS
Sections 1 and 2 of this Amendment shall become effective only upon
the prior satisfaction of all of the following conditions precedent (the date
of satisfaction of such conditions being referred to herein as the "Third
Amendment Effective Date"):
(a) The Borrower shall have delivered to the Administrative Agent
executed copies of this Amendment.
15
<PAGE>
(b) The Required Lenders, the Agents and the Issuing Lender shall have
each delivered to the Administrative Agent an executed original or facsimile of
a counterpart of this Amendment.
(c) The Borrower shall have delivered to the Administrative Agent
executed copies of all documents, instruments and agreements, if any, required
in order for the Borrower and its Subsidiaries to be in full compliance with
the requirements of subsection 6.10 of the Credit Agreement as of the Third
Amendment Effective Date (without giving effect to the thirty (30) day delivery
period referenced in such subsection 6.10, but after giving effect to any
acquisitions that are consummated on or prior to such date); provided that (i)
any Mortgages (and related documentation), (ii) legal opinions and (iii)
security documentation regarding newly-acquired Intellectual Property required
to be delivered to the Administrative Agent pursuant to this subsection (c) may
be delivered to the Administrative Agent within thirty (30) days after the
Third Amendment Effective Date. Filings of UCC financing statements may also be
accomplished during such thirty (30) day period, provided that they are
executed and delivered to the Administrative Agent on or prior to the Third
Amendment Effective Date. The time periods set forth in this subsection (c) may
be extended by the Agents in their discretion, with notice thereof to each of
the Lenders.
(d) The Administrative Agent shall have received evidence satisfactory
to the Administrative Agent that the Boards of Directors of Holdings and the
Borrower have duly authorized the execution, delivery and performance of (i)
this Amendment, (ii) the acquisition of Southern California Microwave, Inc. and
the assets of the satellite transmission services division of California
Microwave, Inc. and (iii) any other agreements and documents to be delivered to
the Administrative Agent on the Third Amendment Effective Date.
(e) The Administrative Agent shall have received evidence satisfactory
to the Administrative Agent that the Board of Directors of Southern California
Microwave, Inc. has duly authorized the execution, delivery and performance of
the Subsidiary Guarantees and the Subsidiary Pledge and Security Agreement.
(f) The Administrative Agent shall have received a legal opinion
addressed to the Agents, the Arranger, the Lenders and the Issuing Bank from
Simpson Thacher & Bartlett, counsel to the Borrower, in form and substance
reasonably satisfactory to the Administrative Agent.
(g) The Borrower shall have executed Revolving Credit Notes for the
benefit of each Revolving Credit Lender in such amount as set forth across from
such Revolving Credit Lender's name on Schedule I to the Credit Agreement (as
amended pursuant to this Amendment).
16
<PAGE>
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce the Required Lenders, the Agents and the Issuing
Lender to enter into this Amendment and to amend the Credit Agreement in the
manner provided herein, the Borrower represents and warrants to each Lender,
each Agent and the Issuing Lender that the following statements are true,
correct and complete:
(a) Corporate Power and Authority. The Borrower has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement").
(b) Authorization of Amendment. The execution and delivery of this
Amendment has been duly authorized by all necessary corporate action on the
part of the Borrower.
(c) No Conflict. The execution and delivery by the Borrower of this
Amendment and the performance by the Borrower of the Amended Agreement does not
and will not (i) violate any provision of any law or any governmental rule or
regulation applicable to the Borrower or any of its Subsidiaries, the
Certificate or Articles of Incorporation or Bylaws of the Borrower or any of
its Subsidiaries or any order, judgment or decree of any court or other agency
of government binding on the Borrower or any of its Subsidiaries, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any contractual obligation of the Borrower or any of its
Subsidiaries (including, without limitation, the Indenture) or (iii) result in,
or require the creation of, any Lien upon any of the properties or assets of
the Borrower or any of its Subsidiaries (other than Liens created under any of
the Credit Documents in favor of the Administrative Agent on behalf of the
Lenders).
(d) Governmental Consents. The execution and delivery by the Borrower
of this Amendment and the performance by the Borrower of the Amended Agreement
by the Borrower does not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal, state
or other governmental authority or regulatory body.
(e) Binding Obligation. This Amendment and the Amended Agreement have
been duly executed and delivered by the Borrower and, when executed and
delivered, will be the legally valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
(f) Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 4 of the
Credit Agreement (as expressly amended hereby) are and will be true, correct
and complete in all material respects on and as of the Third Amendment
Effective Date to the same extent as though made on and as of that
17
<PAGE>
date, except to the extent such representations and warranties specifically
relate to an earlier date.
(g) Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a potential Event of
Default.
SECTION 5. MISCELLANEOUS
(a) Effect of this Amendment. On and after the Third Amendment
Effective Date, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Credit Documents to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to the
Credit Agreement shall mean and be a reference to the Amended Agreement. Except
as specifically amended or waived by this Amendment, the Credit Agreement and
the other Credit Documents shall remain in full force and effect and are hereby
ratified and confirmed. The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a waiver
of any provision of, or operate as a waiver of any right, power or remedy of
the Administrative Agent or any Lender under, the Credit Agreement or any of
the other Credit Documents.
(b) Fees and Expenses. The Borrower acknowledges that all costs, fees
and expenses as described in Section 9 of the Credit Agreement incurred by the
Agents and their counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be paid by the Borrower.
(c) Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive
effect.
(d) GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
(e) SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AMENDMENT AND THE OTHER CREDIT
DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT
OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE
18
<PAGE>
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY
BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN
SUBSECTION 10.2 OF THE CREDIT AGREEMENT OR AT SUCH OTHER ADDRESS OF
WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT
THERETO;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(v) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES.
(f) Acknowledgements. The Borrower hereby acknowledges that:
(i) it has been advised by counsel in the
negotiation, execution and delivery of this Agreement;
(ii) none of the Arranger, the Agents nor any Lender
has any fiduciary relationship with or duty to the Borrower arising
out of or in connection with this Agreement, and the relationship
between any of the Agents and the Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(iii) no joint venture is created hereby or
otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrower and the Lenders.
19
<PAGE>
(g) WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS, THE ARRANGER, THE
LENDERS AND THE OTHER PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEG AL ACTION OR PROCEEDING RELATING TO THIS
AMENDMENT OR ANY OTH ER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
(h) Confidentiality. Each Lender agrees to keep confidential all
non-public information provided to it by the Borrower pursuant to this
Agreement that is designated by the Borrower in writing as confidential
(excluding any such information already in the possession of such Lender or
provided to such Lender by a third party not in violation of this Agreement
which, in either case, is not, to the knowledge of such Lender, subject to a
confidentiality agreement); provided that nothing herein shall prevent any
Lender from disclosing any such information (i) to any Agent or any other
Lender or any of its Affiliates, (ii) to any Transferee or prospective
Transferee or to any direct or indirect contractual counterparties in swap
agreements or such contractual counterparties' professional advisors which
receives such information and agrees to be bound by the confidentiality
provisions hereof, (iii) to its employees, directors, agents, attorneys,
accountants and other professional advisors, (iv) upon the request or demand of
any Governmental Authority having jurisdiction over such Lender, (v) in
response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (vi) which has been
publicly disclosed other than in breach of this Agreement, or (vii) in
connection with the exercise of any remedy hereunder.
(i) Counterparts; Effectiveness. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original (whether by facsimile or otherwise), but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Amendment shall become effective upon the execution of a
counterpart hereof by the Borrower, the Required Lenders, the Syndication
Agent, the Documentation Agent, the Administrative Agent, the Arranger and the
Issuing Lender and receipt by the Borrower and the Administrative Agent of
written or telephonic notification of such execution and authorization of
delivery thereof.
[Signature Pages Follow]
20
<PAGE>
L-3 COMMUNICATIONS CORPORATION
By: /s/ Lawrence W. O'Brien
----------------------------------------
Name: Lawrence W. O'Brien
Title: Vice President and Treasurer
LEHMAN COMMERCIAL PAPER INC.,
as Documentation Agent, Syndication Agent,
Arranger and as a Lender
By:
----------------------------------------
Name:
Title:
LEHMAN SYNDICATED LOANS, INC.
as a Lender
By:
----------------------------------------
Name:
Title:
<PAGE>
L-3 COMMUNICATIONS CORPORATION
By:
----------------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER INC.,
as Documentation Agent, Syndication Agent,
Arranger and as a Lender
By: /s/ Michele Swanson
----------------------------------------
Name: Michele Swanson
Title: Authorized Signatory
LEHMAN SYNDICATED LOANS, INC.
as a Lender
By: /s/ Dennis J. Dee
----------------------------------------
Name:
Title:
<PAGE>
BANK OF AMERICA NT & SA
as Administrative Agent
By:
----------------------------------------
Name:
Title:
BANK OF AMERICA NT & SA
as a Lender
By: /s/ Linda A. Carper
----------------------------------------
Name: Linda a. Carper
Title: Managing Director
<PAGE>
THE BANK OF NEW YORK
as a Lender
By: /s/ Kenneth P. Sneider, Jr.
----------------------------------------
Name: Kenneth P. Sneider, Jr.
Title: Vice President
<PAGE>
THE BANK OF NOVIA SCOTIA,
as Co-Agent and as a Lender
By: /s/ J.R. Trimble
----------------------------------------
Name: J.R. Trimble
Title: Senior Relationship Manager
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
as a Lender
By: /s/ David McLaughlin
----------------------------------------
Name: David Mclaughlin
Title: Vice President
<PAGE>
BANKBOSTON N.A.
By: /s/ Gregory R.D. Clark
----------------------------------------
Name: Gregory R.D. Clark
Title: Managing Director
<PAGE>
BHF-BANK AKTIEGESELLSCHAFT
GRAND CAYMAN BRANCH
By: /s/ Dan Dobrjanskyj
----------------------------------------
Name: Dan Dobrjanskyj
Title: Assistant Vice President
By: /s/ Ralph Dellarocca
----------------------------------------
Name: Ralph Dellarocca
Title: Assistant Treasurer
<PAGE>
CITIBANK, N.A.
as Co-Agent and as a Lender
By: /s/ Hans L. Christensen
----------------------------------------
Name: Hans L. Christensen
Title: Vice President
<PAGE>
CORESTATES BANK, N.A.
as a Lender
By: /s/ John D. Brady
----------------------------------------
Name: John D. Brady
Title: Vice President
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
as Co-Agent and as a Lender
By: /s/ Vladimir Labun
----------------------------------------
Name: Vladimir Labun
Title: First Vice President-Manager
<PAGE>
CRESCENT/MACHI PARTNERS L.P.
By: TCW Asset Management Company,
its Investment Manager,
as a Lender
By: /s/ Justin L. Driscoll
----------------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
as Co-Agent and as a Lender
By: /s/ Amy L. Robbins
----------------------------------------
Name: Amy L. Robbins
Title: Vice President
<PAGE>
FLEET NATIONAL BANK
as Co-Agent and Lender
By: /s/ Roger C. Boucher
----------------------------------------
Name: Roger C. Boucher
Title: Vice President
<PAGE>
THE FUJI BANK, LIMITED NEW YORK BRANCH
as Co-Agent and Lender
By: /s/ Teiji Teramoto
----------------------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
<PAGE>
THE ING CAPITAL SENIOR SECURED
HIGH INCOME FUND, L.P.
as a Lender
By: /s/ Kathleen A. Lenarcic
----------------------------------------
Name: Kathleen A. Lenarcic
Title: Vice President & Portfolio Manager
<PAGE>
ING HIGH INCOME PRINCIPALNERS.
PRESEVATION FUND HOLDING, DC
By: ING CAPITAL ADVISORS, INC.,
AS INVESTMENT ADVISOR
By: /s/ Kathleen A. Lenarcic
Name: Kathleen A. Lenarcic
Title: Vice President & Portfolio
<PAGE>
KZH-CRESCENT CORPORATION
By: /s/ Virginia R. Conway
----------------------------------------
Name: Virginia R. Conway
Title: Authorized Agent
<PAGE>
KZH-ING-1 CORPORATION
By: Virginia R. Conway
----------------------------------------
Name: Virginia R. Conway
Title: Aurthorized Agent
<PAGE>
KZH-SOLEIL CORPORATION
By: Virginia R. Conway
----------------------------------------
Name: Virginia R. Conway
Title: Authorized Agent
<PAGE>
MMARINE MIDLAND BANKNC.
AS CO-AGENT AND AS A LENDER
By: /s/ M. F. Brown
----------------------------------------
Name: M. F. Brown
Title: Authorized Signatory
<PAGE>
MARINE LYNCH SENIOR FLOATING
RATE FUND, INC.,as a Lender
AS A LENER
By: /s/ Gilles Marchand, CFA
----------------------------------------
Name: Gilles Marchand, CFA
Title: Authorized Signatory
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ James R. Dingler
----------------------------------------
Name: James R. Dingler
Title: Director
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION
as a Lender
By: /s/ Beatrice Kossodo
----------------------------------------
Name: Beatrice Kossodo
Title: Senior Vice President
<PAGE>
NATEXIS BANQUE BFCE
By: /s/ William C. Maier
----------------------------------------
Name: William C. Maier
Title: Vp-Group Manager
By: /s/ G. Kevin Dooley
----------------------------------------
Name: G. Kevin Dooley
Title: Vice President
<PAGE>
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO ( A UNIT OF THE CHASE MANHATTAN BANK)
By: /s/ Richard W. Stewart
----------------------------------------
Name: Richard W. Stewart CPA
Title: Managing Directorive
<PAGE>
PAMCO CAYMAN LTD.T
By: Protective Asset Management, L.L.C.,
as Collateral Manager
By: /s/ James Dondero, CFA, CPA
----------------------------------------
Name: James Dondero, CFA, CPA
Title: President
Protective Asset Management Company
<PAGE>
PARIBAS CAPITAL FUNDING LLC
as a Lender
By: /s/
----------------------------------------
Name:
Title:
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
as a Lender
By: /s/ Gary W. Tyrrell
----------------------------------------
Name: Gary W. Tyrrell
Title: Vice President
<PAGE>
ROYALTON COMPANY
as a Lender
By: /s/ Raymond Kennedy
----------------------------------------
Name: Raymond Kennedy
Title: Vice President
<PAGE>
SENIOR DEBT PORTFOLIO
c/o BOSTON MANAGEMENT AND RESEARCH
By: /s/ Scott H. Page
----------------------------------------
Name: Scott H. Page
Title: Vice President
<PAGE>
SKANDINAVISKA ENSKILDA BANKEN
CORPORATION
By: /s/ Perry Vavoules
----------------------------------------
Name: Sverten Jokanson
Title: Vice President
By: /s/ Philip Montemurro
----------------------------------------
Name: Philip Montemurro
Title: Vice President
<PAGE>
SOCIETE GENERALE NEW YORK BRANCH
By: /s/ Alan W. Einson
----------------------------------------
Name: Alan W. Einson
Title: Vice President
<PAGE>
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Perry Vavoules
----------------------------------------
Name: Perry Vavoules
Title: Senior Vice President
<PAGE>
U.S BANK NATIONAL ASSOCIATION
as a Lender
By: /s/ Greg Wilson
----------------------------------------
Name: Grey Wilson
Title: Commerical Banking Officer
<PAGE>
VAN kAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By: /s/ Jeffery W. Maillet
----------------------------------------
Name: Jeffery W. Maillet
Title: SR. Vice PRES. & Director
<PAGE>
VAN KAMPEN CLO I, LIMITED
By: Van Kampen American Capital
Management, Inc., as Collateral Manager
By: /s/ Jeffery W. Maillet
---------------------------------------
Name: Jeffery W. Maillet
Title: Senior Vice President and Director
<PAGE>
Exhibit A-1
to Credit Agreement
FORM OF TRANCHE A TERM NOTE
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE
MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT
PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$_________ New York, New York
April 30, 1997
FOR VALUE RECEIVED, the undersigned, L-3 Communications Corporation, a
Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to
the order of _____________ (the "Lender") at the office of Bank of America NT &
SA ("BOA"), as administrative agent (in such capacity, the "Administrative
Agent"), located at 1850 Gateway Boulevard, Concord, California, 94520, in
lawful money of the United States of America and in immediately available funds,
on the Termination Date the principal amount of (a) _____________ DOLLARS
($________), or, if less, (b) the aggregate unpaid principal amount of all
Tranche A Term Loans made by the Lender to the Borrower pursuant to subsection
2.1 of the Credit Agreement, as hereinafter defined. The Borrower further agrees
to pay interest in like money at such office on the unpaid principal amount
hereof from time to time outstanding at the rates and on the dates specified in
subsections 2.7 and 2.9 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type, and amount of each
Tranche A Term Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to Mother Type and, in the
case of Eurodollar Loans, the length of each interest Period with respect
thereto. Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
shall not affect the obligations of the Borrower in respect of such Tranche A
Term Loan.
This Note (a) is one of the Tranche A Term Notes referred to in the Credit
Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
Lender, the other banks and financial institutions from time to time parties
thereto, Lehman Commercial Paper Inc. ("LCPI") as Arranger, Syndication Agent
and Documentation Agent, and the Administrative Agent (b) is subject to the
provisions of the Credit Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Credit Agreement. This Note is
secured and guaranteed as provided in the Credit Documents. Reference is hereby
made to the Credit Documents for a description of the properties and assets in
which a security interest has been granted, the nature and extent of the
security and the guarantees, the terms and
<PAGE>
2
conditions upon which the security interests and each guarantee were granted and
the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
<PAGE>
3
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
L-3 COMMUNICATIONS CORPORATION
By:________________________________
Name:
Title:
<PAGE>
Schedule A
to Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Amount of Amount of Base Unpaid
Amount of Amount Principal of Rate Loans Principal
Base Rate Converted to Base Rate Converted to Balance of Notation
Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Base Rate Loans Made By
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
===========================================================================================
</TABLE>
<PAGE>
Schedule B
to Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
Amount of
Interest Amount of Eurodollar Unpaid
Amount Period and Principal of Loans Principal
Amount of Converted to Eurodollar Eurodollar Converted Balance of
Eurodollar Eurodollar Rate with Loans to Base Eurodollar Notation
Date Loans Loans Respect Thereto Repaid Rate Loans Loans Made By
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
===========================================================================================
</TABLE>
<PAGE>
Exhibit A-2
to Credit Agreement
FORM OF TRANCHE B TERM NOTE
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE
RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE
TERMS OF SUCH CREDIT AGREEMENT.
$_________________ New York, New York
April 30, 1997
FOR VALUE RECEIVED, the undersigned, L-3 Communications Corporation, a
Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to
the order of ____________ (the "Lender") at the office of Bank of America NT &
SA ("BOA"), as administrative agent (in such capacity, the "Administrative
Agent"), located at 1850 Gateway Boulevard, Concord, California, 94520, in
lawful money of the United States of America and in immediately available funds,
on the Termination Date the principal amount of (a) _____________ DOLLARS
($_____), or, if less, (b) the aggregate unpaid principal amount of all Tranche
B Term Loans made by the Lender to the Borrower pursuant to subsection 2.1 of
the Credit Agreement, as hereinafter defined. The Borrower further agrees to pay
interest in like money at such office on the unpaid principal amount hereof from
time to time outstanding at the rates and on the dates specified in subsections
2.7 and 2.9 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type, and amount of each
Tranche B Term Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of Eurodollar Loans, the length of each Interest Period with respect
thereto. Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
shall not affect the obligations of the Borrower in respect of such Tranche B
Term Loan.
This Note (a) is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
Lender, the other banks and financial institutions from time to time parties
thereto, Lehman Commercial Paper Inc. ("LCPI") as Arranger, Syndication Agent
and Documentation Agent, and the Administrative Agent (b) is subject to the
provisions of the Credit Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Credit Agreement. This Note is
secured and guaranteed as provided in the Credit Documents. Reference is hereby
made to the Credit Documents for a description of the properties and assets in
which a security interest has been granted, the nature and extent of the
security and the guarantees, the terms and
<PAGE>
2
conditions upon which the security interests and each guarantee were granted and
the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
<PAGE>
3
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
L-3 COMMUNICATIONS CORPORATION
By: ___________________________________
Name:
Title:
<PAGE>
Schedule A
to Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Amount of Amount of Base Unpaid
Amount of Amount Principal of Rate Loans Principal
Base Rate Converted to Base Rate Converted to Balance of Notation
Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Base Rate Loans Made By
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
===========================================================================================
</TABLE>
<PAGE>
Schedule B
to Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
Amount of
Interest Amount of Eurodollar Unpaid
Amount Period and Principal of Loans Principal
Amount of Converted to Eurodollar Eurodollar Converted Balance of
Eurodollar Eurodollar Rate with Loans to Base Eurodollar Notation
Date Loans Loans Respect Thereto Repaid Rate Loans Loans Made By
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
===========================================================================================
</TABLE>
<PAGE>
Exhibit A-3
to Credit Agreement
FORM OF TRANCHE C TERM NOTE
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE
RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE
TERMS OF SUCH CREDIT AGREEMENT.
$_____________ New York, New York
April 30, 1997
FOR VALUE RECEIVED, the undersigned, L-3 Communications Corporation, a
Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to
the order of ___________ (the "Lender") at the office of Bank of America NT & SA
("BOA"), as administrative agent (in such capacity, the "Administrative Agent"),
located at 1850 Gateway Boulevard, Concord, California, 94520, in lawful money
of the United States of America and in immediately available funds, on the
Termination Date the principal amount of (a) _____________ DOLLARS ($_______),
or, if less, (b) the aggregate unpaid principal amount of all Tranche C Term
Loans made by the Lender to the Borrower pursuant to subsection 2.1 of the
Credit Agreement, as hereinafter defined. The Borrower further agrees to pay
interest in like money at such office on the unpaid principal amount hereof from
time to time outstanding at the rates and on the dates specified in subsections
2.7 and 2.9 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date. Type, and amount of each
Tranche C Term Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of Eurodollar Loans, the length of each Interest Period with respect
thereto. Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
shall not affect the obligations of the Borrower in respect of such Tranche C
Term Loan.
This Note (a) is one of the Tranche C Term Notes referred to in the Credit
Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
Lender, the other banks and financial institutions from time to time parties
thereto, Lehman Commercial Paper Inc. ("LCPI") as Arranger, Syndication Agent
and Documentation Agent, and the Administrative Agent (b) is subject to the
provisions of the Credit Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Credit Agreement. This Note is
secured and guaranteed as provided in the Credit Documents. Reference is hereby
made to the Credit Documents for a description of the properties and assets in
which a security interest has been granted, the nature and extent of the
security and the guarantees, the terms and
<PAGE>
2
conditions upon which the security interests and each guarantee were granted and
the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
<PAGE>
3
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
L-3 COMMUNICATIONS CORPORATION
By: __________________________
Name:
Title:
<PAGE>
Schedule A
to Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Amount of Amount of Base Unpaid
Amount of Amount Principal of Rate Loans Principal
Base Rate Converted to Base Rate Converted to Balance of Notation
Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Base Rate Loans Made By
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
===========================================================================================
</TABLE>
<PAGE>
Schedule B
to Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
Amount of
Interest Amount of Eurodollar Unpaid
Amount Period and Principal of Loans Principal
Amount of Converted to Eurodollar Eurodollar Converted Balance of
Eurodollar Eurodollar Rate with Loans to Base Eurodollar Notation
Date Loans Loans Respect Thereto Repaid Rate Loans Loans Made By
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
===========================================================================================
</TABLE>
<PAGE>
Exhibit A-4
to Credit Agreement
FORM OF REVOLVING CREDIT NOTE
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE
RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE
TERMS OF SUCH CREDIT AGREEMENT.
$____________ New York, New York
____________ __, ____
FOR VALUE RECEIVED, the undersigned, L-3 Communications Corporation, a
Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to
the order of __________ (the "Lender") at the office of Bank of America NT & SA
("BOA"), as administrative agent (an such capacity, the "Administrative Agent"),
located at 1850 Gateway Boulevard, Concord, California, 94520, in lawful money
of the United States of America and in immediately available funds, on the
Termination Date the principal amount of (a) _____________ DOLLARS ($_______),
or, if less, (b) the aggregate unpaid principal amount of all Revolving Credit
Loans made by the Lender to the Borrower pursuant to subsection 2.1 of the
Credit Agreement, as hereinafter defined. The Borrower further agrees to pay
interest in like money at such office on the unpaid principal amount hereof from
time to time outstanding at the rates and on the dates specified in subsections
2.7 and 2.9 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type, and amount of each
Revolving Credit Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of Eurodollar Loans, the length of each Interest Period with respect
thereto. Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
shall not affect the obligations of the Borrower in respect of such Revolving
Credit Loan.
This Note (a) is one of the Revolving Credit Notes referred to in the
Credit Agreement, dated as of April 30, 1997 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, the Lender, the other banks and financial institutions from time to
time parties thereto, Lehman Commercial Paper Inc. ("LCPI") as Arranger,
Syndication Agent and Documentation Agent, and the Administrative Agent (b) is
subject to the provisions of the Credit Agreement and (c) is subject to optional
and mandatory prepayment in whole or in part as provided in the Credit
Agreement. This Note is secured and guaranteed as provided in the Credit
Documents. Reference is hereby made to the Credit Documents for a description of
the properties and assets in which a security interest has been granted, the
nature and extent of the security and the guarantees, the terms and
<PAGE>
2
conditions upon which the security interests and each guarantee were granted and
the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
<PAGE>
3
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
L-3 COMMUNICATIONS CORPORATION
By: _____________________________
Name:
Title:
<PAGE>
Schedule A
to Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Amount of Amount of Base Unpaid
Amount of Amount Principal of Rate Loans Principal
Base Rate Converted to Base Rate Converted to Balance of Notation
Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Base Rate Loans Made By
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
===========================================================================================
</TABLE>
<PAGE>
Schedule B
to Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
Amount of
Interest Amount of Eurodollar Unpaid
Amount Period and Principal of Loans Principal
Amount of Converted to Eurodollar Eurodollar Converted Balance of
Eurodollar Eurodollar Rate with Loans to Base Eurodollar Notation
Date Loans Loans Respect Thereto Repaid Rate Loans Loans Made By
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
===========================================================================================
</TABLE>
<PAGE>
Exhibit A-5
to Credit Agreement
FORM OF SWING LINE NOTE
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE
RECORDED N THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE
TERMS OF SUCH CREDIT AGREEMENT.
$______________ New York, New York
____________ __, ____
FOR VALUE RECEIVED, the undersigned, L-3 Communications Corporation, a
Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to
the order of ____________ (the "Lender") at the office of Bank of America NT &
SA ("BOA"), as administrative agent (in such capacity, the "Administrative
Agent"), located at 1850 Gateway Boulevard, Concord, California, 94520, in
lawful money of the United States of America and in immediately available funds,
on the Termination Date the principal amount of (a) _____________ DOLLARS
($__________), or, if less, (b) the aggregate unpaid principal amount of all
Swing Line Loans made by the Lender to the Borrower pursuant to subsection 2.1
of the Credit Agreement, as hereinafter defined. The Borrower further agrees to
pay interest in like money at such office on the unpaid principal amount hereof
from time to time outstanding at the rates and on the dates specified in
subsections 2.7 and 2.9 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date. Type, and amount of each Swing
Line Loan made pursuant to the Credit Agreement and the date and amount of each
payment or prepayment of principal thereof, each continuation thereof, each
conversion of all or a portion thereof to another Type and, in the case of
Eurodollar Loans, the length of each Interest Period with respect thereto. Each
such endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement shall not affect
the obligations of the Borrower in respect of such Swing Line Loan.
This Note (a) is one of the Swing Line Notes referred to in the Credit
Agreement, dated as of April 30, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
Lender, the other banks and financial institutions from time to time parties
thereto, Lehman Commercial Paper Inc. ("LCPI") as Arranger, Syndication Agent
and Documentation Agent, and the Administrative Agent (b) is subject to the
provisions of the Credit Agreement and (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Credit Agreement. This Note is
secured and guaranteed as provided in the Credit Documents. Reference is hereby
made to the Credit Documents for a description of the properties and assets in
which a security interest has been granted, the nature and extent of the
security and the guarantees, the terms and
<PAGE>
2
conditions upon which the security interests and each guarantee were granted and
the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
<PAGE>
3
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
L-3 COMMUNICATIONS CORPORATION
By: _____________________________
Name:
Title:
<PAGE>
Schedule A
to Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Amount of Amount of Base Unpaid
Amount of Amount Principal of Rate Loans Principal
Base Rate Converted to Base Rate Converted to Balance of Notation
Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Base Rate Loans Made By
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
===========================================================================================
</TABLE>
<PAGE>
Schedule B
to Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
Amount of
Interest Amount of Eurodollar Unpaid
Amount Period and Principal of Loans Principal
Amount of Converted to Eurodollar Eurodollar Converted Balance of
Eurodollar Eurodollar Rate with Loans to Base Eurodollar Notation
Date Loans Loans Respect Thereto Repaid Rate Loans Loans Made By
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
===========================================================================================
</TABLE>
<PAGE>
EXHIBIT B-1
TO
CREDIT AGREEMENT
===================================================
PARENT GUARANTEE AGREEMENT
made by
L-3 COMMUNICATIONS HOLDINGS, INC.
in favor of
BANK OF AMERICA NT & SA,
AS ADMINISTRATIVE AGENT
Dated as of April 30, 1997
===================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS .................................................. 1
1.1 Definitions .................................................... 1
1.2 Other Definitional Provisions .................................. 2
SECTION 2. GUARANTEE ...................................................... 2
2.1 Guarantee ...................................................... 2
2.2 No Subrogation ................................................. 3
2.3 Amendments, etc. with respect to the Guaranteed Obligations .... 4
2.4 Guarantee Absolute and Unconditional ........................... 4
2.5 Reinstatement .................................................. 5
2.6 Payments ....................................................... 5
SECTION 3. REPRESENTATIONS AND WARRANTIES ................................. 5
3.1 Representations in Credit Agreement ............................ 5
SECTION 4. COVENANTS ...................................................... 5
4.1 Covenants in Credit Agreement .................................. 5
4.2 Issuance of Indebtedness ....................................... 5
4.3 Investments .................................................... 6
4.4 Activity ....................................................... 6
4.5 Distributions .................................................. 6
4.6 Reports ........................................................ 6
4.7 Certificates; Other Information ................................ 6
4.8 Payment of Obligations ......................................... 6
4.9 Inspection of Property, Books and Records; Discussions ......... 6
4.10 Notices ........................................................ 7
4.11 Further Assurance .............................................. 7
4.12 Additional Collateral .......................................... 7
4.13 Foreign Jurisdictions .......................................... 8
4.14 Maintenance of Collateral; Alterations ......................... 8
SECTION 5. MISCELLANEOUS .................................................. 8
5.1 Amendments in Writing .......................................... 8
5.2 Notices ........................................................ 8
5.3 No Waiver by Course of Conduct; Cumulative Remedies ............ 8
5.4 Enforcement Expenses; Indemnification .......................... 8
5.5 Successors and Assigns ......................................... 9
5.6 Counterparts ................................................... 9
5.7 Severability ................................................... 9
5.8 Section Headings ............................................... 9
5.9 Integration .................................................... 9
5.10 GOVERNING LAW .................................................. 9
5.11 SUBMISSION TO JURISDICTION; WAIVERS ............................ 9
5.12 Acknowledgements ............................................... 10
5.13 WAIVER OF JURY TRIAL ........................................... 10
5.14 Releases ....................................................... 11
<PAGE>
FORM OF
PARENT GUARANTEE AGREEMENT
PARENT GUARANTEE AGREEMENT dated as of April 30, 1997, made by L-3
Communications Holdings, Inc., a Delaware corporation ("Holdings"), in favor of
Bank of America NT & SA as Administrative Agent (in such capacity, the
"Administrative Agent") for the banks and other financial institutions
(collectively, the "Lenders") from time to time parties to the Credit Agreement,
dated as of April 30, 1997 (as amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among L-3 Communications
Corporation, a Delaware corporation (the "Borrower"), the Lenders, Lehman
Commercial Paper Inc. ("LCPI"), as documentation agent (in such capacity, the
"Documentation Agent"), LCPI as syndication agent (in such capacity, the
"Syndication Agent" and together with the Documentation Agent and Administrative
Agent, the "Agents"), LCPI as arranger (in such capacity, the "Arranger"), and
the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to or for the benefit of the
Borrower upon the terms and subject to the conditions set forth therein;
WHEREAS, the Borrower is a wholly-owned subsidiary of Holdings, and
Holdings will derive substantial direct and indirect benefit from the
making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the several obligations of
the Lenders to make their respective extensions of credit to or for the
benefit of the Borrower under the Credit Agreement that Holdings shall
have executed and delivered this Agreement to the Administrative Agent for
the ratable benefit of the Lenders and the Agents;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Agents and the Lenders to enter into
the Credit Agreement, and to induce the Lenders to make their respective
extensions of credit to or for the benefit of the Borrower thereunder, Holdings
hereby agrees with the Administrative Agent, for the ratable benefit of the
Lenders and the Agents, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions.
1.1(a) Unless otherwise defined herein, terms defined in thc Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
1.1(b) The following terms shall have the following meanings:
"Agreement": this Parent Guarantee Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Guaranteed Obligations": has the meaning set forth in Section
2.1(a) hereof.
<PAGE>
"Obligations": has the meaning set forth in the Security Documents.
"Parent Distributions": the collective reference to any of the
following, whether direct or indirect: (i) the declaration or payment of any
dividend or other distribution on or in respect of any shares of any class of
any Capital Stock of Holdings, now or hereafter outstanding. (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
retirement for value of any such shares of Capital Stock of Holdings, now or
hereafter outstanding. (iii) any other payment by Holdings to the holder of any
shares of any class of the Capital Stock of Holdings in their capacity as such
and (iv) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of
Capital Stock of Holdings now or hereafter outstanding; provided, however, that
the term "Parent Distribution" shall not include payments of salaries or bonuses
to employees of Holdings in their capacities as such.
"Permitted Parent Distributions": (a) the issuance by Holdings of
options or other equity securities of Holdings to outside directors, members of
management or employees of Holdings in the ordinary course of business, (b) cash
payments made in lieu of issuing fractional shares of Holdings' common stock or
preferred stock, in an aggregate amount not to exceed $50,000 subsequent to the
date hereof, (c) cash payments to repurchase Capital Stock of Holdings solely
with the proceeds of dividends received from the Borrower pursuant to clause (C)
of the definition of Permitted Stock Payments in the Credit Agreement; provided,
however, that such payments do not exceed $5,000,000, (d) the issuance of
pay-in-kind junior subordinated notes (which shall not require cash payments in
respect of principal, interest or otherwise prior to the first anniversary of
the Final Maturity Date), which are reasonably satisfactory in form and
substance to the Agents, issued pursuant to Section 4.3 of the Subscription
Agreements in connection with the exercise of the rights of the Purchasers (as
defined therein) thereunder of other rights under Section 4.2 thereof and (e)
the application of up to $2,000,000 of the proceeds of the sale of common stock
of Holdings to management of Holdings or the Borrower, to the repurchase of
common stock of Holdings; provided that (i) no more than $325,000 of such
proceeds shall be applied to the repurchase of common stock of Holdings from
each of Messrs. Lanza and LaPenta and (ii) the remainder of such proceeds shall
be applied solely to the repurchase of common stock of Holdings from the Seller.
"Subscription Agreements": (a) that certain common stock agreement
dated April 30, 1997, by and between Frank C. Lanza and Holdings and (b) that
certain common stock agreement dated April 30, 1997, by and between Robert V.
LaPenta and Holdings, in each case, as in effect on the date hereof.
1.2 Other Definitional Provisions.
1.2(a) The words "hereof," "herein", "hereto" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section and Schedule references are to this Agreement unless otherwise
specified.
1.2(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
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SECTION 2. GUARANTEE
2.1 Guarantee.
2.1(a) Holdings hereby unconditionally and irrevocably guarantees to
the Administrative Agent, for the ratable benefit of the Lenders and the Agents
and their respective successors, indorsees, transferees and assigns, the prompt
and complete payment and performance by each of the other Credit Parties when
due (whether at the stated maturity, by acceleration or otherwise) of such other
Credit Party's Obligations (collectively, the "Guaranteed Obligations"). The
liability of Holdings hereunder shall be joint and several with the Obligations
of the other Guarantors.
2.1(b) Anything herein or in any other Credit Document to the
contrary notwithstanding, the maximum liability of Holdings hereunder and under
the other Credit Documents shall in no event exceed the maximum amount which can
be guaranteed by Holdings under applicable federal and state laws relating to
the insolvency of debtors without rending Holdings insolvent.
2.1(c) Holdings agrees that the Guaranteed Obligations may at any
time and from time to time exceed the amount of the liability of Holdings
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent, on behalf of the
other Agents and the Lenders, hereunder.
2.1(d) The guarantee contained in this Section 2 shall remain in
full force and effect until all the Guaranteed Obligations and the obligations
of Holdings under this Agreement shall have been satisfied by payment in full,
no Letter of Credit shall be outstanding and the Commitments shall be terminated
(notwithstanding that from time to time during the term of the Credit Agreement,
no Loans or Letters of Credit may be outstanding).
2.1(e) No indefeasible payment made by any Credit Party or any other
Person or received or collected by any of the Agents or the Lenders by virtue of
any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Guaranteed
Obligations shall be deemed to release the liability of Holdings hereunder, and
Holdings shall, notwithstanding any such payment (other than any payment made by
Holdings in respect of the Guaranteed Obligations or any payment received or
collected from Holdings in respect of the Guaranteed Obligations), remain liable
for the Guaranteed Obligations up to the maximum liability of Holdings hereunder
until the Guaranteed Obligations are paid in full, no Loan or Letter of Credit
shall be outstanding and the Commitments are terminated.
2.2 No Subrogation. Notwithstanding any payment made by Holdings
hereunder or any set-off or application of funds of Holdings by any of the
Agents or Lenders, Holdings not shall be entitled to be subrogated to any of the
rights of any of the Agents or Lenders against the other Credit Parties or any
collateral security or guarantee or right of offset held by any of the Agents or
Lenders for the payment of all or any portion of the Guaranteed Obligations, nor
shall Holdings seek or be entitled to seek any contribution or reimbursement
from any of the other Credit Parties in respect of payments made by Holdings
hereunder, until all amounts owing to the Agents and the Lenders by the other
Credit Parties on account of the Guaranteed Obligations are paid in full, no
Letter of Credit shall be outstanding and the Commitments are terminated. If any
amount shall be paid to Holdings on account of such
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subrogation rights at any time when all of the Guaranteed Obligations shall not
have been paid in full, such amount shall be held by Holdings in trust for the
Agents and the Lenders, segregated from other funds of Holdings. and shall,
forthwith upon receipt by Holdings, be turned over to the Administrative Agent
in the exact form received by Holdings (duly indorsed by Holdings to the
Administrative Agent, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, in such order as the Required Lenders
may determine.
2.3 Amendments, etc. with respect to the Guaranteed Obligations.
Holdings shall remain obligated hereunder notwithstanding that, without any
reservation of rights against Holdings and without notice to or further assent
by Holdings, any demand for payment of any of the Guaranteed Obligations made by
any of the Agents or Lenders may be rescinded by such Agent or Lender and any of
the Guaranteed Obligations continued, and the Guaranteed Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by any of the Agents
or Lenders, and the Credit Agreement, the other Credit Documents and any other
documents executed and delivered in connection therewith may be amended,
restated, modified, supplemented or terminated, in whole or in part, as the
Administrative Agent (or the Required Lenders or all Lenders, as the case may
be) may deem advisable from time to time, and any collateral security, guarantee
or right of offset at any time held by any of the Agents or Lenders for the
payment of the Guaranteed Obligations may be sold, exchanged, waived,
surrendered or released. None of the Agents or Lenders shall have any obligation
to protect, secure, perfect or insure any Lien at any time held by it as
security for the Guaranteed Obligations or for the guarantee contained in this
Section 2 or any property subject thereto.
2.4 Guarantee Absolute and Unconditional. Holdings waives any and
all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by any of the Agents
or Lenders upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Guaranteed Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Credit Parties, on the
one hand, and the Agents and the Lenders, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Holdings waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon any
of the Credit Parties with respect to the Guaranteed Obligations. Holdings
understands and agrees that the guarantee contained in this Section 2 shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of the Credit Agreement,
this Agreement or any other Credit Document, any of the Guaranteed Obligations
or any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by any of the Agents or
Lenders, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
any of the other Credit Panics or any other Person against any of the Agents or
the Lenders, or (c) any other circumstance whatsoever (with or without notice to
or knowledge of any of the Credit Parties) which constitutes, or might be
construed to constitute, an equitable or legal discharge of any of the other
Credit Parties for the Guaranteed Obligations, or of Holdings under the
guarantee contained in this Section 2, in bankruptcy or in any other instance.
When making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against Holdings, any of the Agents or Lenders may, but shall be under
no obligation to, make a similar demand on or otherwise pursue such rights and
remedies as it may have against any of the other Credit Parties or any other
Person or against any collateral security or guarantee for the Guaranteed
Obligations or any right of offset with respect thereto, and any failure by the
any of the Agents or Lenders
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to make any such demand. to pursue such other rights or remedies or to collect
any payments from any of the other Credit Parties or any other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of any of the other Credit Parties or any other
Person or any such collateral security, guarantee or right of offset, shall not
relieve Holdings of any obligation or liability hereunder, and shall not impair
or affect the rights and remedies, whether express, implied or available as a
matter of law, of any of the Agents or Lenders against Holdings. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
2.5 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Guaranteed Obligations is rescinded
or must otherwise be restored or returned by the any of the Agents or Lenders
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any of the Credit Parties, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, any
of the Credit Parties or any substantial part of its property, or otherwise, all
as though such payments had not been made.
2.6 Payments. Holdings hereby guarantees that payments hereunder
will be paid to the Administrative Agent without set-off or counterclaim in
Dollars at the office of the Administrative Agent located at 335 Madison Avenue,
New York, New York 10017, Attention: Linda A. Carper, fax: (212) 503-7502.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to or for the benefit of the Borrower thereunder, Holdings hereby
represents and warrants to each of the Agents and the Lenders that:
3.1 Representations in Credit Agreement. The representations and
warranties set forth in Section 4 of the Credit Agreement, each of which is
hereby incorporated herein by reference, are true and correct, and the
Administrative Agent and each Lender shall be entitled to rely on each of them
as if they were fully set forth herein, provided that each reference in each
such representation and warranty to the Borrower's knowledge shall, for the
purposes of this Section 3.1, be deemed to be a reference to Holdings'
knowledge.
SECTION 4. COVENANTS
Holdings covenants and agrees with the Agents and the Lenders that,
from and after the date of this Agreement until the Guaranteed Obligations shall
have been paid in full, no Letter of Credit shall be outstanding and the
Commitments shall have terminated:
4.1 Covenants in Credit Agreement. Holdings shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be
taken or not taken, as the case may be, so that no Default or Event of Default
is caused by the failure to take such action or to refrain from taking such
action by Holdings or any of its Subsidiaries.
4.2 Issuance of Indebtedness. Except for the issuance of pay-in-kind
junior subordinated notes to the extent permitted by clause (v) of the
definition of "Permitted Parent
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Distributions." Holdings shall not issue, incur or assume any Indebtedness or
any Guarantee Obligations other than Indebtedness and Guarantee Obligations
under the Credit Documents to which it is a party.
4.3 Investments. Holdings shall not have outstanding or acquire any
Investment in any Person other than Investments in Capital Stock of the Borrower
and Cash Equivalents.
4.4 Activity. Holdings shall not engage in any business activity
other than its ownership and voting of the Capital Stock of the Borrower and the
performance of its obligations under the Credit Documents to which it is a party
and the Transaction Documents to which it is a party.
4.5 Distributions. Holdings shall not make any Parent Distributions
other than Parent Distributions payable solely in common stock of Holdings and
Permitted Parent Distributions.
4.6 Reports. Holdings will deliver to the Administrative Agent
promptly upon their becoming available, copies of all consolidated or
consolidating financial statements, reports, notices and proxy statements sent
or made available generally by Holdings to its security holders, of all regular
and periodic reports and all registrations statements and prospectuses, if any,
filed by Holdings with any securities exchange or with the Securities and
Exchange Commission and of all press releases and other statements made
available generally by Holdings to the public concerning Holdings.
4.7 Certificates; Other Information. Furnish to the Administrative
Agent with copies for each Lender:
4.7(a) concurrently with the delivery by the Borrower of the
financial statements referred to in subsection 6.1 of the Credit
Agreement, a certificate of a Responsible Officer of Holdings stating
that, to the best of such Officer's knowledge, during such period (i) no
Subsidiary has been formed or acquired, (ii) Holdings has not changed its
name, its principal place of business, its chief executive office or the
location of any material item of tangible Collateral without complying
with the requirements of this Agreement and the Security Documents with
respect thereto and (iii) such Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate; and
4.7(b) promptly, such additional financial and other
information as any Lender may from time to time reasonably request.
4.8 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of Holdings or its Subsidiaries, as the case may be; provided that,
notwithstanding the foregoing, Holdings and each of its Subsidiaries shall have
the right to pay any such obligation and in good faith contest, by proper legal
actions or proceedings, the invalidity or amount of such claims.
4.9 Inspection of Property, Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time on a Business Day and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition
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of Holdings and its Subsidiaries with officers and employees of Holdings and its
Subsidiaries and with its independent certified public accountants; provided
that the Administrative Agent or such Lender shall notify Holdings prior to any
contact with such accountants and give Holdings the opportunity to participate
in such discussion; provided, further, that Holdings shall notify the
Administrative Agent of any such visits, inspections or discussions prior to
each occurrence thereof.
4.10 Notices. Promptly give notice to the Administrative Agent and
each Lender of:
4.10(a) the occurrence of any Default or Event of Default;
4.10(b) any (i) default or event of default under any
Contractual Obligation of Holdings or (ii) litigation, investigation or
proceeding which may exist at any time between Holdings and any
Governmental Authority, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
4.10(c) any litigation or proceeding affecting Holdings in
which the amount involved is $7,500,000 or more and not covered by
insurance or in which injunctive or similar relief is sought;
4.10(d) the following events, as soon as possible and in any
event within 45 days after Holdings knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with
respect to any plan (other than a Multiple Employer Plan), a failure to
make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC
or Holdings or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Single Employer Plan or Multiemployer Plan; and
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action Holdings proposes to take with respect thereto.
4.11 Further Assurance. Upon the request of the Administrative Agent
promptly perform or cause to be performed any and all acts and execute or cause
to be executed any and all documents (including, without limitation, financing,
statements and continuation statements) for filing under the provisions of the
Uniform Commercial Code or any other Requirement of Law which are necessary or
advisable to maintain in favor of the Administrative Agent, for the benefit of
the Lenders, Liens on the Collateral that are duly perfected in accordance with
all applicable Requirements of Law.
4.12 Additional Collateral. With respect to any assets acquired
after the Closing Date by Holdings that are intended to be subject to the Lien
created by any of the Security Documents but which are not so subject (other
than immaterial assets a Lien on which cannot be perfected by filing UCC-1
financing statements), promptly (and in any event within 30 days after the
acquisition thereof): (i) execute and deliver to the Administrative Agent such
amendments to the Parent Pledge and Security Agreement or such other documents
as the Administrative Agent shall deem necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a Lien on such assets,
(ii) take all actions necessary or advisable to cause such Lien to be duly
perfected in accordance with all applicable Requirements of Law, including
without limitation, the filing of financing statements in such jurisdictions
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as may be requested by the Administrative Agent, and (ii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described in clauses (i) and (ii) immediately preceding.
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
4.13 Foreign Jurisdictions. Within 60 days following the Closing
Date, (i) be duly qualified as a foreign corporation and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification, except to
the extent that the failure to so qualify could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, and (ii) deliver to
the Administrative Agent certificates of good standing issued by the Secretary
of State (or other relevant officers) of each jurisdiction referred to in clause
(i) of this subsection.
4.14 Maintenance of Collateral; Alterations. Refrain from committing
any waste on any Collateral or, except in the ordinary course of its business,
make any material change in the use of any Collateral.
SECTION 5. MISCELLANEOUS
5.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, restated, supplemented or otherwise modified
except in accordance with subsection 10.1 of the Credit Agreement.
5.2 Notices. All notices, requests and demands to or upon the Agents
or Holdings hereunder shall be effected in the manner provided for in subsection
10.2 of the Credit Agreement; provided that any such notice, request or demand
to or upon Holdings shall be addressed to Holdings at its notice address set
forth below its signature hereto.
5.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 5.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of any of the Agents or Lenders, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any of the Agents or Lenders of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent, on behalf of the other Agents and the Lenders, would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
5.4 Enforcement Expenses; Indemnification.
5.4(a) Holdings agrees to pay or reimburse each of the Lenders
and Agents for all its costs and expenses incurred in collecting against
Holdings under the guarantee contained in Section 2 or otherwise enforcing
or preserving any rights under this Agreement and the other Credit
Documents to which Holdings is a party, including, without limitation, the
fees and disbursements of counsel to the Administrative Agent and of
counsel to each of the other Agents
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and Lenders.
5.4(b) Holdings agrees to pay, and to save the Agents and the
Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable in connection
with any of the transactions contemplated by this Agreement.
5.4(c) Holdings agrees to pay, and to save the Agents and the
Lenders harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrower would be required to do so pursuant
to subsection 10.5 of the Credit Agreement.
5.4(d) The agreements in this Section 5.4 shall survive
repayment of the Guaranteed Obligations and all other amounts payable
under the Credit Agreement, this Agreement and the other Credit Documents.
5.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of Holdings and shall inure to the benefit of the Agents
and the Lenders and their successors and assigns; provided that Holdings may not
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Required Lenders.
5.6 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
5.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
5.8 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
5.9 Integration. This Agreement and the other Credit Documents
represent the agreement of Holdings, the Agents and the Lenders with respect to
the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the any of the Agents or Lenders relative to
subject matter hereof and thereof not expressly set forth or referred to herein,
the Credit Agreement or in the other Credit Documents.
5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
5.11 SUBMISSION TO JURISDICTION; WAIVERS. HOLDINGS HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
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5.11(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE CREDIT AGREEMENT AND
THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
5.11(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
5.11(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO HOLDINGS AT ITS ADDRESS REFERRED TO IN SECTION 5.2 OR AT SUCH
OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED
PURSUANT THERETO;
5.11(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
5.11(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
5.12 Acknowledgements. Holdings hereby acknowledges that:
5.12(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit Documents to
which it is a party;
5.12(b) none of the Agents nor Lenders has any fiduciary
relationship with or duty to Holdings arising out of or in connection with
this Agreement or any of the other Credit Documents, and the relationship
between Holdings, on the one hand, and the Agents and Lenders, on the
other hand, in connection herewith or therewith is solely that of debtor
and creditor; and
5.12(c) no joint venture is created hereby or by the other
Credit Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Agents, among the Agents and/or the Lenders
or among Holdings and the Agents and/or the Lenders.
5.13 WAIVER OF JURY TRIAL. HOLDINGS AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT
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DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
5.14 Releases. At such time as the Loans, the Reimbursement
Obligations and the other Guaranteed Obligations shall have been paid in full,
the Commitments have been terminated and no Letters of Credit shall be
outstanding, this Agreement and all obligations (other than those expressly
stated to survive such termination) of the Administrative Agent and Holdings
hereunder shall terminate, all without delivery of any instrument or performance
of any act by any party, and all rights shall revert to Holdings and the
Administrative Agent shall execute and deliver to Holdings such documents as
Holdings shall reasonably request to evidence such termination.
[Signature page follows]
IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly executed and delivered as of the date first above written.
L-3 COMMUNICATIONS HOLDINGS, INC.
By: ____________________________
Name:
Title:
Address for Notices:
600 Third Avenue
34th Floor
New York, New York 10016
Attention: ____________________
Phone: (212) 697-1111
Fax: (212)___-____
Accepted on behalf of the Agents and
the Lenders as of the date first
above written:
BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT
By: _________________________
Name:
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EXHIBIT B-2
TO
CREDIT AGREEMENT
================================================================================
SUBSIDIARY GUARANTEE AGREEMENT
made by
__________________________
in favor of
BANK OF AMERICA NT & SA,
as Administrative Agent
Dated as of _______
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS ................................................... 2
1.1 Definitions ..................................................... 2
1.2 Other Definitional Provisions ................................... 2
SECTION 2. GUARANTEE ....................................................... 2
2.1 Guarantee ....................................................... 2
2.2 Right of Contribution ........................................... 3
2.3 No Subrogation .................................................. 3
2.4 Amendments, etc. with respect to the Guaranteed Obligations ..... 3
2.5 Guarantee Absolute and Unconditional ............................ 4
2.6 Reinstatement ................................................... 5
2.7 Payments ........................................................ 5
SECTION 3. REPRESENTATIONS AND WARRANTIES .................................. 5
3.1 Representations in Credit Agreement ............................. 5
SECTION 4. COVENANTS ....................................................... 5
4.1 Covenants in Credit Agreement ................................... 5
SECTION 5. MISCELLANEOUS ................................................... 5
5.1 Amendments in Writing ........................................... 5
5.2 Notices ......................................................... 6
5.3 No Waiver by Course of Conduct; Cumulative Remedies ............. 6
5.4 Enforcement Expenses; Indemnification ........................... 6
5.5 Successors and Assigns .......................................... 6
5.6 Counterparts .................................................... 7
5.7 Severability .................................................... 7
5.8 Section Headings ................................................ 7
5.9 Integration ..................................................... 7
5.10 GOVERNING LAW ................................................... 7
5.11 SUBMISSION TO JURISDICTION; WAIVERS ............................. 7
5.12 Acknowledgements ................................................ 8
5.13 WAIVER OF JURY TRIAL ............................................ 8
5.14 Additional Guarantors ........................................... 8
5.15 Releases ........................................................ 8
i
<PAGE>
FORM OF
SUBSIDIARY GUARANTEE AGREEMENT
SUBSIDIARY GUARANTEE AGREEMENT, dated as of __________, ____ made by
each of the signatories hereto (together with any other entity that may become a
party hereto as provided herein, the "Guarantors"), in favor of Bank of America
NT & SA, ("BOA") as Administrative Agent (in such capacity, the "Administrative
Agent") for the banks and other financial institutions (collectively, the
"Lenders") from time to time parties to the Credit Agreement, dated as of April
30, 1997 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among L-3 Communications Corporation, a Delaware
corporation (the "Borrower"), the Lenders, Lehman Commercial Paper Inc.
("LCPI"), as documentation agent (in such capacity, the "Documentation Agent"),
LCPI as syndication agent (in such capacity, the "Syndication Agent" and
together with the Documentation Agent and Administrative Agent, the "Agents"),
LCPI as arranger (in such capacity, the "Arranger") and the Administrative
Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Guarantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable
transfers to one or more of the other Guarantors in connection with the
operation of their respective businesses;
WHEREAS, the Borrower and the other Guarantors are engaged in
related businesses, and each Guarantor will derive substantial direct and
indirect benefit from the making of the extensions of credit under the
Credit Agreement; and
WHEREAS, it is a condition precedent to the several obligations of
the Lenders to make their respective extensions of credit to or for the
benefit of the Borrower under the Credit Agreement that the Guarantors
shall have executed and delivered this Agreement to the Administrative
Agent for the ratable benefit of the Lenders and the Agents;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Agents and the Lenders to enter into
the Credit Agreement, and to induce the Lenders to make their respective
extensions of credit to or for the benefit of the Borrower thereunder, each
Guarantor hereby agrees with the Administrative Agent, for the ratable benefit
of the Lenders and the Agents, as follows:
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SECTION 1. DEFINED TERMS
1.1 Definitions.
1.1(a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
1.1(b) The following terms shall have the following meanings:
"Agreement": this Subsidiary Guarantee Agreement, as the same
may be amended, restated, supplemented or otherwise modified from time to
time.
"Guarantors": the collective reference to each Guarantor.
"Guaranteed Obligations" has the meaning set forth in Section
2.1(a) hereof.
1.2 Other Definitional Provisions.
1.2(a) The words "hereof," "herein", "hereto" and "hereunder"
and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to this Agreement
unless otherwise specified.
1.2(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. GUARANTEE
2.1 Guarantee.
2.1(a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent,
for the ratable benefit of the Lenders and the Agents and their respective
successors, indorsees, transferees and assigns, the prompt and complete
payment and performance by each of the other Credit Parties when due
(whether at the stated maturity, by acceleration or otherwise) of such
other Credit Party's Obligations (collectively, the "Guaranteed
Obligations"). The liability of the Guarantors hereunder shall be joint
and several with the Obligations of all other Guarantors.
2.1(b) Anything herein or in any other Credit Document to the
contrary notwithstanding, the maximum liability of each Guarantor
hereunder and under the other Credit Documents shall in no event exceed
the maximum amount which can be guaranteed by such Guarantor under
applicable federal and state laws relating to the insolvency of debtors
without rendering such Guarantor insolvent.
2.1(c) Each Guarantor agrees that the Guaranteed Obligations
may at any time and from time to time exceed the amount of the liability
of such Guarantor hereunder without impairing the guarantee contained in
this Section 2 or affecting the rights and remedies of the
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Administrative Agent, on behalf of the other Agents and the Lenders
hereunder.
2.1(d) The guarantee contained in this Section 2 shall remain
in full force and effect until all the Guaranteed Obligations and the
obligations of each Guarantor under this Agreement shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and
the Commitments shall be terminated, notwithstanding that from time to
time during the term of the Credit Agreement, no Loans or Letters of
Credit may be outstanding.
2.1(e) No indefeasible payment made by any Credit Party or any
other Person or received or collected by any of the Agents or the Lenders
by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment
of the Guaranteed Obligations shall be deemed to release the liability of
any Guarantor hereunder, and each Guarantor shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of
the Guaranteed Obligations or any payment received or collected from such
Guarantor in respect of the Guaranteed Obligations), remain liable for the
Guaranteed Obligations up to the maximum liability of such Guarantor
hereunder until the Guaranteed Obligations are paid in full, no Loan or
Letter of Credit shall be outstanding and the Commitments are terminated.
2.2 Right of Contribution. Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid
its proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 2.3. The provisions of
this Section 2.2 shall in no respect limit the obligations and liabilities of
any Guarantor to the Administrative Agent and the Lenders, and each Guarantor
shall remain jointly and severally liable to the Administrative Agent and the
Lenders for the full amount guaranteed by such Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
any of the Agents or Lenders, no Guarantor shall be entitled to be subrogated to
any of the rights of any of the Agents or Lenders against the Other Credit
Parties or any collateral security or guarantee or right of offset held by any
of the Agents or Lenders for the payment of all or any portion of the Guaranteed
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from any of the Other Credit Parties or any other
Guarantor in respect of payments made by such Credit Party hereunder, until all
amounts owing to the Agents and the Lenders by the other Credit Parties on
account of any of the Obligations are paid in full, no Letter of Credit shall be
outstanding and the Commitments are terminated. If any amount shall be paid to
any Guarantor on account of such subrogation rights at any time when all of the
Guaranteed Obligations shall not have been paid in full, such amount shall be
held by such Guarantor in trust for the Agents and the Lenders, segregated from
other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Administrative Agent in the exact form received
by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent,
if required), to be applied against the Guaranteed Obligations, whether matured
or unmatured, in such order as the Administrative Agent may determine.
2.4 Amendments. etc. with respect to the Guaranteed Obligations.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of
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the Guaranteed Obligations made by any of the Agents or Lenders may be rescinded
by such Agent and any of the Guaranteed Obligations continued, and the
Guaranteed Obligations, or the liability of any other Person upon or for any
part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by any of the Agents or Lenders, and the Credit
Agreement, the other Credit Documents and any other documents executed and
delivered in connection therewith may be amended, restated, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent (or
the Required Lenders or all Lenders, as the case may be) may deem advisable from
time to time, and any collateral security guarantee or right of offset at any
time held by any of the Agents or Lenders for the payment of the Guaranteed
Obligations may be sold, exchanged, waived, surrendered or released. None of the
Agents or Lenders shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Guaranteed
Obligations or for the guarantee contained in this Section 2 or any property
subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by any of the Agents
or Lenders upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Guaranteed Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Agents and the Lenders, on the other
hand, likewise shall be conclusively presumed to have been had or consummated in
reliance upon the guarantee contained in this Section 2. Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon any of the Credit Parties with respect to the Guaranteed
Obligations. Each Guarantor understands and agrees that the guarantee contained
in this Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of the
Credit Agreement, this Agreement or any other Credit Document, any of the
Guaranteed Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
any of the Agents or Lenders, (b) any defense, set-off or counterclaim (other
than a defense of payment or performance) which may at any time be available to
or be asserted by any of the other Credit Parties or any other Person against
any of the Agents or Lenders, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of any of the Credit Parties) which constitutes,
or might be construed to constitute, an equitable or legal discharge of any of
the Credit Parties for the Guaranteed Obligations, or of such Guarantor under
the guarantee contained in this Section 2, in bankruptcy or in any other
instance. When making any demand hereunder or otherwise pursuing its rights and
remedies hereunder against any Guarantor, any of the Agents or Lenders may, but
shall be under no obligation to, make a similar demand on or otherwise pursue
such rights and remedies as it may have against any of the other Credit Parties,
any other Guarantor or any other Person or against any collateral security or
guarantee for the Guaranteed Obligations or any right of offset with respect
thereto, and any failure by any of the Agents or Lenders to make any such
demand, to pursue such other rights or remedies or to collect any payments from
any of the other Credit Parties, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of any of the other Credit Parties, any other
Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of any of the Agents or
Lenders against any Guarantor. For the purposes hereof "demand" shall include
the commencement and continuance of any legal proceedings.
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<PAGE>
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Guaranteed Obligations is rescinded
or must otherwise be restored or returned by and of the Agents or Lenders upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of any of
the Credit Parties, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, any of the
Credit Parties or any substantial part of its property, or otherwise, all as
though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at 335
Madison Avenue, New York, New York 10017, Attention: Linda A. Carper, fax: (212)
503-7502.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to or for the benefit of the Borrower thereunder, each Guarantor hereby
represents and warrants to each of the Agents and the Lenders that:
3.1 Representations in Credit Agreement. In the case of each
Guarantor, the representations and warranties set forth in Section 4 of the
Credit Agreement as they relate to such Guarantor or to the Credit Document to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and the Administrative Agent and each Lender
shall be entitled to rely on each of them as if they were fully set forth
herein, provided that each reference in each such representation and warranty to
the Borrower's knowledge shall, for the purposes of this Section 3.1, be deemed
to be a reference to such Guarantor's knowledge.
SECTION 4. COVENANTS
Each Guarantor covenants and agrees with the Agents and the Lenders
that, from and after the date of this Agreement until the Guaranteed Obligations
shall have been paid in full, no Letter of Credit shall be outstanding and the
Commitments shall have terminated:
4.1 Covenants in Credit Agreement. In the case of each Guarantor,
such Guarantor shall take, or shall refrain from taking, as the case may be,
each action that is necessary to be taken or not taken, as the case may be, so
that no Default or Event of Default is caused by the failure to take such action
or to refrain from taking such action by any of the Credit Parties.
SECTION 5. MISCELLANEOUS
5.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, restated, supplemented or otherwise modified
except in accordance with subsection 10.1 of the Credit Agreement.
5.2 Notices. All notices, requests and demands to or upon the Agents
or any Guarantor hereunder shall be effected in the manner provided for in
subsection 10.2 of the Credit Agreement; provided that any such notice, request
or demand to or upon any Guarantor shall be addressed
5
<PAGE>
to such Guarantor at its notice address set forth below its respective signature
hereto.
5.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 5.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of any of the Agents or Lenders, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any of the Agents or Lenders of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent, on behalf of the other Agents and the Lenders, would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
5.4 Enforcement Expenses; Indemnification.
5.4(a) Each Guarantor agrees to pay or reimburse each of the
Lenders and Agents for all its costs and expenses incurred in collecting
against such Guarantor under the guarantee contained in Section 2 or
otherwise enforcing or preserving any rights under this Agreement and the
other Credit Documents to which such Guarantor is a party, including,
without limitation, the fees and disbursements of counsel to the
Administrative Agent and of counsel to each of the other Agents and
Lenders.
5.4(b) Each Guarantor agrees to pay, and to save the Agents
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable in connection
with any of the transactions contemplated by this Agreement.
5.4(c) Each Guarantor agrees to pay, and to save the Agents
and the Lenders harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrower would be required to do so pursuant
to subsection 10.5 of the Credit Agreement.
5.4(d) The agreements in this Section 5.4 shall survive
repayment of the Guaranteed Obligations and all other amounts payable
under the Credit Agreement, this Agreement and the other Credit Documents.
5.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Guarantor and shall inure to the benefit of the
Agents and the Lenders and their successors and assigns; provided that no
Guarantor may assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Required Lenders.
5.6 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
6
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5.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceabilitv without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
5.8 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
5.9 Integration. This Agreement and the other Credit Documents
represent the agreement of the Guarantors, the Agents and the Lenders with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by any of the Agents or Lenders
relative to subject matter hereof and thereof not expressly set forth or
referred to herein, the Credit Agreement or in the other Credit Documents.
5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
5.11 SUBMISSION TO JURISDICTION; WAIVERS. EACH GUARANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
5.11(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE CREDIT AGREEMENT AND
THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
5.11(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
5.11(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO SUCH GUARANTOR AT ITS ADDRESS REFERRED TO IN SUBSECTION 5.2 OR
AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO;
5.11(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
7
<PAGE>
SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
5.11(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
5.12 Acknowledgements. Each Guarantor hereby acknowledges that:
5.12(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit Documents to
which it is a party;
5.12(b) none of the Agents nor Lenders has any fiduciary
relationship with or duty to any Guarantor arising out of or in connection
with this Agreement or any of the other Credit Documents, and the
relationship between the Guarantors, on the one hand, and the Agents and
Lenders, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
5.12(c) no joint venture is created hereby or by the other
Credit Documents or otherwise exists by virtue of the transactions
contemplated hereby among Agents, among the Agents and/or the Lenders, or
among the Guarantors and the Agents and/or the Lenders.
5.13 WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
5.14 Additional Guarantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to subsection 6.10 of the
Credit Agreement shall become a Guarantor for all purposes of this Agreement
upon execution and delivery by such Subsidiary of an Assumption Agreement in the
form of Annex 1 hereto.
5.15 Releases.
(a) At such time as the Loans, the Reimbursement Obligations
and the other Guaranteed Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of Credit shall be
outstanding, this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent
and each Guarantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights shall
revert to the Guarantors and the Administrative Agent shall execute and
deliver to such Guarantor such documents as such Guarantor shall
reasonably request to evidence such termination.
(b) At the request and sole expense of the Borrower, a
Guarantor shall be released from its obligations hereunder in the event
that all the Capital Stock of such Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit
8
<PAGE>
Agreement.
[Signature page follows]
9
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly executed and delivered as of the date first above written.
[Subsidiary Guarantors]
By: _______________________________
Name:
Title:
Address for Notices:
___________________________________
___________________________________
___________________________________
Attention:
Phone: ( ) ___________
Fax: ( ) ___________
Accepted on behalf of the Agents and
the Lenders as of the date first
above written:
BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT
By: ________________________
Name:
Title:
10
<PAGE>
Annex 1 to
Subsidiary Guarantee Agreement
ASSUMPTION AGREEMENT, dated as of ______________, _____, made by
____________________, a ________________ corporation (the "Additional
Guarantor"), in favor of Bank of America NT & SA ("BOA"), as administrative
agent (in such capacity, the "Administrative Agent") for the banks and other
financial institutions (the "Lenders") parties to the Credit Agreement referred
to below. All capitalized terms not defined herein shall have the meaning
ascribed to them in such Credit Agreement.
W I T N E S S E T H:
WHEREAS, L-3 Communications Corporation, a Delaware corporation (the
"Borrower"), the Lenders, Lehman Commercial Paper Inc. ("LCPI"), as
Documentation Agent, LCPI as Syndication Agent, LCPI as Arranger, and the
Administrative Agent have entered into a Credit Agreement, dated as of April 30,
1997, (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower and
certain of its Affiliates (other than the Additional Guarantor) have entered
into the Subsidiary Guarantee Agreement, dated as of _________ , ____ (as
amended, supplemented or otherwise modified from time to time, the "Subsidiary
Guarantee Agreement") in favor of the Administrative Agent for the benefit of
the Lenders;
WHEREAS, the Credit Agreement requires the Additional Guarantor to
become a party to the Subsidiary Guarantee Agreement; and
WHEREAS, the Additional Guarantor has agreed to execute and deliver
this Assumption Agreement in order to become a party to the Subsidiary Guarantee
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Subsidiary Guarantee Agreement. By executing and delivering this
Assumption Agreement, the Additional Subsidiary Guarantor, as provided in
Section 5.14 of the Subsidiary Guarantee Agreement, hereby becomes a party to
the Subsidiary Guarantee Agreement as a Guarantor thereunder with the same force
and effect as if originally named therein as a Guarantor and, without limiting
the generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Guarantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in Schedule 1 to the
Subsidiary Guarantee Agreement. The Additional Guarantor hereby represents and
warrants that each of the representations and warranties contained in Section 3
of the Subsidiary Guarantee Agreement is true and correct on and as the date
hereof (after giving effect to this Assumption Agreement) as if made on and as
of such date.
2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GUARANTOR}
By: _______________________________
Name:
Title:
Address for Notices:
___________________________________
___________________________________
___________________________________
Attention:
Phone: ( ) ___________
Fax: ( ) ___________
Accepted on behalf of the Agents and
the Lenders as of the date first
above written:
BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT
By: ________________________
Name:
Title:
<PAGE>
EXHIBIT B-3
TO
CREDIT AGREEMENT
================================================================================
PARENT PLEDGE AND SECURITY AGREEMENT
made by
L-3 COMMUNICATIONS HOLDINSG, INC.
in favor of
BANK OF AMERICA NT & SA,
as Administrative Agent
Dated as of April 30, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS ................................................... 1
1.1 Definitions ..................................................... 1
1.2 Other Definitional Provisions ................................... 4
SECTION 2. GRANT OF SECURITY INTEREST ...................................... 5
SECTION 3. REPRESENTATIONS AND WARRANTIES .................................. 6
3.1 Representations in Credit Agreement ............................. 6
3.2 Title; No Other Liens ........................................... 6
3.3 Perfected First Priority Liens .................................. 6
3.4 Chief Executive Office .......................................... 7
3.5 Inventory and Equipment ......................................... 7
3.6 Pledged Stock ................................................... 7
3.7 Farm Products ................................................... 7
3.8 Receivables ..................................................... 7
3.9 Contracts ....................................................... 7
3.10 Intellectual Property ........................................... 7
SECTION 4. COVENANTS ....................................................... 7
4.1 Covenants in Credit Agreement ................................... 7
4.2 Delivery of instruments and Chattel Paper ....................... 8
4.3 Payment of Obligations .......................................... 8
4.4 Maintenance of Perfected Security Interest; Further
Documentation .................................................. 8
4.5 Changes in Locations, Name, etc.................................. 8
4.6 Notices ......................................................... 8
4.7 Pledged Securities .............................................. 9
SECTION 5. REMEDIAL PROVISIONS ............................................. 10
5.1 Pledged Stock ................................................... 10
5.2 Proceeds to be Turned Over To Administrative Agent .............. 11
5.3 Application of Proceeds ......................................... 11
5.4 Code and Other Remedies ......................................... 11
5.5 Registration Rights ............................................. 12
5.6 Waiver, Deficiency .............................................. 13
SECTION 6. THE ADMINISTRATIVE AGENT ........................................ 13
6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc...... 13
6.2 Duty of Administrative Agent .................................... 15
6.3 Execution of Financing Statements ............................... 15
6.4 Authority of Administrative Agent ............................... 15
SECTION 7. MISCELLANEOUS ................................................... 15
7.1 Amendments in Writing ........................................... 15
7.2 Notices ......................................................... 15
7.3 No Waiver by Course of Conduct; Cumulative Remedies ............. 16
7.4 Enforcement Expenses; Indemnification ........................... 16
7.5 Successors and Assigns .......................................... 16
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Page
----
7.6 Set-Off ......................................................... 16
7.7 Counterparts .................................................... 17
7.8 Severability .................................................... 17
7.9 Section Headings ................................................ 17
7.10 Integration ..................................................... 17
7.11 GOVERNING LAW ................................................... 17
7.12 SUBMISSION TO JURISDICTION; WAIVERS ............................. 17
7.13 Acknowledgements ................................................ 18
7.14 WAIVER OF JURY TRIAL ............................................ 18
7.15 Releases ........................................................ 18
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FORM OF
PARENT PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of April 30, 1997, made by
L-3 Communications Holdings, Inc., a Delaware corporation ("Holdings"), in favor
of Bank of America NT & SA ("BOA") as Administrative Agent (in such capacity,
the "Administrative Agent") for the banks and other financial institutions
(collectively, the "Lenders") from time to time parties to the Credit Agreement,
dated as of April 30, 1997 (as amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among L-3 Communications
Corporation, a Delaware Company (the "Borrower"), the Lenders, Lehman Commercial
Paper Inc. ("LCPI"), as documentation agent (in such capacity, the
"Documentation Agent"), LCPI as syndication agent (in such capacity, the
"Syndication Agent"; and together with the Documentation Agent and
Administrative Agent, the "Agents"), LCPI as arranger (in such capacity, the
"Arranger") and the Administrative Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, Holdings will derive substantial direct and indirect
benefit from the making of the extensions of credit to the Borrower under the
Credit Agreement; and
WHEREAS, it is a condition precedent to the several obligations of
the Lenders to make their respective extensions of credit to or for the benefit
of the Borrower under the Credit Agreement that Holdings shall have executed and
delivered this Agreement to the Administrative Agent for the ratable benefit of
the Lenders and the Agents;
NOW, THEREFORE, in consideration of the premises and to induce the
Agents and the Lenders to enter into the Credit Agreement, and to induce the
Lenders to make their respective extensions of credit to or for the benefit of
the Borrower thereunder, Holdings hereby agrees with the Administrative Agent,
for the ratable benefit of the Lenders and the Agents, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions.
1.1(a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the
Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Deposit
Accounts, Documents, Equipment, Farm Products, Fixtures, Instruments and
Inventory.
1.1(b) The following terms shall have the following meanings:
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"Agreement": this Parent Pledge and Security Agreement, as the
same may be amended, supplemented or otherwise modified from time to time.
"Collateral": as defined in Section 2.
"Collateral Account": any collateral account established by
the Administrative Agent as provided in subsection 5.4.
"Contracts": all contracts and agreements to which Holdings is
a party on the date hereof or becomes a party subsequent to the date
hereof, as the same may be amended, supplemented or otherwise modified
from time to time, including, without limitation, (i) all rights of
Holdings to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of Holdings to damages arising
thereunder and (iii) all rights of Holdings to perform and to exercise all
remedies thereunder.
"Copyrights": (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished
(including, without limitation, those listed on Schedule 4), all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings
and applications in the United States Copyright Office, and (ii) the right
to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming Holdings as
licensor or licensee (including, without limitation, those listed on
Schedule 4), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"General Intangibles": all "general intangibles" as such term
is defined in Section 9-106 of the Uniform Commercial Code in effect in
the State of New York on the date hereof and, in any event, including,
without limitation, with respect to Holdings, all contracts, agreements,
instruments and indentures in any form, and portions thereof, to which
Holdings is a party or under which Holdings has any right, title or
interest or to which Holdings or any property of Holdings is subject, as
the same may from time to time be amended, supplemented or otherwise
modified, including, without limitation, (i) all rights of Holdings to
receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of Holdings to damages arising thereunder and
(iii) all rights of Holdings to perform and to exercise all remedies
thereunder, in each case to the extent the grant by Holdings of a security
interest pursuant to this Agreement in its right, title and interest in
such contract, agreement, instrument or indenture is not prohibited by
such contract, agreement, instrument or indenture without the consent of
any other party thereto, would not give any other party to such contract,
agreement, instrument or indenture the right to terminate its obligations
thereunder, or is permitted with consent if all necessary consents to such
grant of a security interest have been obtained from the other parties
thereto (it being understood that the foregoing shall not be deemed to
obligate Holdings to obtain such consents); provided, that the foregoing
limitation shall not affect, limit, restrict or impair the grant by
Holdings of a security interest pursuant to this Agreement in any
Receivable or any money or other amounts due or to become due under any
such contract, agreement, instrument or indenture.
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"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks and the
Trademark Licenses, and all rights to sue at law or in equity for any
infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.
"Intercompany Note": any promissory note evidencing loans made
by Holdings to any of its Subsidiaries.
"Investment Property": as defined in the California UCC.
"Issuers": the collective reference to each issuer of a
Pledged Security.
"New York UCC": the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Obligations": the collective reference to the unpaid
principal of and interest on the Loans and Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, (i) interest accruing at the then applicable rate provided in
the Credit Agreement, after the maturity of the Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to Holdings, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding and (ii) any exposure
of any Lender under any lockbox arrangement, controlled disbursement
arrangement, checking accounts or other similar arrangements
(collectively, "Cash Management Agreements") with or on behalf of Holdings
and/or its Subsidiaries) to the Administrative Agent or any Lender (or, in
the case of any Interest Rate Agreement referred to below, any Affiliate
of any Lender), whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Credit Agreement, this
Agreement, the other Credit Documents, any Letter of Credit or any
Interest Rate Agreement entered into by Holdings with any Lender (or any
Affiliate of any Lender) or any Cash Management Agreement entered into by
Holdings or any Subsidiary of Holdings with any Lender or any other
document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent and counsel to the Lenders that are required to be paid by Holdings
pursuant to the terms of any of the foregoing agreements).
"Patents": (i) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and
extensions thereof and all goodwill associated therewith, including,
without limitation, any of the foregoing referred to on Schedule 4, (ii)
all applications for letters patent of the United States or any other
country and all divisions, continuations and continuations-in-part
thereof, including, without limitation, any of the foregoing referred to
on Schedule 4, and (iii) all rights to obtain any reissues or extensions
of the foregoing.
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"Patent License": all agreements, whether written or oral,
providing for the grant by or to Holdings of any right to manufacture, use
or sell any invention covered in whole or in part by a Patent, including,
without limitation, any of the foregoing referred to on Schedule 4.
"Pledged Notes": all promissory notes listed on Schedule 1,
all Intercompany Notes at any time issued to any Pledgor and all other
promissory notes issued to or held by Holdings (other than promissory
notes issued in connection with extensions of trade credit by Holdings in
the ordinary course of business).
"Pledged Securities": the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on
Schedule 1, together with any other shares, stock certificates, options or
rights of any nature whatsoever in respect of the Capital Stock of any
Person that may be issued or granted to, or held by, Holdings while this
Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New York
on the date hereof and, in any event, shall include, without limitation,
all dividends or other income from the Pledged Stock, collections thereon
or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to on Schedule 4, and (ii) the
right to obtain all renewals thereof
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to Holdings of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
on Schedule 4.
1.2 Other Definitional Provisions.
1.2(a) The words "hereof," "herein", "hereto" and "hereunder"
and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to
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any particular provision of this Agreement, and Section and Schedule
references are to this Agreement unless otherwise specified.
1.2(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
1.2(c) Where the context requires, terms relating to the
Collateral or any part thereof shall refer to Holdings' Collateral or the
relevant part thereof.
SECTION 2. GRANT OF SECURITY INTEREST
Holdings hereby assigns and transfers to the Administrative Agent,
and hereby grants to the Administrative Agent, for the ratable benefit of the
Agents and the Lenders, a security interest in, all of the following property
now owned or at any time hereafter acquired by Holdings or in which Holdings now
has or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations:
2.0(a) all Accounts;
2.0(b) all Chattel Paper;
2.0(c) all Contracts;
2.0(d) all Documents;
2.0(e) all Deposit Accounts;
2.0(0) all Equipment;
2.0(g) all Fixtures;
2.0(h) all General Intangibles;
2.0(i) all Instruments;
2.0(j) all Intellectual Property;
2.0(k) all Inventory;
2.0(l) all Investment Property;
2.0(m) all Pledged Stock;
2.0(n) all books and records pertaining to the Collateral; and
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2.0(o) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing.
Notwithstanding the foregoing, except as permitted by Section 9-318(4) of the
New York UCC, this Agreement shall not constitute an assignment of any Contract,
General Intangible, Patent License or Trademark License to the extent that such
Contract, General Intangible, Patent License or Trademark License, or the
instruments giving the same, would prohibit such assignment.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreement and to induce the Agents and the Lenders to make their respective
extensions of credit to or for the benefit of the Borrower thereunder, Holdings
hereby represents and warrants to each of the Agents and the Lenders that:
3.1 Representations in Credit Agreement. The representations and
warranties set forth in Section 4 of the Credit Agreement, each of which is
hereby incorporated herein by reference, are true and correct, and the Agents
and the Lenders shall be entitled to rely on each of them as if they were fully
set forth herein.
3.2 Title; No Other Liens. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Agents and the
Lenders pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, Holdings owns each item of the Collateral
free and clear of any and all Liens or claims of others. No financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as have been filed in favor
of the Administrative Agent, for the ratable benefit of the Agents and the
Lenders, pursuant to this Agreement or as are permitted by the Credit Agreement.
3.3 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement:
3.3(a) upon completion of the filings and other actions
specified on Schedule 2 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the
Administrative Agent in completed and duly executed form) will constitute
valid perfected security interests in all of the Collateral in favor of
the Administrative Agent, for the ratable benefit of the Agents and the
Lenders, as collateral security for the Obligations, enforceable in
accordance with the terms hereof against all creditors of Holdings and any
Persons purporting to purchase any Collateral from Holdings, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; and
3.3(b) are prior to all other Liens on the Collateral in
existence on the date hereof except for unrecorded Liens and other Liens
or permitted by the Credit Agreement which have priority over the Liens on
the Collateral by operation of law.
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3.4 Chief Executive Office. On the date hereof, Holdings'
jurisdiction of organization and the location of Holdings' chief executive
office is specified on Schedule 3.
3.5 Inventory and Equipment. None of Collateral constitutes or is
the Proceeds of Inventory or Equipment.
3.6 Pledged Stock.
3.6(a) The shares of Pledged Stock pledged by Holdings
hereunder constitute all the issued and outstanding shares of all classes
of the Capital Stock of each Issuer owned by Holdings.
3.6(b) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
3.6(c) Holdings is the record and beneficial owner of, and has
good and marketable title to, the Pledged Stock pledged by it hereunder,
free of any and all Liens or options in favor of, or claims of, any other
Person, except the security interest created by this Agreement and other
Liens permitted by the Credit Agreement which have priority by operation
of law.
3.7 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
3.8 Receivables. None of the Collateral constitutes or is the
Proceeds of Receivables.
3.9 Contracts. None of the Collateral constitutes or is the Proceeds
of Contracts.
3.9(a) Except as set forth on Schedule 5 hereto, none of the
parties to any Contract is a Governmental Authority.
3.10 Intellectual Property. None of the Collateral constitutes or is
the Proceeds of Intellectual Property.
SECTION 4. COVENANTS
Holdings covenants and agrees with the Agents and the Lenders that,
from and after the date of this Agreement until the Obligations shall have been
paid in full, no Letter of Credit shall be outstanding and the Commitments shall
have terminated:
4.1 Covenants in Credit Agreement. Holdings shall take, or shall
refrain from taking, as the case may be, each action that is necessary to be
taken or not taken, as the case may be, so that no Default or Event of Default
is caused by the failure to take such action or to refrain from taking such
action by any of the Credit Parties.
4.2 Delivery of Instruments and Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper,
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such Instrument or Chattel Paper shall be promptly delivered to the
Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement.
4.3 Payment of Obligations. Holdings will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all material taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all material claims of any kind (including, without limitation, claims
for labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if the amount or validity thereof is
currently being contested in good faith by appropriate proceedings, reserves in
conformity with GAAP with respect thereto have been provided on the books of
Holdings and such proceedings could not reasonably be expected to result in the
sale, forfeiture or loss of any material portion of the Collateral or any
interest therein.
4.4 Maintenance of Perfected Security Interest; Further
Documentation.
4.4(a) Holdings shall maintain the security interest created
by this Agreement as a perfected security interest having at least the
priority described in subsection 3.3 and shall defend such security
interest against the claims and demands of all Persons whomsoever.
4.4(b) Holdings will furnish to the Agents and the Lenders
from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.
4.4(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of Holdings,
Holdings will promptly and duly execute and deliver, and have recorded,
such further instruments and documents and take such further actions as
the Administrative Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Uniform
Commercial Code (or other similar laws) in effect in any jurisdiction with
respect to the security interests created hereby.
4.5 Changes in Locations, Name, etc. Holdings will not, except upon
15 days' prior written notice to the Administrative Agent and delivery to the
Administrative Agent of all additional executed financing statements and other
documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein,
change its name, identity or corporate structure to such an extent that any
financing statement filed by the Administrative Agent in connection with this
Agreement would become misleading.
4.6 Notices. Holdings will advise the Agents and the Lenders
promptly, in reasonable detail, of:
4.6(a) any Lien (other than security interests created hereby
or Liens permitted under the Credit Agreement) on any of the Collateral
which would adversely affect the ability of the Administrative Agent to
exercise any of its remedies hereunder, and
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4.6(b) of the occurrence of any other event of which it is
aware which could reasonably be expected to have a material adverse effect
on the enforceability, or perfection or priority of, the security
interests purported to be created hereby.
4.7 Pledged Securities.
4.7(a) If Holdings shall become entitled to receive or shall
receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or
rights in respect of the Capital Stock of any Issuer, whether in addition
to, in substitution of, as a conversion of, or in exchange for, any shares
of the Pledged Stock, or otherwise in respect thereof, Holdings shall
accept the same as the agent of the Agents and the Lenders, hold the same
in trust for the Agents and the Lenders and deliver the same forthwith to
the Administrative Agent in the exact form received, duly indorsed by
Holdings to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by
Holdings and with, if the Administrative Agent so requests, signature
guaranteed, to be held by the Administrative Agent, subject to the terms
hereof, as additional collateral security for the Obligations. Any sums
paid upon or in respect of the Pledged Stock upon the liquidation or
dissolution of any Issuer shall be paid over to the Administrative Agent
to be held by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made on or
in respect of the Pledged Stock or any property shall be distributed upon
or with respect to the Pledged Stock pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the
reorganization thereof, the property so distributed shall, unless
otherwise subject to a perfected security interest in favor of the
Administrative Agent, be delivered to the Administrative Agent to be held
by it hereunder as additional collateral security (or except as provided
in the Credit Agreement) for the Obligations. Except as provided in the
Credit Agreement, if any sums of money or property so paid or distributed
in respect of the Pledged Stock under circumstances described in this
Section 4.7(a) shall be received by Holdings, Holdings shall, until such
money or property is paid or delivered to the Administrative Agent, hold
such money or property in trust for the Lenders, segregated from other
funds of Holdings, as additional collateral security for the Obligations.
4.7(b) Except as provided in the Credit Agreement, without the
price written consent of the Administrative Agent, Holdings will not (i)
vote to enable, or take any other action to permit, any Issuer to issue
any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange
for any stock or other equity securities of any nature of any Issuer, (ii)
sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Pledged Stock or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Credit Agreement),
(iii) create, incur or permit to exist any Lien or option in favor of, or
any claim of any Person with respect to, any of the Pledged Stock or
Proceeds thereof, or any interest therein, except for the security
interests created by this Agreement or (iv) enter into any agreement or
undertaking restricting the right or ability of Holdings or the
Administrative Agent to sell, assign or transfer any of the Pledged Stock
or Proceeds thereof.
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SECTION 5. REMEDIAL PROVISIONS
5.1 Pledged Stock.
5.1(a) Unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have given notice to
Holdings of the Administrative Agent's intent to exercise its
corresponding rights pursuant to subsection 5.3(b), Holdings shall be
permitted to receive all cash dividends paid in respect of the Pledged
Stock and all payments made in respect of the Pledged Notes, in each case
paid in the normal course of business of the relevant Issuer and
consistent with past practice, to the extent permitted in the Credit
Agreement, and to exercise all voting and corporate rights with respect to
the Pledged Stock; provided, however, that no vote shall be cast or
corporate right exercised or other action taken which, in the
Administrative Agent's reasonable judgment, would materially impair the
Collateral or which would result in any violation of any provision of the
Credit Agreement, this Agreement or any other Credit Document.
5.1(b) If an Event of Default shall occur and be continuing
and the Administrative Agent shall give notice of its intent to exercise
such rights to Holdings, (i) the Administrative Agent shall have the right
to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Stock and make application thereof to Obligations
in such order as the Administrative Agent may determine, and (ii) any or
all of the Pledged Stock shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its
nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Pledged Stock at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Stock as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its
discretion any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any Issuer, or upon the exercise by
Holdings or the Administrative Agent of any right, privilege or option
pertaining to such Pledged Stock, and in connection therewith, the right
to deposit and deliver any and all of the Pledged Stock with any
committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as the Administrative Agent may
determine), all without liability except to account for property actually
received by it, but the Administrative Agent shall have no duty to
Holdings to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
5.1(c) Holdings hereby authorizes and instructs each Issuer of
any Pledged Stock pledged by Holdings hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that
(x) states that an Event of Default has occurred and is continuing and (y)
is otherwise in accordance with the terms of this Agreement, without any
other or further instructions from Holdings, and Holdings agrees that each
Issuer shall be fully protected in so complying, and (ii) unless otherwise
expressly permitted hereby, pay any dividends or other payments with
respect to the Pledged Stock directly to the Administrative Agent.
5.2 Proceeds to be Turned Over To Administrative Agent. In addition
to the rights of the Agents and the Lenders specified in subsection 5.1 with
respect to payments of Receivables, if an Event of Default shall occur and be
continuing, all Proceeds received by Holdings consisting of cash,
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checks and other near-cash items shall be held by Holdings in trust for the
Agents and the Lenders, segregated from other funds of Holdings, and shall,
forthwith upon receipt by Holdings, be turned over to the Administrative Agent
in the exact form received by Holdings (duly indorsed by Holdings to the
Administrative Agent, if required). All Proceeds received by the Administrative
Agent hereunder shall be held by the Administrative Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while held
by the Administrative Agent in a Collateral Account (or by Holdings in trust for
the Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in subsection 5.5.
5.3 Application of Proceeds. At such intervals as may be agreed upon
by Holdings and the Administrative Agent, or, if an Event of Default shall have
occurred and be continuing, at any time at the Administrative Agent's election,
the Administrative Agent may apply all or any part of Proceeds held in any
Collateral Account in payment of the Obligations in such order as required by
the Credit Agreement, and any part of such funds which are not required as
collateral security for the Obligations shall be paid over from time to time by
the Administrative Agent to Holdings or to whomsoever may be lawfully entitled
to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to
Holdings or to whomsoever may be lawfully entitled to receive the same.
5.4 Code and Other Remedies. If an Event of Default shall occur and
be continuing. the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Borrower or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of any of the Agents or Lenders or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. Any Agents or Lenders shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Borrower, which right or equity is
hereby waived and released. Holdings further agrees, at the Administrative
Agent's request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall reasonably
select, whether at Holdings' premises or elsewhere. The Administrative Agent
shall apply the net proceeds of any action taken by it pursuant to this
subsection 5.6, after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Agents and the Lenders hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Administrative Agent may elect, and only after
such application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the New York UCC, need the Administrative Agent account for
11
<PAGE>
the surplus, if any, to Holdings. To the extent permitted by applicable law,
Holdings waives all claims, damages and demands it may acquire against any
Agents or Lenders arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 15 days before such sale or other disposition.
5.5 Registration Rights.
5.5(a) If the Administrative Agent shall determine to exercise
its right to sell any or all of the Pledged Stock pursuant to subsection
5.6, and if in the opinion of the Administrative Agent it is necessary or
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, Holdings will cause
the Issuer thereof to (i) execute and deliver, and cause the directors and
officers of such Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in
the opinion of the Administrative Agent, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) use its commercially reasonable
efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date
of the first public offering of the Pledged Stock, or that portion thereof
to be sold, and (iii) make all amendments thereto and/or to the related
prospectus which, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. Holdings agrees to cause such
Issuer to comply with the provisions of the securities or "Blue Sky" laws
of any and all jurisdictions which the Administrative Agent shall
designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
5.5(b) Holdings recognizes that the Administrative Agent may
be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act and
applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of
purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view
to the distribution or resale thereof. Holdings acknowledges and agrees
that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner. The Administrative Agent
shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register
such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do
so.
5.5(c) Holdings agrees to use its commercially reasonable
efforts to do or cause to be done all such other acts as may be necessary
to make such sale or sales of all or any portion of the Pledged Stock
pursuant to this subsection 5.7 valid and binding and in compliance with
any and all other applicable Requirements of Law. Holdings further agrees
that a breach of any of the covenants contained in this subsection 5.7
will cause irreparable injury to the Agents and the Lenders, that the
Agents and the Lenders have no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in
this subsection 5.7 shall
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<PAGE>
be specifically enforceable against Holdings, and Holdings hereby waives
and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of
Default has occurred under the Credit Agreement.
5.6 Waiver; Deficiency. Holdings waives and agrees not to assert any
rights or privileges which it may acquire under Section 9-112 of the New York
UCC. Holdings shall remain liable for any deficiency if the proceeds of any sale
or other disposition of the Collateral are insufficient to pay its Obligations
and the fees and disbursements of any attorneys employed by the Administrative
Agent or any Lender to collect such deficiency.
SECTION 6. THE ADMINISTRATIVE AGENT
6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.
6.1(a) Holdings hereby irrevocably constitutes and appoints
the Administrative Agent and any officer or agent thereof, with full power
of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Holdings and in
the name of Holdings or in its own name, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without
limiting the generality of the foregoing, Holdings hereby gives the
Administrative Agent the power and right, on behalf of Holdings, without
notice to or assent by Holdings, to do any or all of the following:
(i) in the name of Holdings or its own name, or
otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Receivable or Contract or with respect to any
other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of
collecting any and all such moneys due under any Receivable or
Contract or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute
and deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Administrative Agent may request to
evidence the Agents' and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of
Holdings relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all or
any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for
in subsection, 5.6 or 5.7, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the
Collateral; and
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<PAGE>
(v)(A) direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct: (B) ask or demand for, collect,
and receive payment of and receipt for, any and all moneys, claims
and other amounts due or to become due at any time in respect of or
arising out of any Collateral; (C) sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments. verifications,
notices and other documents in connection with any of the
Collateral; (D) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (E) defend any
suit, action or proceeding brought against Holdings with respect to
any Collateral; (F) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may reasonably
deem appropriate; (G) assign any Copyright, Patent or Trademark
(along with the goodwill of the business to which any such
Copyright, Patent or Trademark pertains), throughout the world for
such term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (H)
generally, sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Administrative Agent were the absolute
owner thereof for all purposes, and do, at the Administrative
Agent's option and Holdings' expense, at any time, or from time to
time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and
the Agents' and the Lenders' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as
Holdings might do.
Anything in this subsection 6.1(a) to the contrary notwithstanding,
the Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this subsection 6.1(a) unless an Event of
Default shall have occurred and be continuing.
6.1(b) If Holdings fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
6.1(c) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this subsection 6.1,
together with interest thereon at a rate per annum equal to the rate per
annum at which interest would then be payable on past due Base Rate Loans
under the Credit Agreement, from the date of payment by the Administrative
Agent to the date reimbursed by Holdings, shall be payable by Holdings to
the Administrative Agent on demand.
6.1(d) Holdings hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with
an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
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<PAGE>
6.2 Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody. safekeeping and physical preservation of the
Collateral in its possession. under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of Holdings or any other Person or to take any other action whatsoever
with regard to the Collateral or any part thereof The powers conferred on the
Agents and the Lenders hereunder are solely to protect the Agents' and the
Lenders' interests in the Collateral and shall not impose any duty upon any
Agents or Lenders to exercise any such powers. The Agents and the Lenders shall
be accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to Holdings for any act or failure to
act hereunder, except for their own gross negligence or willful misconduct.
6.3 Execution of Financing Statements. Pursuant to Section 9-402 of
the New York UCC and any other applicable law, Holdings authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of Holdings in such form and in such offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any jurisdiction.
6.4 Authority of Administrative Agent. Holdings acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as among the Agents and the Lenders, be governed by
the Credit Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as among the Agents and Holdings, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Lenders with full and valid authority so to act or refrain from acting, and
Holdings shall not be under any obligation, or entitlement, to make any inquiry
respecting such authority.
SECTION 7. MISCELLANEOUS
7.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, restated, supplemented or otherwise modified
except in accordance with subsection 10.1 of the Credit Agreement.
7.2 Notices. All notices, requests and demands to or upon the Agents
or Holdings hereunder shall be effected in the manner provided for in subsection
10.2 of the Credit Agreement.
7.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 7.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
15
<PAGE>
exercising, on the part of any of the Agents or Lenders, any right, power or
privilege hereunder shall operate as a waiver thereof No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any of the Agents or Lenders of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent, on behalf of the other Agents and the Lenders, would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative. may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
7.4 Enforcement Expenses; Indemnification.
7.4(a) Holdings agrees to pay or reimburse each of the Lenders
and the Agents for all its reasonable costs and expenses incurred in
collecting against Holdings or otherwise enforcing or preserving any
rights under this Agreement and the other Credit Documents to which
Holdings is a party, including, without limitation, the reasonable fees
and disbursements of counsel to the Administrative Agent and of counsel to
each of the other Agents and Lenders.
7.4(b) Holdings agrees to pay, and to save the Agents and the
Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect
to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
7.4(c) Holdings agrees to pay, and to save the Agents and the
Lenders harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the extent Holdings would be required to do so pursuant to
subsection 10.5 of the Credit Agreement.
7.4(d) The agreements in this subsection 7.4 shall survive
repayment of the Obligations and all other amounts payable under the
Credit Agreement and the other Credit Documents.
7.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of Holdings and shall inure to the benefit of the Agents
and the Lenders and their successors and assigns; provided that Holdings may not
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Administrative Agent.
7.6 Set-Off. Holdings hereby irrevocably authorizes each of the
Agents and Lenders at any time and from time to time pursuant to subsection
10.7(a) of the Credit Agreement shall have occurred and be continuing, without
notice to Holdings, any such notice being expressly waived by Holdings, to
set-off and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Agent or Lender to or for the credit or the account of the
Borrower, or any part thereof in such amounts as such Agent or Lender may elect,
against and on account of the obligations and liabilities of Holdings to such
Agent or Lender hereunder and claims of every nature and description of
16
<PAGE>
such Agent or Lender against Holdings, in any currency, whether arising
hereunder, under the Credit Agreement, any other Credit Document or otherwise,
as such Agent or Lender may elect, whether or not any Agent or Lender has made
any demand for payment and although such obligations, liabilities and claims may
be contingent or unmatured. Each of the Agents and Lenders shall notify Holdings
promptly of any such set-off and the application made by such Agent or Lender of
the proceeds thereof, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Agent and
Lender under this subsection 7.6 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such Agent or
Lender may have.
7.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
7.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.9 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
7.10 Integration. This Agreement and the other Credit Documents
represent the agreement of Holdings, the Agents and the Lenders with respect to
the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by any of the Agents or Lenders relative to
subject matter hereof and thereof not expressly set forth or referred to herein,
the Credit Agreement or in the other Credit Documents.
7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
7.12 SUBMISSION TO JURISDICTION; WAIVERS. HOLDINGS HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
7.12(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE CREDIT AGREEMENT AND
THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
7.12(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW
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<PAGE>
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
7.12(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO HOLDINGS AT ITS ADDRESS REFERRED TO IN SUBSECTION 7.2 OR AT
SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO;
7.12(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
7.12(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
7.13 Acknowledgements. Holdings hereby acknowledges that:
7.13(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit Documents to
which it is a party;
7.13(b) none of the Agents nor Lenders has any fiduciary
relationship with or duty to the Holdings arising out of or in connection
with this Agreement or any of the other Credit Documents, and the
relationship between Holdings, on the one hand, and the Agents and
Lenders, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
7.13(c) no joint venture is created hereby or by the other
Credit Documents or otherwise exists by virtue of the transactions
contemplated hereby among Agents, among the Agents and/or the Lenders or
among the Borrower and the Agents and/or the Lenders.
7.14 WAIVER OF JURY TRIAL. HOLDINGS AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
7.15 Releases.
(a) At such time as the Loans, the Reimbursement Obligations
and the other Obligations shall have been paid in full, the Commitments
have been terminated and no Letters of Credit shall be outstanding, the
Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to
survive such termination)
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of the Administrative Agent and Holdings hereunder shall terminate, all
without delivery of any instrument or performance of any act by any party,
and all rights to the Collateral shall revert to Holdings and the
Administrative Agent shall deliver to Holdings any Collateral held by the
Administrative Agent hereunder, and execute and deliver to Holdings such
documents as Holdings shall reasonably request to evidence such
termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by Holdings in a transaction permitted by the Credit
Agreement, then the Administrative Agent. at the request and sole expense
of Holdings, shall execute and deliver to Holdings all releases or other
documents reasonably necessary or desirable for the release of the Liens
created hereby on such Collateral.
[Signature page follows]
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IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly executed and delivered as of the date first above written.
L-3 COMMUNICATIONS HOLDINGS, INC.
By: _________________________________
Name:
Title:
Address for Notices:
600 Third Avenue
34th Floor
New York, New York 10016
Attention: __________________________
Phone: (212) 697-1111
Fax: (212) ___-_______
Accepted on behalf of the Agents and
the Lenders as of the date first
above written:
BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT
By: ___________________________
Name:
Title:
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Schedule 1
DESCRIPTION OF PLEDGED STOCK
Pledged Stock:
Issuer Class of Stock Stock Certificate No. No. of Shares
- ------ -------------- --------------------- -------------
Pledged Notes:
Issuer Payee Principal Amount
- ------ ----- ----------------
21
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Schedule 2
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
[List each office where a financing statement is to be filed]
Patent and Trademark Filings
----------------------------
[List all filings]
Actions with respect to Pledged Stock
-------------------------------------
Other Actions
-------------
[Describe other actions to be taken]
22
<PAGE>
Schedule 3
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
Holdings Location
-------- --------
23
<PAGE>
Schedule 4
COPYRIGHTS AND COPYRIGHT LICENSES
o NONE
PATENTS AND PATENT LICENSES
o NONE
TRADEMARKS AND TRADEMARK LICENSES
o NONE
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Schedule 5
CONTRACTS WITH GOVERNMENT AUTHORITY
25
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Parent Pledge
and Security Agreement dated as of April 30, 1997 (the "Agreement"), made by the
parties thereto for the benefit of Bank of America NT & SA, as Administrative
Agent. The undersigned agrees for the benefit of the Administrative Agent and
the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 4.7(a) of
the Agreement.
3. The terms of Sections 5.1(a) and 5.5 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 5.1(a) or 5.5 of the Agreement.
[NAME OF ISSUER]
____________________________________________
Name: ______________________________________
Title:______________________________________
Address for Notices:
____________________________________________
____________________________________________
Fax: ______________________________________
26
<PAGE>
EXHIBIT B-4
TO
CREDIT AGREEMENT
================================================================================
BORROWER PLEDGE AND SECURITY AGREEMENT
made by
L-3 COMMUNICATIONS CORPORATION
in favor of
BANK OF AMERICA NT & SA,
as Administrative Agent
Dated as of April 30, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS .................................................... 1
1.1 Definitions ........................................................ 1
1.2 Other Definitional Provisions ...................................... 5
SECTION 2. GRANT OF SECURITY INTEREST ....................................... 5
SECTION 3. REPRESENTATIONS AND WARRANTIES ................................... 6
3.1 Title; No Other Liens .............................................. 6
3.2 Perfected First Priority Liens ..................................... 6
3.3 Chief Executive Office ............................................. 7
3.4 Inventory and Equipment ............................................ 7
3.5 Pledged Securities ................................................. 7
3.6 Farm Products ...................................................... 7
3.7 Receivables ........................................................ 7
3.8 Contracts .......................................................... 7
3.9 Intellectual Property .............................................. 8
SECTION 4. COVENANTS ........................................................ 9
4.1 Delivery of Instruments and Chattel Paper .......................... 9
4.2 Maintenance of Insurance ........................................... 9
4.3 Payment of Obligations ............................................. 9
4.4 Maintenance of Perfected Security Interest; Further Documentation .. 9
4.5 Changes in Locations, Name, etc. ................................... 10
4.6 Notices ............................................................ 10
4.7 Pledged Securities ................................................. 10
4.8 Receivables ........................................................ 11
4.9 Contracts .......................................................... 12
4.10 Intellectual Property .............................................. 13
SECTION 5. REMEDIAL PROVISIONS .............................................. 14
5.1 Certain Matters Relating to Receivables ............................ 14
5.2 Communications with Obligors; Borrower Remains Liable .............. 16
5.3 Pledged Stock ...................................................... 16
5.4 Proceeds to be Turned Over To Administrative Agent ................. 17
5.5 Application of Proceeds ............................................ 17
5.6 Code and Other Remedies ............................................ 18
5.7 Registration Rights ................................................ 18
5.8 Waiver Deficiency .................................................. 19
SECTION 6. THE ADMINISTRATIVE AGENT ......................................... 19
6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. ....... 19
6.2 Duty of Administrative Agent ....................................... 21
6.3 Execution of Financing Statements .................................. 22
6.4 Authority of Administrative Agent .................................. 22
SECTION 7. MISCELLANEOUS .................................................... 22
7.1 Amendments in Writing .............................................. 22
<PAGE>
Page
----
7.2 Notices ............................................................ 22
7.3 No Waiver by Course of Conduct; Cumulative Remedies ................ 22
7.4 Enforcement Expenses; Indemnification .............................. 22
7.5 Successors and Assigns ............................................. 23
7.6 Set-Off ............................................................ 23
7.7 Counterparts ....................................................... 23
7.8 Severability ....................................................... 24
7.9 Section Headings ................................................... 24
7.10 Integration ........................................................ 24
7.11 GOVERNING LAW ...................................................... 24
7.12 SUBMISSION TO JURISDICTION; WAIVERS ................................ 24
7.13 Acknowledgements ................................................... 25
7.14 WAIVER OF JURY TRIAL ............................................... 25
7.15 Releases ........................................................... 25
7.16 Conflict ........................................................... 26
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FORM OF
BORROWER PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of April 30, 1997, made by
L-3 Communications Corporation, a Delaware corporation (the "Borrower"), in
favor of Bank of America NT & SA ("BOA") as Administrative Agent (in such
capacity, the "Administrative Agent") for the banks and other financial
institutions (collectively, the "Lenders") from time to time parties to the
Credit Agreement, dated as of April 30, 1997 (as amended, restated, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among the
Borrower, the Lenders, Lehman Commercial Paper Inc. ("LCPI"), as documentation
agent (in such capacity, the "Documentation Agent"), LCPI as syndication agent
(in such capacity, the "Syndication Agent"; and together with the Documentation
Agent and Administrative Agent, the "Agents"), LCPI as arranger (in such
capacity, the "Arranger") and the Administrative Agent.
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit Agreement;
and
WHEREAS, it is a condition precedent to the several obligations of
the Lenders to make their respective extensions of credit to or for the benefit
of the Borrower under the Credit Agreement that the Borrower shall have executed
and delivered this Agreement to the Administrative Agent for the ratable benefit
of the Lenders and the Agents;
NOW, THEREFORE, in consideration of the premises and to induce the
Agents and the Lenders to enter into the Credit Agreement, and to induce the
Lenders to make their respective extensions of credit to or for the benefit of
the Borrower thereunder, Borrower hereby agrees with the Administrative Agent,
for the ratable benefit of the Lenders and the Agents, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions.
1.1(a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the
Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Deposit
Accounts, Documents, Equipment, Farm Products, Fixtures, Instruments and
Inventory.
1.1(b) The following terms shall have the following meanings:
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"Agreement": the Borrower Pledge and Security Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Collateral": as defined in Section 2.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in subsections 5.1 or 5.4.
"Contracts": all contracts and agreements to which the Borrower is a
party on the date hereof or becomes a party subsequent to the date hereof, as
the same may be amended, supplemented or otherwise modified from time to time,
including, without limitation, (i) all rights of the Borrower to receive moneys
due and to become due to it thereunder or in connection therewith, (ii) all
rights of the Borrower to damages arising thereunder and (iii) all rights of the
Borrower to perform and to exercise all remedies thereunder.
"Copyrights": (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed on Schedule 5), all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, and (ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming the Borrower as
licensor or licensee (including, without limitation, those listed on Schedule
5), granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.
"General Intangibles": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the State
of New York on the date hereof and, in any event, including, without limitation,
with respect to the Borrower, all contracts, agreements, instruments and
indentures in any form, and portions thereof, to which the Borrower is a party
or under which the Borrower has any right, title or interest or to which the
Borrower or any property of the Borrower is subject, as the same may from time
to time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of the Borrower to receive moneys due and to become
due to it thereunder or in connection therewith, (ii) all rights of the Borrower
to damages arising thereunder and (iii) all rights of the Borrower to perform
and to exercise all remedies thereunder, in each case to the extent the grant by
the Borrower of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or indenture is not
prohibited by such contract, agreement, instrument or indenture without the
consent of any other party thereto, would not give any other party to such
contract, agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all necessary consents
to such grant of a security interest have been obtained from the other parties
thereto (it being understood that the foregoing shall not be deemed to obligate
the Borrower to obtain such consents); provided, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by the Borrower of a
security interest pursuant to this Agreement in any Receivable or any money or
other amounts due or to become due under any such contract, agreement,
instrument or indenture.
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"Government Contract": a Contract with a Government Authority, each
as listed on Schedule 6.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to
sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.
"Intercompany Note": any promissory note evidencing loans made by
the Borrower to any of its Subsidiaries.
"Investment Property": as defined in the California UCC.
"Issuers": the collective reference to each issuer of a Pledged
Security.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": the collective reference to the unpaid principal of
and interest on the Loans and Reimbursement Obligations and all other
obligations and liabilities of the Borrower (including, without limitation, (i)
interest accruing at the then applicable rate provided in the Credit Agreement
after the maturity of the Loans and Reimbursement Obligations and interest
accruing at the then applicable rate provided in the Credit Agreement after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding
and (ii) any exposure of any Lender under any lockbox arrangement, controlled
disbursement arrangement, checking accounts or other similar arrangements
(collectively, "Cash Management Agreements") with or on behalf of the Borrower
and/or its Subsidiaries) to the Administrative Agent or any Lender (or, in the
case of any Interest Rate Agreement referred to below, any Affiliate of any
Lender), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, this Agreement, the other Credit
Documents, any Letter of Credit or any Interest Rate Agreement entered into by
the Borrower with any Lender (or any Affiliate of any Lender) or any Cash
Management Agreement entered into by the Borrower or any Subsidiary of the
Borrower with any Lender or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Administrative Agent and counsel to the Lenders that are required to be paid by
the Borrower pursuant to the terms of any of the foregoing agreements).
"Patents": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without limitation,
any of the foregoing referred to on Schedule 5, (ii) all applications for
letters patent of the United States or any other country and all divisions,
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continuations and continuations-in-part thereof, including, without limitation,
any of the foregoing referred to on Schedule 5, and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to the Borrower of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to on Schedule 5.
"Pledged Notes": all promissory notes listed on Schedule 1, all
Intercompany Notes at any time issued to any Pledgor and all other promissory
notes issued to or held by the Borrower (other than promissory notes issued in
connection with extensions of trade credit by the Borrower in the ordinary
course of business).
"Pledged Securities": the collective reference to the Pledged Notes
and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on Schedule 1,
together with any other shares, stock certificates, options or rights of any
nature whatsoever in respect of the Capital Stock of any Person that may be
issued or granted to, or held by, the Borrower while this Agreement is in
effect.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New York on
the date hereof and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Restricted Government Contract": Government Contracts which, by
their terms, prohibit the assignment of Receivables thereunder.
"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, including, without limitation, any of the foregoing
referred to on Schedule 5, and (ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to the Borrower of any right to use any Trademark,
including, without limitation, any of the foregoing referred to on Schedule 5.
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1.2 Other Definitional Provisions.
1.2(a) The words "hereof," "herein", "hereto" and "hereunder"
and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to this Agreement
unless otherwise specified.
1.2(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
1.2(c) Where the context requires, terms relating to the
Collateral or any part thereof shall refer to the Borrower's Collateral or
the relevant part thereof.
SECTION 2. GRANT OF SECURITY INTEREST
Borrower hereby assigns and transfers to the Administrative Agent,
and hereby grants to the Administrative Agent, for the ratable benefit of the
Agents and the Lenders, a security interest in, all of the following property
now owned or at any time hereafter acquired by the Borrower or in which the
Borrower now has or at any time in the future may acquire any right, title or
interest (collectively, the "Collateral"), as collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations:
2.0(a) all Accounts;
2.0(b) all Chattel Paper;
2.0(c) all Contracts;
2.0(d) all Documents;
2.0(e) all Deposit Accounts;
2.0(f) all Equipment;
2.0(g) all Fixtures;
2.0(h) all General Intangibles;
2.0(i) all Instruments;
2.0(j) all Intellectual Property;
2.0(k) all Inventory;
2.0(l) all Investment Property;
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2.0(m) all Pledged Securities;
2.0(n) all books and records pertaining to the Collateral; and
2.0(o) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing.
Notwithstanding the foregoing, except as permitted by Section 9-318(4) of the
New York UCC, this Agreement shall not constitute an assignment of any Contract,
General Intangible, Patent License or Trademark License to the extent that such
Contract, General Intangible, Patent License or Trademark License, or the
instruments giving the same, would prohibit such assignment.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreement and to induce the Agents and the Lenders to make their respective
extensions of credit to or for the benefit of the Borrower thereunder, Borrower
hereby represents and warrants to each of the Agents and the Lenders that:
3.1 Title; No Other Liens. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Agents and the
Lenders pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, the Borrower owns each item of the
Collateral free and clear of any and all Liens or claims of others. No financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Agents and the Lenders, pursuant to this Agreement or as are permitted by the
Credit Agreement.
3.2 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement:
3.2(a) upon completion of the filings and other actions
specified on Schedule 2 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the
Administrative Agent in completed and duly executed form) will constitute
valid perfected security interests in all of the Collateral in favor of
the Administrative Agent, for the ratable benefit of the Agents and the
Lenders, as collateral security for the Obligations, enforceable in
accordance with the terms hereof against all creditors of the Borrower and
any Persons purporting to purchase any Collateral from the Borrower,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; and
3.2(b) are prior to all other Liens on the Collateral in
existence on the date hereof except for unrecorded Liens and other Liens
or permitted by the Credit Agreement which have priority over the Liens on
the Collateral by operation of law.
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3.3 Chief Executive Office. On the date hereof, the Borrower's
jurisdiction of organization and the location of the Borrower's chief executive
office is specified on Schedule 3.
3.4 Inventory and Equipment. On the date hereof, the Inventory and
the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 4.
3.5 Pledged Securities.
3.5(a) The shares of Pledged Stock pledged by the Borrower
hereunder constitute all the issued and outstanding shares of all classes
of the Capital Stock of each Issuer owned by the Borrower.
3.5(b) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
3.5(c) Each of the Pledged Notes constitutes the legal, valid
and binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
3.5(d) The Borrower is the record and beneficial owner of, and
has good and marketable title to, the Pledged Securities pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of,
any other Person, except the security interest created by this Agreement
and other Liens permitted by the Credit Agreement which have priority by
operation of law.
3.6 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
3.7 Receivables.
3.7(a) Except as set forth on Schedule 6 hereto, none of the
obligors on any material Receivable is a Governmental Authority.
3.7(b) The amounts represented by the Borrower to the Lenders
from time to time as owing to the Borrower in respect of the Receivables
will at such times be accurate in all material respects.
3.8 Contracts.
3.8(a) Each Contract is in full force and effect and
constitutes a valid and legally enforceable obligation of the parties
thereto, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
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3.8(b) Except as set forth on Schedule 4.5 to the Credit
Agreement, no consent or authorization of, filing with or other act by or
in respect of any Governmental Authority is required in connection with
the execution, delivery, performance, validity or enforceability of any of
the Contracts by any party thereto other than those which have been duly
obtained, made or performed, are in full force and effect and do not
subject the scope of any such Contract to any material adverse limitation,
either specific or general in nature.
3.8(c) Neither the Borrower nor (to the best of the Borrower's
knowledge) any of the other parties to the Contracts is in default in the
performance or observance of any of the terms thereof in any manner that,
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
3.8(d) The right, title and interest of the Borrower in, to
and under the Contracts are not subject to any defenses, offsets,
counterclaims or claims that, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
3.8(e) No amount payable to the Borrower under or in
connection with any Contract is evidenced by any Instrument or Chattel
Paper which has not been delivered to the Administrative Agent.
3.8(f) Except as set forth on Schedule 6 hereto, none of the
parties to any Contract is a Governmental Authority.
3.9 Intellectual Property.
3.9(a) The Borrower owns no material Intellectual Property
other than as set forth on Schedule 5.
3.9(b) On the date hereof, all material Intellectual Property
is valid, subsisting, unexpired and enforceable, has not been abandoned
and does not infringe the intellectual property rights of any other
Person, except as could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
3.9(c) Except as set forth in Schedule 5, on the date hereof,
none of the material Intellectual Property is the subject of any licensing
or franchise agreement pursuant to which the Borrower is the licensor or
franchisor.
3.9(d) No holding, decision or judgment has been rendered by
any Governmental Authority which would limit, cancel or question the
validity of, or the Borrower's ownership interests in, any Intellectual
Property in any respect that could reasonably be expected to have a
Material Adverse Effect.
3.9(e) No action or proceeding is pending, or, to the
knowledge of the Borrower, threatened, on the date hereof (i) seeking to
limit, cancel or question the validity of any material Intellectual
Property or the Borrower's ownership interest therein, or (ii) which, if
adversely determined, would have a material adverse effect on the value of
any Intellectual Property.
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SECTION 4. COVENANTS
Borrower covenants and agrees with the Agents and the Lenders that,
from and after the date of this Agreement until the Obligations shall have been
paid in full, no Letter of Credit shall be outstanding and the Commitments shall
have terminated:
4.1 Delivery of Instruments and Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
promptly delivered to the Administrative Agent, duly indorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.
4.2 Maintenance of Insurance.
4.2(a) The Borrower will maintain, with financially sound and
reputable companies, insurance policies as required by subsection 6.5 of
the Credit Agreement.
4.2(b) All such insurance shall (i) provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by the
Administrative Agent of written notice thereof, (ii) name the
Administrative Agent as insured party or loss payee, (iii) if reasonably
requested by the Administrative Agent, include a breach of warranty clause
and (iv) be reasonably satisfactory in all other respects to the
Administrative Agent.
4.2(c) The Borrower shall deliver to the Agents and the
Lenders a report of a reputable insurance broker with respect to such
insurance during the month of December in each calendar year and such
supplemental reports with respect thereto as the Administrative Agent may
from time to time reasonably request.
4.3 Payment of Obligations. The Borrower will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all material taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all material claims of any kind (including, without limitation, claims
for labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if the amount or validity thereof is
currently being contested in good faith by appropriate proceedings, reserves in
conformity with GAAP with respect thereto have been provided on the books of the
Borrower and such proceedings could not reasonably be expected to result in the
sale, forfeiture or loss of any material portion of the Collateral or any
interest therein.
4.4 Maintenance of Perfected Security Interest; Further
Documentation.
4.4(a) The Borrower shall maintain the security interest
created by this Agreement as a perfected security interest having at least
the priority described in subsection 3.3 and shall defend such security
interest against the claims and demands of all Persons whomsoever.
4.4(b) The Borrower will furnish to the Agents and the Lenders
from time to time statements and schedules further identifying and
describing the Collateral and such other
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reports in connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail.
4.4(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of the
Borrower, the Borrower will promptly and duly execute and deliver, and
have recorded, such further instruments and documents and take such
further actions as the Administrative Agent may reasonably request for the
purpose of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted, including, without limitation,
the filing of any financing or continuation statements under the Uniform
Commercial Code (or other similar laws) in effect in any jurisdiction with
respect to the security interests created hereby.
4.5 Chances in Locations, Name, etc. The Borrower will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein
and (b) if applicable, a written supplement to Schedule 4 showing any additional
location at which Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept at a
location other than those listed on Schedule 4;
(ii) change the location of its chief executive office from
that referred to in Section 3.4; or
(iii) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Administrative Agent
in connection with this Agreement would become misleading.
4.6 Notices. The Borrower will advise the Agents and the Lenders
promptly, in reasonable detail, of:
4.6(a) any Lien (other than security interests created hereby
or Liens permitted under the Credit Agreement) on any of the Collateral
which would adversely affect the ability of the Administrative Agent to
exercise any of its remedies hereunder; and
4.6(b) of the occurrence of any other event of which it is
aware which could reasonably be expected to have a material adverse effect
on the enforceability, or perfection or priority of, the security
interests purported to be created hereby.
4.7 Pledged Securities.
4.7(a) If the Borrower shall become entitled to receive or
shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or
rights in respect of the Capital Stock of any Issuer, whether in addition
to, in substitution of, as a conversion of, or in exchange
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for, any shares of the Pledged Stock, or otherwise in respect thereof, the
Borrower shall accept the same as the agent of the Agents and the Lenders,
hold the same in trust for the Agents and the Lenders and deliver the same
forthwith to the Administrative Agent in the exact form received, duly
indorsed by the Borrower to the Administrative Agent, if required,
together with an undated stock power covering such certificate duly
executed in blank by the Borrower and with, if the Administrative Agent so
requests, signature guaranteed, to be held by the Administrative Agent,
subject to the terms hereof, as additional collateral security for the
Obligations. Any sums paid upon or in respect of the Pledged Securities
upon the liquidation or dissolution of any Issuer shall be paid over to
the Administrative Agent to be held by it hereunder as additional
collateral security for the Obligations, and in case any distribution of
capital shall be made on or in respect of the Pledged Securities or any
property shall be distributed upon or with respect to the Pledged
Securities pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected
security interest in favor of the Administrative Agent, be delivered to
the Administrative Agent to be held by it hereunder as additional
collateral security (or except as provided in the Credit Agreement) for
the Obligations. Except as provided in the Credit Agreement, if any sums
of money or property so paid or distributed in respect of the Pledged
Securities under circumstances described in this Section 4.7(a) shall be
received by the Borrower, the Borrower shall, until such money or property
is paid or delivered to the Administrative Agent, hold such money or
property in trust for the Lenders, segregated from other funds of the
Borrower, as additional collateral security for the Obligations.
4.7(b) Except as provided in the Credit Agreement, without the
prior written consent of the Administrative Agent, the Borrower will not
(i) vote to enable, or take any other action to permit, any Issuer to
issue any stock or other equity securities of any nature or to issue any
other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any
Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Pledged Securities or Proceeds
thereof (except pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Pledged Securities or Proceeds thereof, or any interest therein, except
for the security interests created by this Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of the
Borrower or the Administrative Agent to sell, assign or transfer any of
the Pledged Securities or Proceeds thereof.
4.8 Receivables.
4.8(a) Other than in the ordinary course of business, the
Borrower will not (i) grant any extension of the time of payment of any
Receivable, (ii) compromise or settle any Receivable for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable
for the payment of any Receivable, (iv) allow any credit or discount
whatsoever on any Receivable or (v) amend, supplement or modify any
Receivable in any manner that could adversely affect the value thereof.
4.8(b) The Borrower will deliver to the Administrative Agent a
copy of each material demand, notice or document received by it that
questions or calls into doubt the validity or enforceability of more than
5% of the aggregate amount of the then outstanding Receivables.
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4.8(c) Upon the written request of the Required Lenders upon
the occurrence and during the continuance of an Event of Default, the
Borrower hereby authorizes the Administrative Agent upon prior written
notice to the Borrower to (x) file a Notice of Assignment pursuant to the
provisions of the Assignment of Claims Act of 1940, as amended, with the
appropriate officer or officers of the appropriate Government Authority
with respect to each Government Contract (other than Restricted Government
Contracts) and (y) take all such other action as the Administrative Agent
reasonably deems necessary to comply with the provisions of the Assignment
of Claims Act of 1940, as amended, and the Borrower shall, upon written
request of the Administrative Agent, promptly use its best efforts to have
such Notices of Assignment executed by the appropriate officer or officers
of the appropriate Government Authority; (iv) with respect to each
contract, agreement or transaction pursuant to which any State or any
political subdivision thereof is a party, execute and deliver all notices
which are required under, and comply in all other respects with, the laws
of such State to ensure that the Administrative Agent has a valid and
perfected first priority security interest in such contract, agreement or
transaction to the extent required by the terms of the Credit Agreement;
and (v) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary, or as the Administrative Agent may reasonably request, in order
to perfect and preserve the pledge, assignment and security interest
granted or purported to be granted hereby.
4.9 Contracts.
4.9(a) The Borrower will perform and comply in all material
respects with all its obligations under its material Contracts.
4.9(b) The Borrower will not amend, modify, terminate or waive
any provision of any material Contract in any manner which could
reasonably be expected to materially adversely affect the value of such
material Contract as Collateral.
4.9(c) The Borrower will exercise promptly and diligently each
and every right which it may have under each material Contract (other than
any right of termination).
4.9(d) The Borrower will deliver to the Administrative Agent a
copy of each material demand, notice or document received by it relating
in any way to any material Contract that questions the validity or
enforceability of such material Contract.
4.9(e) The Borrower represents and warrants that the
Government Contracts referenced on Schedule 6 constitute all Government
Contracts having a value equal to or in excess of $1.0 million to which
the Borrower is a party on the date hereof.
4.9(f) The Borrower will, when required under Section 6.13 of
the Credit Agreement, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Administrative Agent, the GC
Notice Recipients with respect to any Government Contract or any other
Person from time to time such documents, instruments, certificates or
reports and take such further steps relating to the Collateral consisting
of the Receivables in respect of Government Contracts which (i) the
Administrative Agent deems necessary to perfect, preserve or protect its
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security interest in such Collateral or (ii) shall be necessary to comply
with the provisions of 31 U.S.C. ss. 3727 or 41 U.S.C. ss. 15.
4.9(g) The Borrower hereby covenants and agrees that it will
not enter any Restricted Government Contracts unless the Borrower
determines in good faith that it must agree to a prohibition on the
assignment of Receivables arising under such Government Contract in order
to obtain such Government Contract and gives the Administrative Agent
written notice that it has entered into such Restricted Government
Contract.
4.10 Intellectual Property.
4.10(a) The Borrower (either itself or through licensees) will
(i) continue to use each material Trademark on each and every trademark
class of goods applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to maintain such Trademark in
full force free from any claim of abandonment for non-use, except where
the failure to do so could not, individually or in the aggregate, be
expected to have a Material Adverse Effect, (ii) maintain as in the past
the quality of products and services offered under such material
Trademark, (iii) use such material Trademark with the appropriate notice
of registration and all other notices and legends required by applicable
Requirements of Law, (iv) not adopt or use any mark which is confusingly
similar or a colorable imitation of such material Trademark unless the
Administrative Agent, for the ratable benefit of the Lenders, shall obtain
a perfected security interest in such mark pursuant to this Agreement, (v)
not do any act or knowingly omit to do any act whereby such material
Trademark may become invalidated or impaired in any way, and (vi) use
reasonable efforts to prevent any licensee or sublicensee thereof from
doing any act or knowingly omitting to do any act whereby such trademark
may become invalidated or impaired in any way.
4.10(b) The Borrower will not do any act, or omit to do any
act, whereby any material Patent may become forfeited, abandoned or
dedicated to the public and will use reasonable efforts to prevent any
sublicensee from doing any act, or omitting to do any act, whereby any
material Patent may become forfeited, abandoned or dedicated to the
public.
4.10(c) The Borrower will not do any act or knowingly omit to
do any act and will use reasonable efforts to prevent any licensee or
sublicensee thereof from doing any act or knowingly omitting to do any act
whereby any material portion of the material Copyrights may become
invalidated or otherwise impaired. The Borrower will not do any act and
will use reasonable efforts to prevent any sublicensee from doing any act
whereby any material portion of the Copyrights may fall into the public
domain.
4.10(d) The Borrower (either itself or through licensees) will
not do any act that knowingly uses any material Intellectual Property to
infringe the intellectual property rights of any other Person.
4.10(e) The Borrower will notify the Administrative Agent and
the Lenders immediately if it knows that any application or registration
relating to any material Intellectual Property may become forfeited,
abandoned or dedicated to the public, or of any material adverse
determination or development (including, without limitation, the
institution of, or any such
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determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any
court or tribunal in any country) regarding the Borrower's ownership of,
or the validity of, any material Intellectual Property or the Borrower's
right to register the same or to own and maintain the same.
4.10(f) Whenever the Borrower, either by itself or through any
agent, employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States Patent
and Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision
thereof, the Borrower shall report such filing to the Administrative Agent
within 30 Business Days after the last day of the fiscal quarter in which
such filing occurs. Upon request of the Administrative Agent, the Borrower
shall execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as the Administrative Agent may
reasonably request to evidence the Agents' and the Lenders' security
interest in any Copyright, Patent or Trademark and the goodwill and
general intangibles of the Borrower relating thereto or represented
thereby.
4.10(g) The Borrower will take all reasonable and necessary
steps, including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application (and to
obtain the relevant registration) and to maintain each registration of the
material Intellectual Property, including, without limitation, filing of
any necessary applications for renewal, affidavits of use and affidavits
of incontestability, and paying all necessary fees, except to the extent
the failure to do so could not, individually or in the aggregate, be
expected to have a Material Adverse Effect.
4.10(h) In the event that any material Intellectual Property
is infringed, misappropriated or diluted by a third party, the Borrower
shall (i) take such actions as the Borrower shall reasonably deem
appropriate under the circumstances to protect such Intellectual Property
and (ii) if such Intellectual Property is of material economic value to
the Borrower and its Subsidiaries taken as a whole, promptly notify the
Administrative Agent after it learns thereof and sue for infringement,
misappropriation or dilution, seek injunctive relief where appropriate and
recover any and all damages for such infringement, misappropriation or
dilution.
SECTION 5. REMEDIAL PROVISIONS
5.1 Certain Matters Relating to Receivables.
5.1(a) The Administrative Agent shall have the right to make
test verifications of the Receivables in any manner and through any medium
that it reasonably considers advisable, and the Borrower shall furnish all
such assistance and information as the Administrative Agent may require in
connection with such test verifications. At any time and from time to
time, upon the Administrative Agent's request and at the expense of the
Borrower, the Borrower shall cause independent public accountants or
others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
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5.1(b) The Administrative Agent hereby authorizes the Borrower
to collect the Borrower's Receivables, subject to the Administrative
Agent's direction and control, and the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative
Agent at any time after the occurrence and during the continuance of an
Event of Default, any payments of Receivables, when collected by the
Borrower, (i) shall be forthwith (and, in any event, within two Business
Days) deposited by the Borrower in the exact form received, duly indorsed
by the Borrower to the Administrative Agent if required, in a Collateral
Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent
for the account of the Lenders only as provided in subsection 5.5, and
(ii) until so turned over, shall be held by the Borrower in trust for the
Agents and the Lenders, segregated from other funds of the Borrower. Each
such deposit of Proceeds of Receivables shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments
included in the deposit. In addition, the Administrative Agent shall have
the right at any time, upon the occurrence and during the continuance of
an Event of Default and upon written notice to the Borrower of its
intention to do so, to require the Borrower to prepare notices of
assignment for each Government Contract for which it has not previously
delivered a notice of assignment pursuant to Section 6.13 of the Credit
Agreement and to file such notices of assignment (and any notice of
assignment delivered to the Administrative Agent pursuant to Section 6.13
of the Credit Agreement) with the appropriate contracting officer of the
appropriate Government Authority and to otherwise notify the account
debtors or obligors under any Receivables of the assignment of such
Receivables to the Administrative Agent and to direct such account debtors
or obligors to make payment of all amounts due or to become due to the
Borrower thereunder directly to the Administrative Agent and, upon such
notification and at the expense of the Borrower, to enforce collection of
any such Receivables, and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as the Borrower
might have done. After receipt by the Borrower of the notice from the
Administrative Agent referred to in the proviso to the preceding sentence,
(i) all amounts and proceeds (including instruments) received by the
Borrower in respect of the Receivables shall be received in trust for the
benefit of the Administrative Agent, the Agents, the Lenders, the Issuing
Banks and the other Holders hereunder, shall be segregated from other
funds of the Borrower and shall be forthwith paid over to the
Administrative Agent in the same form as so received (with any necessary
indorsement) to be applied to the Obligations in accordance with Section 8
of the Credit Agreement and (ii) the Borrower shall not adjust, settle or
compromise the amount or payment of any Account, release wholly or partly
any account debtor or obligor thereof, or allow any credit or discount
thereon.
5.1(c) At the Administrative Agent's request, the Borrower
shall deliver to the Administrative Agent all original and other documents
evidencing, and relating to, the agreements and transactions which gave
rise to the Receivables, including, without limitation, all original
orders, invoices and shipping receipts.
5.2 Communications with Obligors; Borrower Remains Liable.
5.2(a) The Administrative Agent in its own name or in the name
of others may at any time after the occurrence and during the continuance
of an Event of Default communicate with obligors under the Receivables and
parties to the Contracts to verify with them to the
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Administrative Agent's satisfaction the existence, amount and terms of any
Receivables or Contracts.
5.2(b) Upon the request of the Administrative Agent at any
time after the occurrence and during the continuance of an Event of
Default, the Borrower shall notify obligors on the Receivables and parties
to the Contracts that the Receivables and the Contracts have been assigned
to the Administrative Agent for the ratable benefit of the Lenders and
that payments in respect thereof shall be made directly to the
Administrative Agent.
5.2(c) Anything herein to the contrary notwithstanding, the
Borrower shall remain liable under each of the Receivables and Contracts
to observe and perform all the conditions and obligations to be observed
and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto. Neither the Administrative Agent nor any
Lender shall have any obligation or liability under any Receivable (or any
agreement giving rise thereto) or Contract by reason of or arising out of
this Agreement or the receipt by any Agent or Lender of any payment
relating thereto, nor shall any Agent or Lender be obligated in any manner
to perform any of the obligations of the Borrower under or pursuant to any
Receivable (or any agreement giving rise thereto) or Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any
party thereunder, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or
times.
5.3 Pledged Stock.
5.3(a) Unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have given notice to the
Borrower of the Administrative Agent's intent to exercise its
corresponding rights pursuant to subsection 5.3(b), the Borrower shall be
permitted to receive all cash dividends paid in respect of the Pledged
Stock and all payments made in respect of the Pledged Notes, in each case
paid in the normal course of business of the relevant Issuer and
consistent with past practice, to the extent permitted in the Credit
Agreement, and to exercise all voting and corporate rights with respect to
the Pledged Securities; provided, however, that no vote shall be cast or
corporate right exercised or other action taken which, in the
Administrative Agent's reasonable judgment, would materially impair the
Collateral or which would result in any violation of any provision of the
Credit Agreement, this Agreement or any other Credit Document.
5.3(b) If an Event of Default shall occur and be continuing
and the Administrative Agent shall give notice of its intent to exercise
such rights to the Borrower, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds
paid in respect of the Pledged Securities and make application thereof to
the Borrower Obligations in such order as the Administrative Agent may
determine, and (ii) any or all of the Pledged Securities shall be
registered in the name of the Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter exercise (x) all
voting, corporate and other rights pertaining to such Pledged Securities
at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to
such Pledged Securities as if it were the
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absolute owner thereof (including, without limitation, the right to
exchange at its discretion any and all of the Pledged Securities upon the
merger, consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of any Issuer, or upon the
exercise by the Borrower or the Administrative Agent of any right,
privilege or option pertaining to such Pledged Securities, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Administrative Agent may determine), all without liability except to
account for property actually received by it, but the Administrative Agent
shall have no duty to the Borrower to exercise any such right, privilege
or option and shall not be responsible for any failure to do so or delay
in so doing.
5.3(c) The Borrower hereby authorizes and instructs each
Issuer of any Pledged Securities pledged by the Borrower hereunder to (i)
comply with any instruction received by it from the Administrative Agent
in writing that (x) states that an Event of Default has occurred and is
continuing and (y) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions from the Borrower,
and the Borrower agrees that each Issuer shall be fully protected in so
complying, and (ii) unless otherwise expressly permitted hereby, pay any
dividends or other payments with respect to the Pledged Securities
directly to the Administrative Agent.
5.4 Proceeds to be Turned Over To Administrative Agent. In addition
to the rights of the Agents and the Lenders specified in subsection 5.1 with
respect to payments of Receivables, if an Event of Default shall occur and be
continuing, all Proceeds received by the Borrower consisting of cash, checks and
other near-cash items shall be held by the Borrower in trust for the Agents and
the Lenders, segregated from other funds of the Borrower, and shall, forthwith
upon receipt by the Borrower, be turned over to the Administrative Agent in the
exact form received by the Borrower (duly indorsed by the Borrower to the
Administrative Agent, if required). All Proceeds received by the Administrative
Agent hereunder shall be held by the Administrative Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while held
by the Administrative Agent in a Collateral Account (or by the Borrower in trust
for the Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in subsection 5.5.
5.5 Application of Proceeds. At such intervals as may be agreed upon
by the Borrower and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds held in
any Collateral Account in payment of the Obligations in such order as required
by the Credit Agreement, and any part of such funds which are not required as
collateral security for the Obligations shall be paid over from time to time by
the Administrative Agent to the Borrower or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
5.6 Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing
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or relating to the Obligations, all rights and remedies of a secured party under
the New York UCC or any other applicable law. Without limiting the generality of
the foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the Borrower or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of any of the Agents or Lenders or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Any Agents or Lenders shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Borrower, which right
or equity is hereby waived and released. The Borrower further agrees, at the
Administrative Agent's request, to assemble the Collateral and make it available
to the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at the Borrower's premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this subsection 5.6, after deducting all reasonable costs and
expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Agents and the Lenders hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in such order as the Administrative
Agent may elect, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the New York UCC, need the
Administrative Agent account for the surplus, if any, to the Borrower. To the
extent permitted by applicable law, the Borrower waives all claims, damages and
demands it may acquire against any Agents or Lenders arising out of the exercise
by them of any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 15 days before such sale or other
disposition.
5.7 Registration Rights.
5.7(a) If the Administrative Agent shall determine to exercise
its right to sell any or all of the Pledged Stock pursuant to subsection
5.6, and if in the opinion of the Administrative Agent it is necessary or
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the Borrower will
cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts
as may be, in the opinion of the Administrative Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be
sold, under the provisions of the Securities Act, (ii) use its
commercially reasonable efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period
of one year from the date of the first public offering of the Pledged
Stock, or that portion thereof to be sold, and (iii) make all amendments
thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto. The Borrower
agrees to cause such Issuer to comply with the provisions of the
securities or "Blue Sky" laws of
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any and all jurisdictions which the Administrative Agent shall designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
5.7(b) The Borrower recognizes that the Administrative Agent
may be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act and
applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of
purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view
to the distribution or resale thereof. The Borrower acknowledges and
agrees that any such private sale may result in prices and other terms
less favorable than if such sale were a public sale and, notwithstanding
such circumstances, agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged
Stock for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or
under applicable state securities laws, even if such Issuer would agree to
do so.
5.7(c) The Borrower agrees to use its commercially reasonable
efforts to do or cause to be done all such other acts as may be necessary
to make such sale or sales of all or any portion of the Pledged Stock
pursuant to this subsection 5.7 valid and binding and in compliance with
any and all other applicable Requirements of Law. The Borrower further
agrees that a breach of any of the covenants contained in this subsection
5.7 will cause irreparable injury to the Agents and the Lenders, that the
Agents and the Lenders have no adequate remedy at law in respect of such
breach and, as a consequence. that each and every covenant contained in
this subsection 5.7 shall be specifically enforceable against the
Borrower, and the Borrower hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred under the
Credit Agreement.
5.8 Waiver; Deficiency. The Borrower waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. The Borrower shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
SECTION 6. THE ADMINISTRATIVE AGENT
6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.
6.1(a) The Borrower hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the
Borrower and in the name of the Borrower or in its own name, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, the
Borrower hereby gives
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the Administrative Agent the power and right, on behalf of the Borrower,
without notice to or assent by the Borrower, to do any or all of the
following:
(i) in the name of the Borrower or its own name, or otherwise,
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or Contract or with respect to any other Collateral and file
any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Administrative Agent for the
purpose of collecting any and all such moneys due under any Receivable or
Contract or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments, documents
and papers as the Administrative Agent may request to evidence the Agents'
and the Lenders' security interest in such Intellectual Property and the
goodwill and general intangibles of the Borrower relating thereto or
represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
subsection, 5.6 or 5.7, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(v)(A) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (B) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (C)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (D) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (E) defend any suit, action or proceeding
brought against the Borrower with respect to any Collateral; (F) settle,
compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the
Administrative Agent may reasonably deem appropriate; (G) assign any
Copyright, Patent or Trademark (along with the goodwill of the business to
which any such Copyright, Patent or Trademark pertains), throughout the
world for such term or terms, on such conditions, and in such manner, as
the Administrative Agent shall in its sole discretion determine; and (H)
generally, sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes, and do, at the Administrative Agent's option and the Borrower's
expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect,
20
<PAGE>
preserve or realize upon the Collateral and the Agents' and the Lenders'
security interests therein and to effect the intent of this Agreement, all
as fully and effectively as the Borrower might do.
Anything in this subsection 6.1(a) to the contrary notwithstanding,
the Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this subsection 6.1(a) unless an Event of
Default shall have occurred and be continuing.
6.1(b) If the Borrower fails to perform or comply with any of
its agreements contained herein, the Administrative Agent, at its option,
but without any obligation so to do, may perform or comply, or otherwise
cause performance or compliance, with such agreement.
6.1(c) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this subsection 6.1,
together with interest thereon at a rate per annum equal to the rate per
annum at which interest would then be payable on past due Base Rate Loans
under the Credit Agreement, from the date of payment by the Administrative
Agent to the date reimbursed by the Borrower, shall be payable by the
Borrower to the Administrative Agent on demand.
6.1(d) The Borrower hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with
an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
6.2 Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Borrower or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Agents and the Lenders hereunder are solely to protect the
Agents' and the Lenders' interests in the Collateral and shall not impose any
duty upon any Agents or Lenders to exercise any such powers. The Agents and the
Lenders shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to the Borrower
for any act or failure to act hereunder, except for their own gross negligence
or willful misconduct.
6.3 Execution of Financing Statements. Pursuant to Section 9-402 of
the New York UCC and any other applicable law, the Borrower authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of the Borrower in such form and in such offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any jurisdiction.
21
<PAGE>
6.4 Authority of Administrative Agent. The Borrower acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as among the Agents and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as among the
Agents and the Borrower, the Administrative Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and the Borrower shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
SECTION 7. MISCELLANEOUS
7.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, restated, supplemented or otherwise modified
except in accordance with subsection 10.1 of the Credit Agreement.
7.2 Notices. All notices, requests and demands to or upon the Agents
or the Borrower hereunder shall be effected in the manner provided for in
subsection 10.2 of the Credit Agreement.
7.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 7.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of any of the Agents or Lenders, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any of the Agents or Lenders of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent, on behalf of the other Agents and the Lenders, would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
7.4 Enforcement Expenses; Indemnification.
7.4(a) The Borrower agrees to pay or reimburse each of the
Lenders and the Agents for all its reasonable costs and expenses incurred
in collecting against the Borrower or otherwise enforcing or preserving
any rights under this Agreement and the other Credit Documents to which
the Borrower is a party, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent and of
counsel to each of the other Agents and Lenders.
7.4(b) The Borrower agrees to pay, and to save the Agents and
the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect
to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
22
<PAGE>
7.4(c) The Borrower agrees to pay, and to save the Agents and
the Lenders harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrower would be required to do so pursuant
to subsection 10.5 of the Credit Agreement.
7.4(d) The agreements in this subsection 7.4 shall survive
repayment of the Obligations and all other amounts payable under the
Credit Agreement and the other Credit Documents.
7.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Borrower and shall inure to the benefit of the
Agents and the Lenders and their successors and assigns; provided that the
Borrower may not assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Administrative
Agent.
7.6 Set-Off. The Borrower hereby irrevocably authorizes each of the
Agents and Lenders at any time and from time to time pursuant to subsection
10.7(a) of the Credit Agreement shall have occurred and be continuing, without
notice to the Borrower, any such notice being expressly waived by the Borrower,
to set-off and appropriate and apply any and all deposits (general or special,
time or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Agent or Lender to or for the credit or the account of the
Borrower, or any part thereof in such amounts as such Agent or Lender may elect,
against and on account of the obligations and liabilities of the Borrower to
such Agent or Lender hereunder and claims of every nature and description of
such Agent or Lender against the Borrower, in any currency, whether arising
hereunder, under the Credit Agreement, any other Credit Document or otherwise,
as such Agent or Lender may elect, whether or not any Agent or Lender has made
any demand for payment and although such obligations, liabilities and claims may
be contingent or unmatured. Each of the Agents and Lenders shall notify the
Borrower promptly of any such set-off and the application made by such Agent or
Lender of the proceeds thereof, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Agent and Lender under this subsection 7.6 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such
Agent or Lender may have.
7.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
7.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.9 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
23
<PAGE>
7.10. Integration. This Agreement and the other Credit Documents
represent the agreement of the Borrower, the Agents and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by any of the Agents or Lenders
relative to subject matter hereof and thereof not expressly set forth or
referred to herein, the Credit Agreement or in the other Credit Documents.
7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
7.12 SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
7.12(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE CREDIT AGREEMENT AND
THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
7.12(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
7.12(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO THE BORROWER AT ITS ADDRESS REFERRED TO IN SUBSECTION 7.2 OR
AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO;
7.12(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION, AND
7.12(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
24
<PAGE>
7.13 Acknowledgements. The Borrower hereby acknowledges that:
7.13(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit Documents to
which it is a party;
7.13(b) none of the Agents nor Lenders has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Credit Documents, and the
relationship between the Borrower, on the one hand, and the Agents and
Lenders, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
7.13(c) no joint venture is created hereby or by the other
Credit Documents or otherwise exists by virtue of the transactions
contemplated hereby among Agents, among the Agents and/or the Lenders or
among the Borrower and the Agents and/or the Lenders.
7.14 WAIVER OF JURY TRIAL. THE BORROWER AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
7.15 Releases.
(a) At such time as the Loans, the Reimbursement Obligations
and the other Obligations shall have been paid in full, the Commitments
have been terminated and no Letters of Credit shall be outstanding, the
Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and the Borrower
hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral
shall revert to the Borrower and the Administrative Agent shall deliver to
the Borrower any Collateral held by the Administrative Agent hereunder,
and execute and deliver to the Borrower such documents as the Borrower
shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by the Borrower in a transaction permitted by the
Credit Agreement, then the Administrative Agent, at the request and sole
expense of the Borrower, shall execute and deliver to the Borrower all
releases or other documents reasonably necessary or desirable for the
release of the Liens created hereby on such Collateral.
7.16 Conflict. In the event there is a conflict between the terms of
this Agreement and the Credit Agreement, the Credit Agreement shall control.
[Signature page follows]
25
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly executed and delivered as of the date first above written.
L-3 COMMUNICATIONS CORPORATION
By:
-----------------------------
Name:
Title:
Address for Notices:
600 Third Avenue
34th Floor
New York, New York 10016
Attention:
----------------------
Phone:(212) 697-1111
Fax: (212) ___-_____
Accepted on behalf of the Agents
and the Lenders as of the date first
above written:
BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT
By:
--------------------------
Name:
Title:
26
<PAGE>
Schedule 1
DESCRIPTION OF PLEDGED SECURITIES
Pledged Stock:
Issuer Class of Stock Stock Certificate No. No. of Shares
- ----------------------- ------------------ ----------------------- -------------
Pledged Notes:
Issuer Payee Principal Amount
- ------------------------------- -------------------------- ---------------------
27
<PAGE>
Schedule 2
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
[List each office where a financing statement is to be filed]
Patent and Trademark Filings
[List all filings]
Actions with respect to Pledged Stock
Other Actions
[Describe other actions to be taken]
28
<PAGE>
Schedule 3
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
Borrower Location
-------- --------
29
<PAGE>
Schedule 4
LOCATION OF INVENTORY AND EQUIPMENT
Borrower Locations
-------- ---------
30
<PAGE>
Schedule 5
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
31
<PAGE>
Schedule 6
GOVERNMENT CONTRACTS
32
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Borrower
Pledge and Security Agreement dated as of April 30, 1997 (the "Agreement"), made
by the parties thereto for the benefit of Bank of America NT & SA, as
Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 4.7(a) of
the Agreement.
3. The terms of Sections 5.3(a) and 5.7 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 5.3(a) or 5.7 of the Agreement.
[NAME OF ISSUER]
-------------------------------
Name:
--------------------------
Title:
--------------------------
Address for Notices:
-------------------------------
-------------------------------
Fax:
---------------------------
33
<PAGE>
EXHIBIT B-5
TO
CREDIT AGREEMENT
================================================================================
SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
made by
L-3 COMMUNICATIONS HOLDINGS, INC.
in favor of
BANK OF AMERICA NT & SA,
AS ADMINISTRATIVE AGENT
Dated as of ________ __, ___
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS ................................................ 2
1.1 Definitions ................................................. 2
1.2 Other Definitional Provisions ............................... 5
SECTION 2. GRANT OF SECURITY INTEREST ................................... 5
SECTION 3. REPRESENTATIONS AND WARRANTIES ............................... 6
3.1 Representations in Credit Agreement ......................... 6
3.2 Title; No Other Liens ....................................... 7
3.3 Perfected First Priority Liens .............................. 7
3.4 Chief Executive Office ...................................... 7
3.5 Inventory and Equipment ..................................... 7
3.6 Farm Products ............................................... 7
3.7 Pledged Securities .......................................... 7
3.8 Receivables ................................................. 8
3.9 Contracts ................................................... 8
3.10 Intellectual Property ....................................... 9
SECTION 4. COVENANTS .................................................... 9
4.1 Covenants in Credit Agreement ............................... 9
4.2 Delivery of Instruments and Chattel Paper ................... 9
4.3 Maintenance of Insurance .................................... 9
4.4 Payment of Obligations ...................................... 10
4.5 Maintenance of Perfected Security Interest; Further
Documentation ............................................... 10
4.6 Chances in Locations, Name, etc ............................. 10
4.7 Notices ..................................................... 11
4.8 Pledged Securities .......................................... 11
4.9 Receivables ................................................. 12
4.10 Contracts ................................................... 13
4.11 Intellectual Property ....................................... 14
SECTION 5. REMEDIAL PROVISIONS ......................................... 15
5.1 Certain Matters Relating to Receivables ..................... 15
5.2 Communications with Obligors; Grantors Remain Liable ........ 16
5.3 Pledged Stock ............................................... 17
5.4 Proceeds to be Turned Over To Administrative Agent .......... 18
5.5 Application of Proceeds ..................................... 18
5.6 Code and Other Remedies ..................................... 18
5.7 Registration Rights ......................................... 19
5.8 Waiver: Deficiency .......................................... 20
SECTION 6. THE ADMINISTRATIVE AGENT .................................... 20
6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc . 20
6.2 Duty of Administrative Agent ................................ 22
6.3 Execution of Financing Statements ........................... 22
<PAGE>
6.4 Authority of Administrative Agent ........................... 22
SECTION 7. MISCELLANEOUS ............................................... 23
7.1 Amendments in Writing ....................................... 23
7.2 Notices ..................................................... 23
7.3 No Waiver by Course of Conduct; Cumulative Remedies ......... 23
7.4 Enforcement Expenses; Indemnification ....................... 23
7.5 Successors and Assigns ...................................... 24
7.6 Set-Off ..................................................... 24
7.7 Counterparts ................................................ 24
7.8 Severability ................................................ 24
7.9 Section Headings ............................................ 24
7.10 Integration ................................................. 24
7.11 GOVERNING LAW ............................................... 25
7.12 SUBMISSION TO JURISDICTION; WAIVERS ......................... 25
7.13 Acknowledgements ............................................ 25
7.14 WAIVER OF JURY TRIAL ........................................ 26
7.15 Additional Grantors ......................................... 26
7.16 Releases .................................................... 26
7.17 Conflict .................................................... 26
ii
<PAGE>
FORM OF
SUBSIDIARY PLEDGE AND SECURITY AGREEMENT
SUBSIDIARY PLEDGE AND SECURITY AGREEMENT, dated as of ________,
____, made by each of the signatories hereto (together with any other entity
that may become a party hereto as provided herein, the "Grantors"), in favor of
Bank of America NT & SA, ("BOA") as Administrative Agent (in such capacity, the
"Administrative Agent") for the banks and other financial institutions
(collectively, the "Lenders") from time to time parties to the Credit Agreement,
dated as of April 30, 1997 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among L-3 Communications Corporation, a
Delaware corporation (the "Borrower"), the Lenders, Lehman Commercial Paper Inc.
("LCPI"), as documentation agent (in such capacity, the "Documentation Agent"),
LCPI as syndication agent (in such capacity, the "Syndication Agent" and
together with the Documentation Agent and Administrative Agent, the "Agents"),
LCPI as arranger (in such capacity, the "Arranger") and the Administrative
Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable transfers
to one or more of the other Grantors in connection with the operation of their
respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the several obligations of
the Lenders to make their respective extensions of credit to or for the benefit
of the Borrower under the Credit Agreement that the Grantors shall have executed
and delivered this Agreement to the Administrative Agent for the ratable benefit
of the Lenders and the Agents;
NOW, THEREFORE, in consideration of the premises and to induce the
Agents and the Lenders to enter into the Credit Agreement, and to induce the
Lenders to make their respective extensions of credit to or for the benefit of
the Borrower thereunder, each Grantor hereby agrees with the Administrative
Agent, for the ratable benefit of the Lenders and the Agents, as follows:
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SECTION 1. DEFINED TERMS
1.1 Definitions.
1.1(a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the
Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Deposit
Accounts, Documents, Equipment, Farm Products, Fixtures, Instruments and
Inventory.
1.1(b) The following terms shall have the following meanings:
"Agreement": this Subsidiary Pledge and Security Agreement, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Collateral": as defined in Section 2.
"Collateral Account": any collateral account established by
the Administrative Agent as provided in subsection 5.1 or 5.4.
"Contracts": all contracts and agreements to which the
Borrower is a party on the date hereof or becomes a party subsequent to
the date hereof, as the same may be amended, supplemented or otherwise
modified from time to time, including, without limitation, (i) all rights
of any Grantor to receive moneys due and to become due to it thereunder or
in connection therewith, (ii) all rights of any Grantor to damages arising
thereunder and (iii) all rights of any Grantor to perform and to exercise
all remedies thereunder.
"Copyrights": (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished
(including, without limitation, those listed on Schedule 5), all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings
and applications in the United States Copyright Office, and (ii) the right
to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor
as licensor or licensee (including, without limitation, those listed on
Schedule 5), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"General Intangibles": all "general intangibles" as such term
is defined in Section 9-106 of the Uniform Commercial Code in effect in
the State of New York on the date hereof and, in any event, including,
without limitation, with respect to any Grantor, all contracts,
agreements, instruments and indentures in any form, and portions thereof,
to which such Grantor is a party or under which such Grantor has any
right, title or interest or to which such Grantor or any property of such
Grantor is subject, as the same may from time to time be amended,
supplemented or otherwise modified, including, without limitation, (i) all
rights of such Grantor to receive moneys due and to become due to it
thereunder or in connection therewith, (ii) all
2
<PAGE>
rights of such Grantor to damages arising thereunder and (iii) all rights
of such Grantor to perform and to exercise all remedies thereunder, in
each case to the extent the grant by such Grantor of a security interest
pursuant to this Agreement in its right, title and interest in such
contract, agreement, instrument or indenture is not prohibited by such
contract, agreement, instrument or indenture without the consent of any
other party thereto, would not give any other party to such contract,
agreement, instrument or indenture the right to terminate its obligations
thereunder, or is permitted with consent if all necessary consents to such
grant of a security interest have been obtained from the other parties
thereto (it being understood that the foregoing shall not be deemed to
obligate such Grantor to obtain such consents); provided, that the
foregoing limitation shall not affect, limit, restrict or impair the grant
by such Grantor of a security interest pursuant to this Agreement in any
Receivable or any money or other amounts due or to become due under any
such contract, agreement, instrument or indenture.
"Government Contract": a Contract with a Government Authority,
each as listed on Schedule 6.
"Holdings": L-3 Communications Holdings, Inc.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks and the
Trademark Licenses, and all rights to sue at law or in equity for any
infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.
"Intercompany Note": any promissory note evidencing loans made
by any Grantor to Holdings, the Borrower or any of their respective
Subsidiaries.
"Investment Property": as defined in the California UCC.
"Issuers": the collective reference to each issuer of a
Pledged Security.
"New York UCC": the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Obligations": the collective reference to the unpaid
principal of and interest on the Loans and Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, (i) interest accruing at the then applicable rate provided in
the Credit Agreement after the maturity of the Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding and (ii) any exposure
of any Lender under any lockbox arrangement, controlled disbursement
arrangement, checking accounts or other similar arrangements
(collectively, "Cash Management Agreements") with or on behalf of the
Borrower and/or its Subsidiaries) to the Administrative Agent or any
Lender (or, in the case of any Interest Rate Agreement referred to below,
any Affiliate of any Lender), whether direct or indirect, absolute
3
<PAGE>
or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the Credit
Agreement, this Agreement, the other Credit Documents, any Letter of
Credit or any Interest Rate Agreement entered into by the Borrower with
any Lender (or any Affiliate of any Lender) or any Cash Management
Agreement entered into by the Borrower or any Subsidiary of the Borrower
with any Lender or any other document made, delivered or given in
connection therewith, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent and counsel to the Lenders that are
required to be paid by the Borrower pursuant to the terms of any of the
foregoing agreements).
"Patents": (i) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and
extensions thereof and all goodwill associated therewith, including,
without limitation, any of the foregoing referred to on Schedule 5, (ii)
all applications for letters patent of the United States or any other
country and all divisions, continuations and continuations-in-part
thereof, including, without limitation, any of the foregoing referred to
on Schedule 5, and (iii) all rights to obtain any reissues or extensions
of the foregoing.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture,
use or sell any invention covered in whole or in part by a Patent,
including, without limitation, any of the foregoing referred to on
Schedule 5.
"Pledged Notes": all promissory notes listed on Schedule 1,
all Intercompany Notes at any time issued to any Pledgor and all other
promissory notes issued to or held by any Grantor (other than promissory
notes issued in connection with extensions of trade credit by any Grantor
in the ordinary course of business).
"Pledged Securities": the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on
Schedule 1, together with any other shares, stock certificates, options or
rights of any nature whatsoever in respect of the Capital Stock of any
Person that may be issued or granted to, or held by, any Grantor while
this Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New York
on the date hereof and, in any event, shall include, without limitation,
all dividends or other income from the Pledged Securities, collections
thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).
"Restricted Government Contract": Government Contracts which,
by their terms, prohibit the assignment of Receivables thereunder.
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"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to on Schedule 5, and (ii) the
right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
on Schedule 5.
1.2 Other Definitional Provisions.
1.2(a) The words "hereof," "herein", "hereto" and "hereunder"
and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this
Agreement, and Section and Schedule references are to this Agreement
unless otherwise specified.
1.2(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
1.2(c) Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall
refer to such Grantor's Collateral or the relevant part thereof.
SECTION 2. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit of
the Agents and the Lenders, a security interest in, all of the following
property now owned or at any time hereafter acquired by such Grantor or in which
such Grantor now has or at any time in the future may acquire any right, title
or interest (collectively, the "Collateral"), as collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations:
2.0(a) all Accounts;
2.0(b) all Chattel Paper;
2.0(c) all Contracts;
2.0(d) all Deposit Accounts;
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2.0(e) all Documents;
2.0(f) all Equipment;
2.0(g) all Fixtures;
2.0(h) all General Intangibles;
2.0(i) all Instruments;
2.0(j) all Intellectual Property;
2.0(k) all Inventory;
2.0(l) all Investment Property;
2.0(m) all Pledged Securities;
2.0(n) all books and records pertaining to the Collateral; and
2.0(o) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing.
Notwithstanding the foregoing, except as permitted by Section 9-318(4) of the
New York UCC, this Agreement shall not constitute an assignment of any Contract,
General Intangible, Patent License or Trademark License to the extent that such
Contract, General Intangible, Patent License or Trademark License, or the
instruments giving the same, would prohibit such assignment.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreement and to induce the Agents and the Lenders to make their respective
extensions of credit to or for the benefit of the Borrower thereunder, each
Grantor hereby represents and warrants to each of the Agents and the Lenders
that:
3.1 Representations in Credit Agreement. In the case of each
Grantor, the representations and warranties set forth in Section 4 of the Credit
Agreement as they relate to such Grantor, each of which is hereby incorporated
herein by reference, are true and correct, and each of the Agents and Lenders
shall be entitled to rely on each of them as if they were fully set forth
herein, provided that each reference in each such representation and warranty to
the Borrower's knowledge shall, for the purposes of this Section 4.1, be deemed
to be a reference to such Grantor's knowledge.
3.2 Title; No Other Liens. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Agents and the
Lenders pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each
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item of the Collateral free and clear of any and all Liens or claims of others.
No financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Agents and the Lenders, pursuant to this Agreement or as are permitted by the
Credit Agreement.
3.3 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement:
3.3(a) upon completion of the filings and other actions
specified on Schedule 2 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the
Administrative Agent in completed and duly executed form) will constitute
valid perfected security interests in all of the Collateral in favor of
the Administrative Agent, for the ratable benefit of the Agents and the
Lenders, as collateral security for the Obligations, enforceable in
accordance with the terms hereof against all creditors of such Grantor and
any Persons purporting to purchase any Collateral from such Grantor,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; and
3.3(b) are prior to all other Liens on the Collateral in
existence on the date hereof except for unrecorded Liens and other Liens
or permitted by the Credit Agreement which have priority over the Liens on
the Collateral by operation of law.
3.4 Chief Executive Office. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office is specified on Schedule 3.
3.5 Inventory and Equipment. On the date hereof, the Inventory and
the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 4.
3.6 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
3.7 Pledged Securities.
3.7(a) The shares of Pledged Stock pledged by such Grantor
hereunder constitute all the issued and outstanding shares of all classes
of the Capital Stock of each Issuer owned by such Grantor.
3.7(b) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
3.7(c) Each of the Pledged Notes constitutes the legal, valid
and binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
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3.7(d) Such Grantor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Securities pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of,
any other Person, except the security interest created by this Agreement
and other Liens permitted by the Credit Agreement which have priority by
operation of law.
3.8 Receivables.
3.8(a) Except as set forth on Schedule 6 hereto, none of the
obligors on any material Receivable is a Governmental Authority.
3.8(b) The amounts represented by such Grantor to the Lenders
from time to time as owing to such Grantor in respect of the Receivables
will at such times be accurate in all material respects.
3.9 Contracts.
3.9(a) Each Contract is in full force and effect and
constitutes a valid and legally enforceable obligation of the parties
thereto, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
3.9(b) Except as set forth on Schedule 4.5 to the Credit
Agreement, no consent or authorization of, filing with or other act by or
in respect of any Governmental Authority is required in connection with
the execution, delivery, performance, validity or enforceability of any of
the Contracts by any party thereto other than those which have been duly
obtained, made or performed, are in full force and effect and do not
subject the scope of any such Contract to any material adverse limitation,
either specific or general in nature.
3.9(c) Neither such Grantor nor (to the best of such Grantor's
knowledge) any of the other parties to the Contracts is in default in the
performance or observance of any of the terms thereof in any manner that,
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
3.9(d) The right, title and interest of such Grantor in, to
and under the Contracts are not subject to any defenses, offsets,
counterclaims or claims that, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
3.9(e) No amount payable to such Grantor under or in
connection with any Contract is evidenced by any Instrument or Chattel
Paper which has not been delivered to the Administrative Agent.
3.9(f) Except as set forth on Schedule 6 hereto, none of the
parties to any Contract is a Governmental Authority.
3.10 Intellectual Property.
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3.10(a) Each Grantor owns no material Intellectual Property
other than as set forth on Schedule 5.
3.10(b) On the date hereof, all material Intellectual Property
is valid, subsisting, unexpired and enforceable, has not been abandoned
and does not infringe the intellectual property rights of any other
Person, except as could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
3.10(c) Except as set forth in Schedule 5, on the date hereof,
none of the material Intellectual Property is the subject of any licensing
or franchise agreement pursuant to which such Grantor is the licensor or
franchisor.
3.10(d) No holding, decision or judgment has been rendered by
any Governmental Authority which would limit, cancel or question the
validity of, or such Grantor's ownership interests in, any Intellectual
Property in any respect that could reasonably be expected to have a
Material Adverse Effect.
3.10(e) No action or proceeding is pending, or, to the
knowledge of such Grantor, threatened, on the date hereof (i) seeking to
limit, cancel or question the validity of any Intellectual Property or
such Grantor's ownership interest therein, or (ii) which, if adversely
determined, would have a material adverse effect on the value of any
Intellectual Property.
SECTION 4. COVENANTS
Each Grantor covenants and agrees with the Agents and the Lenders
that, from and after the date of this Agreement until the Obligations shall have
been paid in full, no Letter of Credit shall be outstanding and the Commitments
shall have terminated:
4.1 Covenants in Credit Agreement. In the case of each Grantor, such
Grantor shall take, or shall refrain from taking, as the case may be, each
action that is necessary to be taken or not taken, as the case may be, so that
no Default or Event of Default is caused by the failure to take such action or
to refrain from taking such action by any of the Credit Parties.
4.2 Delivery of Instruments and Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
promptly delivered to the Administrative Agent, duly indorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement.
4.3 Maintenance of Insurance.
4.3(a) Such Grantor will maintain, with financially sound and
reputable companies, insurance policies as required by subsection 6.5 of
the Credit Agreement.
4.3(b) All such insurance shall (i) provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by the
Administrative Agent of written notice thereof, (ii) name the
Administrative
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Agent as insured party or loss payee, (iii) if reasonably requested by the
Administrative Agent, include a breach of warranty clause and (iv) be
reasonably satisfactory in all other respects to the Administrative Agent.
4.3(c) The Borrower shall deliver to the Agents and the
Lenders a report of a reputable insurance broker with respect to such
insurance during the month of December in each calendar year and such
supplemental reports with respect thereto as the Administrative Agent may
from time to time reasonably request.
4.4 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all material taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all material claims of any kind (including, without limitation, claims
for labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if the amount or validity thereof is
currently being contested in good faith by appropriate proceedings, reserves in
conformity with GAAP with respect thereto have been provided on the books of
such Grantor and such proceedings could not reasonably be expected to result in
the sale, forfeiture or loss of any material portion of the Collateral or any
interest therein.
4.5 Maintenance of Perfected Security Interest; Further
Documentation.
4.5(a) Such Grantor shall maintain the security interest
created by this Agreement as a perfected security interest having at least
the priority described in subsection 3.3 and shall defend such security
interest against the claims and demands of all Persons whomsoever.
4.5(b) Such Grantor will furnish to the Agents and the Lenders
from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.
4.5(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of such
Grantor, such Grantor will promptly and duly execute and deliver, and have
recorded, such further instruments and documents and take such further
actions as the Administrative Agent may reasonably request for the purpose
of obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Uniform
Commercial Code (or other similar laws) in effect in any jurisdiction with
respect to the security interests created hereby.
4.6 Changes in Locations, Name, etc. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein
and (b) if applicable, a written supplement to Schedule 4 showing any additional
location at which Inventory or Equipment shall be kept:
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(i) permit any of the Inventory or Equipment to be kept at a
location other than those listed on Schedule 4;
(ii) change the location of its chief executive office from
that referred to in Section 3.4; or
(iii) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Administrative Agent
in connection with this Agreement would become misleading.
4.7 Notices. Such Grantor will advise the Agents and the Lenders
promptly, in reasonable detail, of:
4.7(a) any Lien (other than security interests created hereby
or Liens permitted under the Credit Agreement) on any of the Collateral
which would adversely affect the ability of the Administrative Agent to
exercise any of its remedies hereunder; and
4.7(b) of the occurrence of any other event of which it is
aware which could reasonably be expected to have a material adverse effect
on the enforceability, or perfection or priority of, the security
interests purported to be created hereby.
4.8 Pledged Securities.
4.8(a) If such Grantor shall become entitled to receive or
shall receive any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or
rights in respect of the Capital Stock of any Issuer, whether in addition
to, in substitution of, as a conversion of, or in exchange for, any shares
of the Pledged Stock, or otherwise in respect thereof, such Grantor shall
accept the same as the agent of the Agents and the Lenders, hold the same
in trust for the Agents and the Lenders and deliver the same forthwith to
the Administrative Agent in the exact form received, duly indorsed by such
Grantor to the Administrative Agent, if required, together with an undated
stock power covering such certificate duly executed in blank by such
Grantor and with, if the Administrative Agent so requests, signature
guaranteed, to be held by the Administrative Agent, subject to the terms
hereof, as additional collateral security for the Obligations. Any sums
paid upon or in respect of the Pledged Securities upon the liquidation or
dissolution of any Issuer shall be paid over to the Administrative Agent
to be held by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made on or
in respect of the Pledged Securities or any property shall be distributed
upon or with respect to the Pledged Securities pursuant to the
recapitalization or reclassification of the capital of any Issuer or
pursuant to the reorganization thereof, the property so distributed shall,
unless otherwise subject to a perfected security interest in favor of the
Administrative Agent, be delivered to the Administrative Agent to be held
by it hereunder as additional collateral security (or except as provided
in the Credit Agreement) for the Obligations. Except as provided in the
Credit Agreement, if any sums of money or property so paid or distributed
in respect of the Pledged Securities under circumstances described in this
Section 4.8(a) shall be received by such Grantor, such Grantor shall,
until such money or property is paid or delivered to the
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Administrative Agent, hold such money or property in trust for the
Lenders, segregated from other funds of such Grantor, as additional
collateral security for the Obligations.
4.8(b) Except as provided in the Credit Agreement, without the
prior written consent of the Administrative Agent, such Grantor will not
(i) vote to enable, or take any other action to permit, any Issuer to
issue any stock or other equity securities of any nature or to issue any
other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any
Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, or
grant any option with respect to, the Pledged Securities or Proceeds
thereof (except pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Pledged Securities or Proceeds thereof, or any interest therein, except
for the security interests created by this Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of such
Grantor or the Administrative Agent to sell, assign or transfer any of the
Pledged Securities or Proceeds thereof.
4.8(c) In the case of each Grantor which is an Issuer, such
Issuer agrees that (i) it will be bound by the terms of this Agreement
relating to the Pledged Securities issued by it and will comply with such
terms insofar as such terms are applicable to it, (ii) it will notify the
Administrative Agent promptly in writing of the occurrence of any of the
events described in subsection 5.8(a) with respect to the Pledged
Securities issued by it and (iii) the terms of subsections 6.3(c) and 6.7
shall apply to it, mutatis mutandis, with respect to all actions that may
be required of it pursuant to subsections 6.3(c) or 6.7 with respect to
the Pledged Securities issued by it.
4.9 Receivables.
4.9(a) Other than in the ordinary course of business, such
Grantor will not (i) grant any extension of the time of payment of any
Receivable, (ii) compromise or settle any Receivable for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable
for the payment of any Receivable, (iv) allow any credit or discount
whatsoever on any Receivable or (v) amend, supplement or modify any
Receivable in any manner that could adversely affect the value thereof.
4.9(b) Such Grantor will deliver to the Administrative Agent a
copy of each material demand, notice or document received by it that
questions or calls into doubt the validity or enforceability of more than
5% of the aggregate amount of the then outstanding Receivables.
4.9(c) Upon the written request of the Required Lenders upon
the occurrence and during the continuance of an Event of Default, each
Grantors hereby authorizes the Administrative Agent upon prior written
notice to such Grantor to (x) file a Notice of Assignment pursuant to the
provisions of the Assignment of Claims Act of 1940, as amended, with the
appropriate officer or officers of the appropriate Government Authority
with respect to each Government Contract (other than Restricted Government
Contracts) and (y) take all such other action as the Administrative Agent
reasonably deems necessary to comply with the provisions of the Assignment
of Claims Act of 1940, as amended, and each Grantor shall, upon written
request of the Administrative Agent, promptly use its best efforts to have
such Notices of Assignment
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executed by the appropriate officer or officers of the appropriate
Government Authority; (iv) with respect to each contract, agreement or
transaction pursuant to which any State or any political subdivision
thereof is a party, execute and deliver all notices which are required
under, and comply in all other respects with, the laws of such State to
ensure that the Administrative Agent has a valid and perfected first
priority security interest in such contract, agreement or transaction to
the extent required by the terms of the Credit Agreement; and (v) execute
and file such financing or continuation statements, or amendments thereto,
and such other instruments or notices, as may be necessary, or as the
Administrative Agent may reasonably request, in order to perfect and
preserve the pledge, assignment and security interest granted or purported
to be granted hereby.
4.10 Contracts.
4.10(a) Such Grantor will perform and comply in all material
respects with all its obligations under the Contracts.
4.10(b) Such Grantor will not amend, modify, terminate or
waive any provision of any material Contract in any manner which could
reasonably be expected to materially adversely affect the value of such
material Contract as Collateral.
4.10(c) Such Grantor will exercise promptly and diligently
each and every material right which it may have under each Contract (other
than any right of termination).
4.10(d) Such Grantor will deliver to the Administrative Agent
a copy of each material demand, notice or document received by it relating
in any way to any material Contract that questions the validity or
enforceability of such material Contract.
4.10(e) Each Grantor represents and warrants that (i) the
Government Contracts referenced on Schedule 6 constitute all Government
Contracts having a value equal to or in excess of $1.0 million to which
such Grantor is a party on the date hereof.
4.10(f) Each Grantor will, when required under Section 6.13 of
the Credit Agreement, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Administrative Agent, the GC
Notice Recipients with respect to any Government Contract or any other
Person from time to time such documents, instruments, certificates or
reports and take such further steps relating to the Collateral consisting
of the Receivables in respect of Government Contracts which (i) the
Administrative Agent deems necessary to perfect, preserve or protect its
security interest in such Collateral or (ii) shall be necessary to comply
with the provisions of 31 U.S.C. ss. 3727 or 41 U.S.C. ss. 15.
4.10(g) Each Grantor hereby covenants and agrees that it will
not enter any Restricted Government Contracts unless such Grantor
determines in good faith that it must agree to a prohibition on the
assignment of Receivables arising under such Government Contract in order
to obtain such Government Contract and gives the Administrative Agent
written notice that it has entered into such Restricted Government
Contract.
4.11 Intellectual Property.
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4.11(a) Such Grantor (either itself or through licensees) will
(i) continue to use each material Trademark on each and every trademark
class of goods applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to maintain such Trademark in
full force free from any claim of abandonment for non-use, except where
the failure to do so could not, individually or in the aggregate, be
expected to have a Material Adverse Effect, (ii) maintain as in the past
the quality of products and services offered under such material
Trademark, (iii) use such material Trademark with the appropriate notice
of registration and all other notices and legends required by applicable
Requirements of Law, (iv) not adopt or use any mark which is confusingly
similar or a colorable imitation of such material Trademark unless the
Administrative Agent, for the ratable benefit of the Lenders, shall obtain
a perfected security interest in such mark pursuant to this Agreement, (v)
not do any act or knowingly omit to do any act whereby such material
Trademark may become invalidated or impaired in any way, and (vi) use
reasonable efforts to prevent any licensee or sublicensee thereof from
doing any act or knowingly omitting to do any act whereby such trademark
may become invalidated or impaired in any way.
4.11(b) Such Grantor will not do any act, or omit to do any
act, whereby any material Patent may become forfeited, abandoned or
dedicated to the public and will use reasonable efforts to prevent any
sublicensee from doing any act, or omitting to do any act, whereby any
material Patent may become forfeited, abandoned or dedicated to the
public.
4.11(c) Such Grantor will not do any act or knowingly omit to
do any act and will use reasonable efforts to prevent any licensee or
sublicensee thereof from doing any act or knowingly omitting to do any act
whereby any material portion of the material Copyrights may become
invalidated or otherwise impaired. Such Grantor will not do any act and
will use reasonable efforts to prevent any sublicensee from doing any act
whereby any material portion of the Copyrights may fall into the public
domain.
4.11(d) Such Grantor (either itself or through licensees) will
not do any act that knowingly uses any material Intellectual Property to
infringe the intellectual property rights of any other Person.
4.11(e) Such Grantor will notify the Administrative Agent and
the Lenders immediately if it knows that any application or registration
relating to any material Intellectual Property may become forfeited,
abandoned or dedicated to the public, or of any material adverse
determination or development (including, without limitation, the
institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United
States Copyright Office or any court or tribunal in any country) regarding
such Grantor's ownership of, or the validity of, any material Intellectual
Property or such Grantor's right to register the same or to own and
maintain the same.
4.11(f) Whenever such Grantor, either by itself or through
any agent, employee, licensee or designee, shall file an application for
the registration of any Intellectual Property with the United States
Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, such Grantor shall report such filing to the Administrative Agent
within 30 Business Days after the last day of the fiscal quarter in which
such filing occurs. Upon request of the Administrative Agent, such
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Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Administrative Agent
may reasonably request to evidence the Agents' and the Lenders' security
interest in any Copyright, Patent or Trademark and the goodwill and
general intangibles of such Grantor relating thereto or represented
thereby.
4.11(g) Such Grantor will take all reasonable and necessary
steps, including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application (and to
obtain the relevant registration) and to maintain each registration of the
material Intellectual Property, including, without limitation, filing of
any necessary applications for renewal, affidavits of use and affidavits
of incontestability and paying all necessary fees, except to the extent
the failure to do so could not, individually or in the aggregate, be
expected to have a Material Adverse Effect.
4.11(h) In the event that any material Intellectual Property
is infringed, misappropriated or diluted by a third party, such Grantor
shall (i) take such actions as such Grantor shall reasonably deem
appropriate under the circumstances to protect such Intellectual Property
and (ii) if such Intellectual Property is of material economic value to
the Borrower and its Subsidiaries taken as a whole, promptly notify the
Administrative Agent after it learns thereof and sue for infringement,
misappropriation or dilution, seek injunctive relief where appropriate and
recover any and all damages for such infringement, misappropriation or
dilution.
SECTION 5. REMEDIAL PROVISIONS
5.1 Certain Matters Relating to Receivables.
5.1(a) The Administrative Agent shall have the right to make
test verifications of the Receivables in any manner and through any medium
that it reasonably considers advisable, and each Grantor shall furnish all
such assistance and information as the Administrative Agent may require in
connection with such test verifications. At any time and from time to
time, upon the Administrative Agent's request and at the expense of the
relevant Grantor, such Grantor shall cause independent public accountants
or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
5.1(b) The Administrative Agent hereby authorizes each Grantor
to collect such Grantor's Receivables, subject to the Administrative
Agent's direction and control, and the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative
Agent at any time after the occurrence and during the continuance of an
Event of Default, any payments of Receivables, when collected by any
Grantor, (i) shall be forthwith (and, in any event, within two Business
Days) deposited by such Grantor in the exact form received, duly indorsed
by such Grantor to the Administrative Agent if required, in a Collateral
Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent
for the account of the Lenders only as provided in subsection 5.5, and
(ii) until so turned over, shall be held by such Grantor in trust for the
Agents and the Lenders, segregated from other
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funds of such Grantor. Each such deposit of Proceeds of Receivables shall
be accompanied by a report identifying in reasonable detail the nature and
source of the payments included in the deposit. In addition, the
Administrative Agent shall have the right at any time, upon the occurrence
and during the continuance of an Event of Default and upon written notice
to such Grantor of its intention to do so, to require the Grantor to
prepare notices of assignment for each Government Contract for which it
has not previously delivered a notice of assignment pursuant to Section
6.13 of the Credit Agreement and to file such notices of assignment (and
any notice of assignment delivered to the Administrative Agent pursuant to
Section 6.13 of the Credit Agreement) with the appropriate contracting
officer of the appropriate Government Authority and to otherwise notify
the account debtors or obligors under any Receivables of the assignment of
such Receivables to the Administrative Agent and to direct such account
debtors or obligors to make payment of all amounts due or to become due to
the Grantor thereunder directly to the Administrative Agent and, upon such
notification and at the expense of the Grantor, to enforce collection of
any such Receivables, and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as the Grantor
might have done. After receipt by the Grantor of the notice from the
Administrative Agent referred to in the proviso to the preceding sentence,
(i) all amounts and proceeds (including instruments) received by the
Grantor in respect of the Receivables shall be received in trust for the
benefit of the Administrative Agent, the Agents, the Lenders, the Issuing
Banks and the other Holders hereunder, shall be segregated from other
funds of the Grantor and shall be forthwith paid over to the
Administrative Agent in the same form as so received (with any necessary
indorsement) to be applied to the Obligations in accordance with Section 8
of the Credit Agreement and (ii) the Grantor shall not adjust, settle or
compromise the amount or payment of any Account, release wholly or partly
any account debtor or obligor thereof, or allow any credit or discount
thereon.
5.1(c) At the Administrative Agent's request, each Grantor
shall deliver to the Administrative Agent all original and other documents
evidencing, and relating to, the agreements and transactions which gave
rise to the Receivables, including, without limitation, all original
orders, invoices and shipping receipts.
5.2 Communications with Obligors; Grantors Remain Liable.
5.2(a) The Administrative Agent in its own name or in the name
of others may at any time after the occurrence and during the continuance
of an Event of Default communicate with obligors under the Receivables and
parties to the Contracts to verify with them to the Administrative Agent's
satisfaction the existence, amount and terms of any Receivables or
Contracts.
5.2(b) Upon the request of the Administrative Agent at any
time after the occurrence and during the continuance of an Event of
Default, each Grantor shall notify obligors on the Receivables and parties
to the Contracts that the Receivables and the Contracts have been assigned
to the Administrative Agent for the ratable benefit of the Lenders and
that payments in respect thereof shall be made directly to the
Administrative Agent.
5.2(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Receivables and Contracts to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with
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the terms of any agreement giving rise thereto. Neither the Administrative
Agent nor any Lender shall have any obligation or liability under any
Receivable (or any agreement giving rise thereto) or Contract by reason of
or arising out of this Agreement or the receipt by any Agent or Lender of
any payment relating thereto, nor shall any Agent or Lender be obligated
in any manner to perform any of the obligations of any Grantor under or
pursuant to any Receivable (or any agreement giving rise thereto) or
Contract, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, to take
any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be entitled
at any time or times.
5.3 Pledged Stock.
5.3(a) Unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have given notice to the
relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to subsection 5.3(b), each Grantor shall be
permitted to receive all cash dividends paid in respect of the Pledged
Stock and all payments made in respect of the Pledged Notes, in each case
paid in the normal course of business of the relevant Issuer and
consistent with past practice, to the extent permitted in the Credit
Agreement, and to exercise all voting and corporate rights with respect to
the Pledged Securities; provided, however, that no vote shall be cast or
corporate right exercised or other action taken which, in the
Administrative Agent's reasonable judgment, would materially impair the
Collateral or which would result in any violation of any provision of the
Credit Agreement, this Agreement or any other Credit Document.
5.3(b) If an Event of Default shall occur and be continuing
and the Administrative Agent shall give notice of its intent to exercise
such rights to the relevant Grantor or Grantors, (i) the Administrative
Agent shall have the right to receive any and all cash dividends, payments
or other Proceeds paid in respect of the Pledged Securities and make
application thereof to the Obligations in such order as the Administrative
Agent may determine, and (ii) any or all of the Pledged Securities shall
be registered in the name of the Administrative Agent or its nominee, and
the Administrative Agent or its nominee may thereafter exercise (x) all
voting, corporate and other rights pertaining to such Pledged Securities
at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to
such Pledged Securities as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion
any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the
corporate structure of any Issuer, or upon the exercise by any Grantor or
the Administrative Agent of any right, privilege or option pertaining to
such Pledged Securities, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Securities with any committee,
depositary, transfer agent, registrar or other designated agency upon such
terms and conditions as the Administrative Agent may determine), all
without liability except to account for property actually received by it,
but the Administrative Agent shall have no duty to any Grantor to exercise
any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
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5.3(c) Each Grantor hereby authorizes and instructs each
Issuer of any Pledged Securities pledged by such Grantor hereunder to (i)
comply with any instruction received by it from the Administrative Agent
in writing that (x) states that an Event of Default has occurred and is
continuing and (y) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions from such Grantor,
and each Grantor agrees that each Issuer shall be fully protected in so
complying, and (ii) unless otherwise expressly permitted hereby, pay any
dividends or other payments with respect to the Pledged Securities
directly to the Administrative Agent.
5.4 Proceeds to be Turned Over To Administrative Agent. In addition
to the rights of the Agent and the Lenders specified in subsection 5.1 with
respect to payments of Receivables, if an Event of Default shall occur and be
continuing, all Proceeds received by any Grantor consisting of cash, checks and
other near-cash items shall be held by such Grantor in trust for the Agents and
the Lenders, segregated from other funds of such Grantor, and shall, forthwith
upon receipt by such Grantor, be turned over to the Administrative Agent in the
exact form received by such Grantor (duly indorsed by such Grantor to the
Administrative Agent, if required). All Proceeds received by the Administrative
Agent hereunder shall be held by the Administrative Agent in a Collateral
Account maintained under its sole dominion and control. All Proceeds while
held by the Administrative Agent in a Collateral Account (or by such Grantor in
trust for the Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in subsection 5.5.
5.5 Application of Proceeds. At such intervals as may be agreed upon
by the Borrower and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds held in
any Collateral Account in payment of the Obligations in such order as required
by the Credit Agreement, and any part of such funds which are not required as
collateral security for the Obligations shall be paid over from time to time by
the Administrative Agent to the Borrower or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
5.6 Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of any of the Agents or Lenders or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without assumption
of any credit risk. Any Agents or
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Lenders shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.
Each Grantor further agrees, at the Administrative Agent's request, to assemble
the Collateral and make it available to the Administrative Agent at places which
the Administrative Agent shall reasonably select, whether at such Grantor's
premises or elsewhere. The Administrative Agent shall apply the net proceeds of
any action taken by it pursuant to this subsection 5.6, after deducting all
reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Agents and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Administrative Agent may elect, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
New York UCC, need the Administrative Agent account for the surplus, if any, to
any Grantor. To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against any Agents or Lenders arising
out of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 15 days before such sale
or other disposition.
5.7 Registration Rights.
5.7(a) If the Administrative Agent shall determine to exercise
its right to sell any or all of the Pledged Stock pursuant to subsection
5.6, and if in the opinion of the Administrative Agent it is necessary or
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and
cause the directors and officers of such Issuer to execute and deliver,
all such instruments and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Administrative Agent,
necessary or advisable to register the Pledged Stock, or that portion
thereof to be sold, under the provisions of the Securities Act, (ii) use
its commercially reasonable efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period
of one year from the date of the first public offering of the Pledged
Stock, or that portion thereof to be sold, and (iii) make all amendments
thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto. Each Grantor
agrees to cause such Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the
Administrative Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the
Securities Act.
5.7(b) Each Grantor recognizes that the Administrative Agent
may be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act and
applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of
purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view
to the distribution or resale thereof. Each Grantor acknowledges and
agrees that any such private sale may result in prices and other terms
less favorable than if
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such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged Stock for the period of
time necessary to permit the Issuer thereof to register such securities
for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
5.7(c) Each Grantor agrees to use its commercially reasonable
efforts to do or cause to be done all such other acts as may be necessary
to make such sale or sales of all or any portion of the Pledged Stock
pursuant to this subsection 5.7 valid and binding and in compliance with
any and all other applicable Requirements of Law. Each Grantor further
agrees that a breach of any of the covenants contained in this subsection
5.7 will cause irreparable injury to the Agents and the Lenders, that the
Agents and the Lenders have no adequate remedy at law in respect of such
breach and, as a consequence, that each and every covenant contained in
this subsection 5.7 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred under the
Credit Agreement.
5.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
SECTION 6. THE ADMINISTRATIVE AGENT
6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.
6.1(a) Each Grantor hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of such
Grantor and in the name of such Grantor or in its own name, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on
behalf of such Grantor, without notice to or assent by such Grantor, to do
any or all of the following:
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Receivable or Contract or with respect to any
other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of
collecting any and all such moneys due under any Receivable or
Contract or with respect to any other Collateral whenever payable;
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(ii) in the case of any Intellectual Property, execute
and deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Administrative Agent may request to
evidence the Agents' and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of
such Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all or
any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for
in subsection 5.6 or 5.7, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the
Collateral; and
(v)(A) direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (B) ask or demand for, collect,
and receive payment of and receipt for, any and all moneys, claims
and other amounts due or to become due at any time in respect of or
arising out of any Collateral; (C) sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the
Collateral; (D) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (E) defend any
suit, action or proceeding brought against such Grantor with
respect to any Collateral; (F) settle, compromise or adjust any such
suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may reasonably
deem appropriate; (G) assign any Copyright, Patent or Trademark
(along with the goodwill of the business to which any such
Copyright, Patent or Trademark pertains), throughout the world for
such term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (H)
generally, sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Administrative Agent were the absolute
owner thereof for all purposes, and do, at the Administrative
Agent's option and such Grantor's expense, at any time, or from time
to time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and
the Agents' and the Lenders' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as
such Grantor might do.
Anything in this subsection 6.1(a) to the contrary notwithstanding,
the Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this subsection 6.1(a) unless an Event of
Default shall have occurred and be continuing.
6.1(b) If any Grantor fails to perform or comply with any of
its agreements contained herein, the Administrative Agent, at its option,
but without any obligation so to do, may perform or comply, or otherwise
cause performance or compliance, with such agreement.
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6.1(c) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this subsection 6.1,
together with interest thereon at a rate per annum equal to the rate per
annum at which interest would then be payable on past due Base Rate Loans
under the Credit Agreement, from the date of payment by the Administrative
Agent to the date reimbursed by the relevant Grantor, shall be payable by
such Grantor to the Administrative Agent on demand.
6.1(d) Each Grantor hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with
an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
6.2 Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Agents and the Lenders hereunder are solely to protect the
Administrative Agents' and the Lenders' interests in the Collateral and shall
not impose any duty upon any Agents or Lender to exercise any such powers. The
Agents and the Lenders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
6.3 Execution of Financing Statements. Pursuant to Section 9-402 of
the New York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any jurisdiction.
6.4 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as among the Agents and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as among the
Agents and the Grantors, the Administrative Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
SECTION 7. MISCELLANEOUS
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7.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, restated, supplemented or otherwise modified
except in accordance with subsection 10.1 of the Credit Agreement.
7.2 Notices. All notices, requests and demands to or upon the Agents
or any Grantor hereunder shall be effected in the manner provided for in
subsection 10.2 of the Credit Agreement.
7.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 7.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of any of the Agents or Lenders, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any of the Agents or Lenders of any right or remedy hereunder on any
one occasion shall not be construed as a bar to any right or remedy which the
Administrative Agent, on behalf of other Agents and the Lenders, would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
7.4 Enforcement Expenses; Indemnification.
7.4(a) Each Grantor agrees to pay or reimburse each of the
Lenders and the Agents for all its reasonable costs and expenses incurred
in collecting against such Grantor or otherwise enforcing or preserving
any rights under this Agreement and the other Credit Documents to which
such Grantor is a party, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent and of
counsel each of the other Agents and Lenders.
7.4(b) Each Grantor agrees to pay, and to save the Agents and
the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect
to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
7.4(c) Each Grantor agrees to pay, and to save the Agents and
the Lenders harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrower would be required to do so pursuant
to subsection 10.5 of the Credit Agreement.
7.4(d) The agreements in this subsection 7.4 shall survive
repayment of the Obligations and all other amounts payable under the
Credit Agreement and the other Credit Documents.
7.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Agents and the Lenders and their
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successors and assigns; provided that no Grantor may assign, transfer or
delegate any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent.
7.6 Set-Off. Each Grantor hereby irrevocably authorizes each of the
Agents and Lenders at any time and from time to time pursuant to subsection
10.7(a) of the Credit Agreement shall have occurred and be continuing, without
notice to such Grantor or any other Grantor, any such notice being expressly
waived by each Grantor; to set-off and appropriate and apply any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by Agent or Lender to or for the credit or
the account of such Grantor, or any part thereof in such amounts as such Agent
or Lender may elect, against and on account of the obligations and liabilities
of such Grantor to such Agent or Lender hereunder and claims of every nature and
description of such Agent or Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Credit Document
or otherwise, as such Agent or Lender may elect, whether or not any Agent or
Lender has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured. Each of the Agents and
Lenders shall notify such Grantor promptly of any such set-off and the
application made by such Agent or Lender of the proceeds thereof, provided that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of each Agent and Lender under this subsection 7.6
are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which such Agent or Lender may have.
7.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
7.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.9 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
7.10 Integration. This Agreement and the other Credit Documents
represent the agreement of the Grantors, the Agents and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by any of the Agents or Lenders
relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Credit Documents.
7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
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7.12 SUBMISSION TO JURISDICTION; WAIVERS. EACH GRANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
7.12(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER CREDIT
DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF
ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM
ANY THEREOF;
7.12(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
7.12(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO SUCH GRANTOR AT ITS ADDRESS REFERRED TO IN SUBSECTION 7.2 OR
AT SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO;
7.12(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
7.12(e) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
7.13 Acknowledgements. Each Grantor hereby acknowledges that:
7.13(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Credit Documents to
which it is a party;
7.13(b) none of the Agents nor Lenders has any fiduciary
relationship with or duty to any Grantor arising out of or in connection
with this Agreement or any of the other Credit Documents, and the
relationship between the Grantors, on the one hand, and the Agents and
Lenders, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor, and
7.13(c) no joint venture is created hereby or by the other
Credit Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Agents, among the Agents and/or the Lenders
or among the Grantors and the Agents and/or the Lenders.
25
<PAGE>
7.14 WAIVER OF JURY TRIAL. EACH GRANTOR AND, BY ACCEPTANCE OF THE
BENEFITS HEREOF, EACH OF THE LENDERS AND THE AGENTS, HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
7.15 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to subsection 6.10 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex I hereto.
7.16 Releases.
(a) At such time as the Loans, the Reimbursement Obligations
and the other Obligations shall have been paid in full, the Commitments
have been terminated and no Letters of Credit shall be outstanding, the
Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral
shall revert to the Grantors and the Administrative Agent shall deliver to
such Grantor any Collateral held by the Administrative Agent hereunder,
and execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the
Credit Agreement, then the Administrative Agent, at the request and sole
expense of such Grantor, shall execute and deliver to such Grantor all
releases or other documents reasonably necessary or desirable for the
release of the Liens created hereby on such Collateral. At the request and
sole expense of the Borrower, a Grantor shall be released from its
obligations hereunder in the event that all the Capital Stock of such
Grantor shall be sold, transferred or otherwise disposed of in a
transaction permitted by the Credit Agreement.
7.17 Conflict. In the event there is a conflict between the terms of
this Agreement and the Credit Agreement, the Credit Agreement shall control.
[Signature page follows]
26
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this
Agreement to be duly executed and delivered as of the date first above written.
[NAMES OF SUBSIDIARIES]
By:
-----------------------
Name:
Title:
Address for Notices:
___________________________
___________________________
___________________________
Attention:
Phone:( ) ___________
Fax: ( ) ___________
Accepted on behalf of the Agents and
the Lenders as of the date first
above written:
BANK OF AMERICA NT & SA, AS ADMINISTRATIVE AGENT
By:
-------------------------------
Name:
Title:
27
<PAGE>
Schedule 1
DESCRIPTION OF PLEDGED SECURITIES
Pledged Stock:
Issuer Class of Stock Stock Certificate No. No. of Shares
- ------------------- ---------------- ----------------------- ---------------
Pledged Notes:
Issuer Payee Principal Amount
- ------------------- ---------------- -----------------------
28
<PAGE>
Schedule 2
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
[List each office where a financing statement is to be filed]
Patent and Trademark Filings
----------------------------
[List all filings]
Actions with respect to Pledged Stock
-------------------------------------
Other Actions
-------------
[Describe other actions to be taken]
29
<PAGE>
Schedule 3
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
Grantor Location
------- --------
30
<PAGE>
Schedule 4
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Locations
------- ---------
31
<PAGE>
Schedule 5
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
32
<PAGE>
Schedule 6
GOVERNMENT CONTRACTS
33
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Subsidiary
Pledge and Security Agreement dated as of _________ __, ___ (the "Agreement"),
made by the Grantors parties thereto for the benefit of Bank of America NT & SA,
as Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 4.8(a) of
the Agreement.
3. The terms of Sections 5.3(a) and 5.7 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 5.3(a) or 5.7 of the Agreement.
[NAME OF ISSUER]
____________________________________________
Name:_______________________________________
Title:______________________________________
Address for Notices:
____________________________________________
____________________________________________
Fax: _______________________________________
34
<PAGE>
EXHIBIT C-1 TO
CREDIT AGREEMENT
[FORM OF MORTGAGE]
- --------------------------------------------------------------------------------
REAL ESTATE MORTGAGE
among
L-3 COMMUNICATIONS CORPORATION, as Mortgagor,
and
BANK OF AMERICA NT & SA, as Administrative Agent, as Mortgagee
Dated as of April 30, 1997
- --------------------------------------------------------------------------------
This document was prepared by,
and after recording should be
returned to:
Latham & Watkins
885 Third Avenue
New York, New York
Attn: Rose Greenberg, Esq.
<PAGE>
REAL ESTATE MORTGAGE
THIS REAL ESTATE MORTGAGE, dated as of the 30 day of April 1997,
between L-3 COMMUNICATIONS CORPORATION, a Delaware corporation ("Mortgagor"),
having its principal office at 600 Third Avenue, 34th Floor, New York, New York
10016, and BANK OF AMERICA NT & SA, a Delaware corporation ("Mortgagee"), having
an office at 335 Madison Avenue, New York, New York 10017, as Administrative
Agent for the lenders (the "Lenders") under that certain Credit Agreement, dated
as of April 30, 1997 (the "Credit Agreement"), among Mortgagor, Mortgagee,
Lenders and Lehman Commercial Paper Inc., as Arranger, Syndication Agent and
Documentation Agent.
W I T N E S S E T H
TO SECURE:
(i) The Principal sum of up to a maximum of TWO HUNDRED SEVENTY FIVE
MILLION ($275,000,000) as evidenced by, and all of Mortgagor's obligations
under, the promissory notes dated as of the date hereof (the "Notes") from
Mortgagor in favor of Mortgagee;
(ii) performance and observance of each term to be performed by
Mortgagor under the Credit Agreement and any of the Credit Documents;
(iii) performance and observance of each term contained in this
Mortgage and payment of all sums payable by Mortgagor to Mortgagee as
provided in this Mortgage; and
(iv) future obligations of Mortgagor to Mortgagee and future
advances by Mortgagee under the Credit Agreement.
Mortgagor hereby conveys, grants, assigns, transfers and sets over to Mortgagee
the following (collectively, the "Mortgaged Property"):
(A) the real property described in Exhibit _____ attached hereto and
made a part hereof (the "Premises");
(B) all buildings, improvements and fixtures now or hereafter
located or erected on the Premises (the "Improvements");
(C) any and all leases, underlettings and licenses of the Premises
or Improvements, or any part thereof, now existing or hereafter entered
into by Mortgagor, including, without limitation, upon the happening and
during the continuance of an Event of Default, the right to receive and
collect the rents, issues and profits derived or to be derived by
Mortgagor therefrom; and
(D) all right, title and interest of Mortgagor in and to (i) all and
singular, the tenements, hereditaments, rights of way, easements, waters,
water courses, riparian rights, appendages and appurtenances and property
rights belonging or in any way pertaining to the
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Premises or the Improvements and (ii) all estate, right, title, claim or
demand whatsoever, either in law or in equity, in possession or
expectancy, of, in and to the Premises and the Improvements.
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its
successors and assigns forever.
IN THE EVENT Mortgagor shall perform its obligations under the
Credit Agreement in accordance with the terms thereof and shall pay all of the
sums payable hereunder by Mortgagor, and shall comply with the terms hereunder,
then this Mortgage shall be null and void and of no further force and effect and
shall be released by the Mortgagee at the expense of Mortgagor.
SECTION 1. COVENANTS
Mortgagor covenants with Mortgagee as follows:
1.1 Definitions. As used in this Mortgage, all capitalized terms not
otherwise defined herein shall have the meaning ascribed thereto in the Credit
Agreement:
Default Rate: Citibank Base Rate as announced from time to time plus
5% per year.
Events of Default: (a) any Event of Default or (b) the default in
the payment of any Imposition required to be paid under this Mortgage.
Loss Proceeds: all insurance proceeds, condemnation awards or other
compensation in respect of a condemnation or casualty affecting all or a
portion of the Mortgaged Property.
Mortgage: this instrument, and any and all renewals, modifications,
amendments, supplements, extensions, consolidations, substitutions,
spreaders and replacements of this instrument.
Requirements of Law: all laws, ordinances, orders, judgments, rules
and regulations applicable to the Mortgaged Property.
Taking: a taking of all or any part of the Mortgaged Property or any
interest therein or right accruing thereto, as the result of or in lieu or
in anticipation of the exercise of the right of condemnation or eminent
domain, or a change of grade affecting the Mortgaged Property or any part
thereof.
1.2 Payment of Indebtedness. Mortgagor shall pay the indebtedness
secured by this Mortgage in accordance with the terms of the Credit Agreement
and perform each obligation to be performed under this Mortgage and any of the
other Credit Documents.
1.3 Insurance. (a) Mortgagor shall maintain with insurers approved
by Mortgagee:
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<PAGE>
(i) Insurance covering the Improvements against loss or damage by
fire, lightning, vandalism and malicious mischief and by such other,
further and additional risks as now are or hereafter may be covered by the
standard extended coverage endorsement in amounts not less than the full
insurable value (actual replacement value less actual physical
depreciation);
(ii) If the Mortgaged Property is located within a flood hazard
area, flood insurance in such amounts as provided in Section 6.5 of the
Credit Agreement;
(iii) Comprehensive public liability, property damage and business
interruption insurance applicable to the Mortgaged Property in such
amounts as provided in Section 6.5 of the Credit Agreement;
(iv) During the course of any construction or repair of the
Improvements, workers' compensation insurance in amounts reasonably
satisfactory to Mortgagee;
(v) During the course of any construction or repair of Improvements,
builder's completed value risk insurance against "all risks of physical
loss," including collapse and transit coverage, during construction of the
Improvements, covering the total value of work performed and equipment,
supplies and materials furnished;
(vi) Boiler and machinery insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping, heating, air conditioning and
elevator equipment and escalator equipment, provided the Improvements
contain equipment of such nature, and insurance against loss of occupancy
or use arising from any such breakdown, in amounts reasonably satisfactory
to Mortgagee; and
(vii) Such other insurance, and in such amounts, as reasonably may
be required by Mortgagee against the same or other hazards.
All policies of insurance shall, except for workers' compensation insurance,
name Mortgagee as additional named insured and loss payee as its interest may
require.
(b) Mortgagor will make all payments for insurance premiums and will
deliver to Mortgagee, promptly upon request, copies of all insurance policies
required hereunder (or, in the case of blanket policies, certificates thereof)
together with evidence of payment of all premiums due thereon.
(c) Any amounts advanced or expended by Mortgagee to pay costs of
collection of insurance proceeds hereunder, including, without limitation,
reasonable attorneys' fees, costs and disbursements, shall be paid by Mortgagor
to Mortgagee on demand, together with interest thereon at the Default Rate, and
shall be deemed part of the indebtedness secured by this Mortgage.
1.4 Maintenance, Repairs, Additions, etc. Mortgagor shall (a)
maintain the Mortgaged Property in good condition and repair (including, without
limitation, any repair or rebuilding required as a result of any damage,
destruction or Taking of the Mortgaged Property), wear and tear excepted, and
shall not commit or suffer any waste thereof, (b) not materially alter or
demolish the Mortgaged Property except to the extent that such alterations do
not decrease the value of the Mortgaged Property and that any replacements will
be of like or better quality than the
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<PAGE>
Improvements which were altered or demolished and (c) subject to subsection 1.6,
comply with all Requirements of Law affecting the Mortgaged Property.
1.5 Impositions. (a) Prior to delinquency, Mortgagor shall pay (i)
all real estate taxes or assessments and special assessments for local
improvements, sewer rents, water rates and any other charges in lieu of or in
substitution of real estate taxes or assessments and (ii) any license fee, tax
or assessment imposed on Mortgagee and measured by or based in whole or in part
upon the amount of the outstanding obligations secured hereby ((i) and (ii),
collectively, the "Impositions").
(b) Mortgagor shall furnish Mortgagee upon request within 30 days
after the date upon which any such Imposition is payable hereunder by Mortgagor,
official receipts of the appropriate taxing authority, or other proof reasonably
satisfactory to Mortgagee, evidencing the payment thereof.
(c) If requested by Mortgagee, after any default hereunder in the
payment of Impositions or after the occurrence of any Event of Default,
Mortgagor shall cause to be furnished to Mortgagee a tax report of a type,
duration and prepared by a company reasonably satisfactory to Mortgagee,
covering the Mortgaged Property.
1.6 Permitted Contests. Mortgagor may contest, after notice to
Mortgagee, any Imposition or Requirement of Law, provided that (a) in the case
of an unpaid Imposition such proceedings shall suspend the collection thereof
from Mortgagor, Mortgagee and the Mortgaged Property, (b) neither the Mortgaged
Property nor any interest therein would be in danger of being sold, forfeited or
lost, (c) in the case of a Requirement of Law, neither Mortgagor nor Mortgagee
would be in any danger of any additional civil or any criminal liability for
failure to comply therewith, and (d) Mortgagor shall have set aside on its books
adequate reserves with respect thereto, and shall have furnished such security
as may be reasonably requested by Mortgagee.
1.7 Expenses of Litigation. All sums reasonably incurred by
Mortgagee for the expense of any litigation (including, without limitation,
reasonable attorneys' fees and expenses) to prosecute or defend the rights and
lien created by this Mortgage shall be paid by Mortgagor on demand, together
with interest thereon at the Default Rate, and shall be deemed part of the
indebtedness secured by this Mortgage.
1.8 Casualty or Taking of the Mortgaged Property. (a) In the event
of a condemnation of all or substantially all of the Mortgaged Property, all
Loss Proceeds in respect of such condemnation shall be paid to Administrative
Agent on behalf of Mortgagee (as agent for all of the Lenders) and applied to
the indebtedness due to Mortgagee and the other Lenders under the Credit
Agreement, with any excess to be paid to Mortgagor.
(b) Subject to subsection (c) below, in the event of damage to or
destruction of the Mortgaged Property, or in the event of a partial condemnation
of the Mortgaged Property, all Loss Proceeds shall be paid to Mortgagor, and
Mortgagor shall commence to repair and restore the Mortgaged Property pursuant
to Section 6.5(b) of the Credit Agreement.
(c) If pursuant to Section 6.5(b) of the Credit Agreement Loss
Proceeds are required to be paid to the Administrative Agent and held as
collateral for application in accordance with the Security Documents, such Loss
Proceeds shall be applied, and repair and restoration shall be undertaken, as
follows: Mortgagor shall commence to repair and restore the Mortgaged Property
5
<PAGE>
pursuant to plans and specifications approved by Mortgagee, in its reasonable
discretion, within ninety (90) days from the date of such condemnation, damage
or destruction, and shall complete the same with reasonable diligence and as
promptly as may be practicable after Mortgagee approves the plans and
specifications. Any Loss Proceeds received in connection with such condemnation,
damage or destruction shall be payable to Mortgagee to be applied in accordance
with the following provisions:
(i) If the Loss Proceeds received are less than $50,000, then such
proceeds shall be given to Mortgagor to be held in trust for Mortgagee and the
Lenders and applied only for the purpose of repairing, restoring, replacing or
rebuilding the Mortgaged Property. Any excess held by Mortgagor, after such
restoration, may be retained by Mortgagor.
(ii) In all other cases, the net amount of the Loss Proceeds on
account of such condemnation, damage or destruction to the Mortgaged Property,
after reimbursement out of such proceeds for any costs and expenses (including
reasonable attorneys' fees and disbursements) for collection thereof (such net
proceeds and deposits, and any other deposits made therein as provided below,
being herein collectively called the "Fund") shall be received and held by
Mortgagee and applied in accordance with the following provisions:
(A) If the net amount of Loss Proceeds shall be insufficient
to pay the entire cost of restoring the Mortgaged Property (as estimated by a
registered architect or professional engineer reasonably satisfactory to
Mortgagee, which estimate shall be delivered to Mortgagee before the
commencement of any such work), Mortgagor shall, prior to allowing such work to
commence, deposit the amount of the deficiency into the Fund, and thereafter
from time to time such additional amounts as shall be needed to meet any
increases in estimates made by said registered architect or professional
engineer. If the net amount of said proceeds shall be insufficient to pay the
entire cost of such work, Mortgagor shall pay and be responsible for the
deficiency.
(B) Mortgagor shall be entitled out of the Fund to ninety
percent (90%) of the cost of making temporary repairs or doing other work to
protect the Mortgaged Property pending adjustment of the insurance loss or the
making of permanent repairs, restoration, replacements or rebuilding.
(C) Mortgagor shall be entitled out of the Fund to payments
from time to time as the work progresses in amounts equal to a maximum of ninety
percent (90%) of the cost of labor and material incorporated into and used in
such work and architects' and engineers' fees, provided and upon condition that
(1) the work shall have been done in accordance with the plans and
specifications therefor, any other requirements contained in this Section, (2)
the remaining amount of the Fund shall be sufficient to pay in full for all of
the remaining work, and (3) a certificate of an independent registered architect
or professional engineer satisfactory to Mortgagee stating that such conditions
have been met shall have been delivered to Mortgagee.
(D) Mortgagor shall be entitled out of the Fund to the
remaining ten percent (10%) of the cost of labor and material incorporated into
and used in such work and architects' and engineers' fees when such work shall
have been fully completed and paid for and a certificate of an independent
registered architect or professional engineer satisfactory to Mortgagee stating
that such conditions have been met shall have been delivered to Mortgagee.
(E) At Mortgagee's request, Mortgagor shall furnish to
Mortgagee at the time of any such progress or final payment, a title search or
other evidence reasonably satisfactory to
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<PAGE>
Mortgagee (including waivers of lien agreements from the general contractor
supervising such work, or in the absence of a general contractor, all
contractors, materialmen and others providing labor or services in connection
therewith) that the Mortgaged Property and the interests therein of Mortgagee
and Mortgagor shall be free from (1) liens for labor performed or claimed to
have been performed or materials supplied or claimed to have been supplied,
unless the same are bonded, and (2) chattel mortgages, conditional sales
contacts, title retention agreements, security interests and agreements,
financing agreements, financing statements and any similar agreements, in
connection with such work. Notwithstanding any provision to the contrary,
Mortgagor shall not be entitled to any amount out of the Fund (x) while any such
lien or other encumbrance shall remain unsatisfied of record, unless in the case
of a lien the same is bonded or (y) during the continuance of any Event of
Default.
(F) If any of such Loss Proceeds shall remain after the full
completion of, and payment for, such repairs, restoration, replacements or
rebuilding, the excess shall be paid to Mortgagor.
1.9 Inspection. Mortgagee and any persons authorized by Mortgagee
shall have the right to enter and inspect the Mortgaged Property at all
reasonable times upon reasonable notice.
1.10 Utilities. Mortgagor shall pay when due all utility, sprinkler
system and protective services charges which are furnished to the Mortgaged
Property, whether public or private.
1.11 Action by Mortgagee to Preserve Mortgaged Property. Should
Mortgagor fail to make any payment or do any act as and in the manner provided
in this Mortgage, Mortgagee without obligation so to do and without notice to or
demand upon Mortgagor and without releasing Mortgagor from any obligation, may
make or do the same in such manner and to such extent as it may deem necessary
therefor. Mortgagor shall, upon demand therefor by Mortgagee pay all reasonable
costs and expenses incurred by Mortgagee in connection with the exercise by
Mortgagee of the foregoing rights (including, without limitation, reasonable
attorneys' fees and expenses) together with interest thereon from the date of
each such expenditure until paid, calculated at the Default Rate and the same
shall be deemed part of the indebtedness secured by this Mortgage.
SECTION 2. DEFAULT
2.1 Remedies. (a) Upon the occurrence of any Event of Default, in
addition to any other rights and remedies Mortgagee may have pursuant to the
Credit Documents, or as provided by law, and without limitation, (a) if such
event is an Event of Default specified in clause (a) or (b) of Section 8 of the
Credit Agreement, automatically the indebtedness secured hereby and all other
amounts owing under this Mortgage and the other Credit Documents immediately
shall become due and payable, and (b) if such event is any other Event of
Default, by `notice to Mortgagor, Mortgagee may declare the indebtedness secured
hereby and all other amounts payable under this Mortgage and the other Credit
Documents to be immediately due and payable. Except as expressly provided above
in this Section, presentment, demand, protest and all other notices of any kind
are hereby expressly waived. In addition, upon the occurrence of any Event of
Default, Mortgagee may immediately take such action, without notice or demand,
as it deems advisable to protect and enforce its rights against Mortgagor and in
and to the Mortgaged Property, including, without limitation, the following
actions, each of which may be pursued concurrently or otherwise, at such time
and in such manner as Mortgagee may determine, in its sole discretion, without
impairing or otherwise affecting the other rights and remedies of Mortgagee:
7
<PAGE>
(i) Mortgagee may, to the extent permitted by applicable law, (A)
institute and maintain an action of mortgage foreclosure against all or
any part of the Mortgaged Property, (B) institute and maintain an action
on the Notes, or (C) take such other action at law or in equity for the
enforcement of this Mortgage or any of the Credit Documents as the law may
allow. Mortgagee may proceed in any such action to final judgment and
execution thereon for all sums due hereunder, together with interest
thereon at the Default Rate and all costs of suit, including, without
limitation, reasonable attorneys' fees and disbursements. Interest at the
Default Rate shall be due on any judgment obtained by Mortgagee from the
date of judgment until actual payment is made of the full amount of the
judgment.
(ii) Mortgagee may personally, or by its agents, attorneys and
employees and without regard to the adequacy or inadequacy of the
Mortgaged Property or any other collateral as security for the
indebtedness and obligations secured hereby enter into and upon the
Mortgaged Property and each and every part thereof and exclude Mortgagor
and its agents and employees therefrom without liability for trespass,
damage or otherwise (Mortgagor hereby agreeing to surrender possession of
the Mortgaged Property to Mortgagee upon demand at any such time) and use,
operate, manage, maintain and control the Mortgaged Property and every
part thereof. Following such entry and taking of possession, Mortgagee
shall be entitled, without limitation, (x) to lease all or any part or
parts of the Mortgaged Property for such periods of time and upon such
conditions as Mortgagee may, in its discretion, deem proper, (y) to
enforce, cancel or modify any Lease and (z) generally to execute, do and
perform any other act, deed, matter or thing concerning the Mortgaged
Property as Mortgagee shall deem appropriate as fully as Mortgagor might
do.
(b) The holder of this Mortgage, in any action to foreclose it,
shall be entitled to the appointment of a receiver. In case of a foreclosure
sale, the Mortgaged Property may be sold, at Mortgagee's election, in one parcel
or in more than one parcel and Mortgagee is specifically empowered, (without
being required to do so, and in its sole and absolute discretion) to cause
successive sales of portions of the Mortgaged Property to be held.
(c) In the event of any breach of any of the covenants, agreements,
terms or conditions contained in this Mortgage, and notwithstanding to the
contrary any exculpatory or non-recourse language which may be contained herein,
Mortgagee shall be entitled to enjoin such breach and obtain specific
performance of any covenant, agreement, term or condition and Mortgagee shall
have the right to invoke any equitable right or remedy as though other remedies
were not provided for in this Mortgage.
2.2. Appointment of Receiver. If an Event of Default shall have
occurred and be continuing, Mortgagee, shall, as a matter of right, be entitled
to the appointment of a receiver for the Mortgaged Property, and Mortgagor
hereby consents to such appointment and waives notice of any application
therefor.
2.3 Remedies, etc. Cumulative. Each right, power and remedy of
Mortgagee provided for herein and now or hereafter existing at law or in equity
or by statute or otherwise shall be cumulative, and the exercise by Mortgagee of
any one or more of such rights, powers or remedies shall not preclude the
simultaneous or later exercise by Mortgagee of any or all such other rights,
powers or remedies.
SECTION 3. MISCELLANEOUS
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3.1 Agreement. This Mortgage has been executed and delivered
pursuant to the Credit Agreement and is entitled to the benefits thereof.
3.2 Notices. All notices, requests, demands and other communications
hereunder shall be given as provided in the Credit Agreement.
3.3 No Oral Modification. This Mortgage may not be changed or
terminated orally.
3.4 Terms Subject to Applicable Law. All rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Mortgage invalid,
unenforceable or not entitled to be recorded, registered or filed under any
applicable law. In the event any one or more of the terms contained in this
Mortgage shall be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other term
hereof.
3.5 Successors and Assigns. All terms of this Mortgage shall run
with the land and bind Mortgagor, its successors and assigns, and all persons
claiming under or through Mortgagor or any such successor or assign and shall
inure to the benefit of Mortgagee, and its successors and assigns.
3.6 Warranty of Title. Mortgagor represents that it has good and
marketable fee simple title to the Mortgaged Property, subject only to the
permitted exceptions shown on the title insurance policy delivered to the
Mortgagee pursuant to subsection 5.1(r) of the Credit Agreement and to other
Liens permitted under Section 7.3 of the Credit Agreement, and has the right to
mortgage the Mortgaged Property. Mortgagor will warrant and defend to Mortgagee
such title and the lien and interest of this Mortgage as a valid and enforceable
first mortgage thereon.
3.7 Multiple Security. If (a) the Premises shall consist of one or
more parcels, whether or not contiguous and whether or not located in the same
county, or (b) in addition to this Mortgage, Mortgagee shall now or hereafter
hold or be the beneficiary of one or more additional mortgages, liens, deeds of
trust or other security (directly or indirectly) for the indebtedness secured
hereby upon other property in the State in which the Premises are located
(whether or not such property is owned by Mortgagor or by others) or (c) both
the circumstances described in clauses (a) and (b) shall be true, then to the
fullest extent permitted by law, Mortgagee may, at its election, commence or
consolidate in a single trustee's sale or foreclosure action, as the case may
be, all sale or foreclosure proceedings against all such collateral securing the
indebtedness secured hereby (including the Mortgaged Property), which action may
be brought or consolidated in the courts of, or sale conducted in, any county in
which any of such collateral is located. Mortgagor acknowledges that the right
to maintain a consolidated sale or foreclosure action is a specific inducement
to Mortgagee and the Lenders to extend the indebtedness secured hereby, and
Mortgagor expressly and irrevocably waives any objections to the commencement or
consolidation of the sale or foreclosure proceedings in a single action and any
objections to the laying of venue or based on the grounds of forum non
conveniens which it may now or hereafter have. Mortgagor further agrees that if
Mortgagee shall be prosecuting one or more sales, foreclosure or other
proceedings against a portion of the Mortgaged Property or against any
collateral other than the Mortgaged Property, which collateral directly or
indirectly secures the indebtedness secured hereby, or if Mortgagee shall have
obtained a judgment of foreclosure and sale or similar judgment against such
collateral (or, in the case
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of sale, shall have met the statutory requirements therefor with respect to such
collateral), then, whether or not such proceedings are being maintained or
judgments were obtained in or outside the State in which the Premises are
located, Mortgagee may commence or continue any sale or foreclosure proceedings
and exercise its other remedies granted in this Mortgage against all or any part
of the Mortgaged Property and Mortgagor waives any objections to the
commencement or continuation of a foreclosure of this Mortgage or exercise of
any other remedies hereunder based on such other proceedings or judgments, and
waives any right to seek to dismiss, stay, remove, transfer or consolidate
either any action under this Mortgage or such other proceedings on such basis.
The commencement or continuation of proceedings to sell the Mortgaged Property,
to foreclose this Mortgage or the exercise of any other rights hereunder or the
recovery of any judgment by Mortgagee or the occurrence of any sale in any such
proceedings shall not prejudice, limit or preclude Mortgagee's right to commence
or continue one or more sales, foreclosure or other proceedings or obtain a
judgment against any other collateral (either in or outside the State in which
the Premises are located) which directly or indirectly secures the indebtedness
secured hereby, and Mortgagor expressly waives any objections to the
commencement of, continuation of, or entry of a judgment in such other sales,
foreclosure or proceedings or exercise of any remedies in such sales,
foreclosure or proceedings based upon any action or judgment connected to this
Mortgage, and Mortgagor also waives any right to seek to dismiss, stay, remove,
transfer or consolidate either such other sales, foreclosures or proceedings or
any sale or action under this Mortgage on such basis.
3.8. Receipt of Copy. Mortgagor acknowledges that it has received a
true copy of this Mortgage.
3.9. Future Advances. State Specific Clauses. [Insert additional
state required clauses.]
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IN WITNESS WHEREOF, this Mortgage has been duly executed by
Mortgagor and its corporate seal has been duly affixed hereto.
ATTEST ____________________
[corporate seal]
By: By:
--------------------------- -------------------------
Name: Name:
Title: Title:
The address of the within-named Mortgagee is:
- --------------------------------------------------------------------------------
For the Mortgagee
---------------------------------
Name:
Title:
11
<PAGE>
[ACKNOWLEDGEMENT]
12
<PAGE>
EXHIBIT ___
to
Mortgage
REAL PROPERTY DESCRIPTION
13
<PAGE>
EXHIBIT C-2 TO
CREDIT AGREEMENT
- --------------------------------------------------------------------------------
DEED OF TRUST
among
L-3 COMMUNICATIONS CORPORATION, as Grantor,
and
[__________], as Trustee
and
BANK OF AMERICA NT & SA, as Administrative Agent, as Beneficiary
Dated as of April 30, 1997
- --------------------------------------------------------------------------------
This document was prepared by,
and after recording should be
returned to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attn: Rose Greenberg, Esq.
<PAGE>
DEED OF TRUST
THIS DEED OF TRUST, dated as of the 30 day of April, 1997 ("Deed of
Trust"), among L-3 COMMUNICATIONS CORPORATION, a Delaware corporation
("Grantor"), having its principal office at 600 Third Avenue, 34th Floor, New
York, New York 10016; _________________ ("Trustee"), having an address at
_______________; and BANK OF AMERICA NT & SA, a Delaware corporation,
("Beneficiary"), having an office at 335 Madison Avenue, New York, New York
10017, as Administrative Agent for the lenders (the Lenders") under that certain
Credit Agreement, dated as of April 30, 1997 (the "Credit Agreement"), among
Grantor, Grantee, Lenders and Lehman Commercial Paper Inc., as Arranger,
Sydication Agent and Documentation Agent.
W I T N E S S E T H
TO SECURE:
(i) The Principal sum of up to a maximum of TWO HUNDRED SEVENTY FIVE
MILLION ($275,000,000) as evidenced by, and all of Grantor's obligations
under, the promissory notes dated as of the date hereof (the "Notes") from
Grantor in favor of Beneficiary;
(ii) performance and observance of each term to be performed by
Grantor under the Credit Agreement and any of the Credit Documents: and
(iii) performance and observance of each term contained in this Deed
of Trust and payment of all sums payable by Grantor to Beneficiary as
provided in this Deed of Trust;
(iv) future obligations of Grantor to Beneficiary and future
advances by Beneficiary under the Credit Agreement.
Grantor hereby conveys, grants, assigns, transfers and sets over to Trustee the
following (collectively, the "Trust Property"):
(A) the real property described in Exhibit A attached hereto and
made a part hereof (the "Premises");
(B) all buildings, improvements and fixtures now or hereafter
located or erected on the Premises (the "Improvements");
(C) any and all leases, underlettings and licenses of the Premises
or Improvements, or any part thereof, now existing or hereafter entered
into by Grantor, including, without limitation, upon the happening and
during the continuance of an Event of Default, the right to receive and
collect the rents, issues and profits derived or to be derived by Grantor
therefrom; and
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(D) all right, title and interest of Grantor in and to (i) all and
singular, the tenements, hereditaments, rights of way, easements, waters,
water courses, riparian rights, appendages and appurtenances and property
rights belonging or in any way pertaining to the Premises or the
Improvements and (ii) all estate, right, title, claim or demand
whatsoever, either in law or in equity, in possession or expectancy, of,
in and to the Premises and the Improvements.
TO HAVE AND TO HOLD the Trust Property unto Trustee, its successors
and assigns forever.
IN TRUST, NEVERTHELESS, upon the terms and trust herein set forth
for the benefit and security of Beneficiary.
IN THE EVENT Grantor shall perform its obligations under the
Subsidiaries' Guarantee in accordance with the terms thereof and shall pay all
of the sums payable under the Subsidiaries' Guarantee and hereunder by Grantor,
and shall comply with the terms hereunder, then this Deed of Trust shall be null
and void and of no further force and effect and shall be released by the Trustee
at the direction of Beneficiary at the expense of Grantor.
SECTION 1. COVENANTS
Grantor covenants with Beneficiary as follows:
1.1 Definitions. As used in this Deed of Trust all capitalized terms
not otherwise defined herein shall have the meaning ascribed thereto in the
Credit Agreement:
Deed of Trust: this instrument, and any and all renewals,
modifications, amendments, supplements, extensions, consolidations,
substitutions, spreaders and replacements of this instrument.
Default Rate: Citibank Base Rate as announced from time to time,
plus 5% per year.
Events of Default: (a) any Event of Default or (b) the default in
the payment of any Imposition required to be paid under this Deed of
Trust.
Loss Proceeds: all insurance proceeds, condemnation awards or other
compensation in respect of a condemnation or casualty affecting all or a
portion of the Trust Property.
Requirements of Law: all laws, ordinances, orders, judgments, rules
and regulations applicable to the Trust Property.
Taking: a taking of all or any part of the Trust Property or any
interest therein or right accruing thereto, as the result of or in lieu or
in anticipation of the exercise of the right of condemnation or eminent
domain, or a change of grade affecting the Trust Property or any part
thereof.
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<PAGE>
1.2 Payment of Indebtedness. Grantor shall pay the indebtedness
secured by this Deed of Trust in accordance with the terms of the Subsidiaries'
Guarantee and perform each obligation to be performed under this Deed of Trust
and any of the other Credit Documents.
1.3 Insurance. (a) Grantor shall maintain with insurers approved by
Beneficiary:
(i) Insurance covering the Improvements against loss or damage by
fire, lightning, vandalism and malicious mischief and by such other,
further and additional risks as now are or hereafter may be covered by the
standard extended coverage endorsement in amounts not less than the full
insurable value (actual replacement value less actual physical
depreciation);
(ii) If the Trust Property is located within a flood hazard area,
flood insurance in such amounts as provided in Section 6.5 of the Credit
Agreement;
(iii) Comprehensive public liability, property damage and business
interruption insurance applicable to the Trust Property in such amounts as
provided in Section 6.5 of the Credit Agreement;
(iv) During the course of any construction or repair of the
Improvements, workers' compensation insurance in amounts reasonably
satisfactory to Beneficiary;
(v) During the course of any construction or repair of Improvements,
builder's completed value risk insurance against "all risks of physical
loss," including collapse and transit coverage, during construction of the
Improvements, covering the total value of work performed and equipment,
supplies and materials furnished;
(vi) Boiler and machinery insurance covering pressure vessels, air
tanks, boilers, machinery, pressure piping, heating, air conditioning and
elevator equipment and escalator equipment, provided the Improvements
contain equipment of such nature, and insurance against loss of occupancy
or use arising from any such breakdown, in amounts reasonably satisfactory
to Beneficiary; and
(vii) Such other insurance, and in such amounts, as reasonably may
be required by Beneficiary against the same or other hazards.
All policies of insurance shall, except for workers' compensation insurance,
name Beneficiary as additional named insured and loss payee as its interest may
require.
(b) Grantor will make all payments for insurance premiums and will
deliver to Beneficiary, promptly upon request, copies of all insurance policies
required hereunder (or, in the case of blanket policies, certificates thereof)
together with evidence of payment of all premiums due thereon.
(c) Any amounts advanced or expended by Beneficiary to pay costs of
collection of insurance proceeds hereunder, including, without limitation,
reasonable attorneys' fees, costs and disbursements, shall be paid by Grantor to
Beneficiary on demand, together with interest thereon at the Default Rate, and
shall be deemed part of the indebtedness secured by this Deed of Trust.
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<PAGE>
1.4 Maintenance, Repairs, Additions, etc. Grantor shall (a) maintain
the Trust Property in good condition and repair (including, without limitation,
any repair or rebuilding required as a result of any damage, destruction or
Taking of the Trust Property), wear and tear excepted, and shall not commit or
suffer any waste thereof, (b) not materially alter or demolish the Trust
Property except to the extent that such alterations do not decrease the value of
the Trust Property and that any replacements will be of like or better quality
than the Improvements which were altered or demolished and (c) subject to
subsection 1.6, comply with all Requirements of Law affecting the Trust
Property.
1.5 Impositions. (a) Prior to delinquency, Grantor shall pay (i) all
real estate taxes or assessments and special assessments for local improvements,
sewer rents, water rates and any other charges in lieu of or in substitution of
real estate taxes or assessments and (ii) any license fee, tax or assessment
imposed on Beneficiary and measured by or based in whole or in part upon the
amount of the outstanding obligations secured hereby ((i) and (ii),
collectively, the "Impositions").
(b) Grantor shall furnish Beneficiary upon request within 30 days
after the date upon which any such Imposition is payable hereunder by Grantor,
official receipts of the appropriate taxing authority, or other proof reasonably
satisfactory to Beneficiary, evidencing the payment thereof.
(c) If requested by Beneficiary, after any default hereunder in the
payment of Impositions or after the occurrence of any Event of Default, Grantor
shall cause to be furnished to Beneficiary a tax report of a type, duration and
prepared by a company reasonably satisfactory to Beneficiary, covering the Trust
Property.
1.6 Permitted Contests. Grantor may contest, after notice to
Beneficiary, any Imposition or Requirement of Law, provided that (a) in the case
of an unpaid Imposition, such proceedings shall suspend the collection thereof
from Grantor, Beneficiary and the Trust Property, (b) neither the Trust Property
nor any interest therein would be in danger of being sold, forfeited or lost,
(c) in the case of a Requirement of Law, neither Grantor nor Beneficiary would
be in any danger of any additional civil or any criminal liability for failure
to comply therewith, and (d) Grantor shall have set aside on its books adequate
reserves with respect thereto, and shall have furnished such security as may be
reasonably requested by Beneficiary.
1.7 Expenses of Litigation. All sums reasonably incurred by
Beneficiary for the expense of any litigation (including, without limitation,
reasonable attorneys' fees and expenses) to prosecute or defend the rights and
lien created by this Deed of Trust shall be paid by Grantor on demand, together
with interest thereon at the Default Rate, and shall be deemed part of the
indebtedness secured by this Deed of Trust.
1.8 Casualty or Taking of the Trust Property. (a) In the event of a
condemnation of all or substantially all of the Trust Property, all Loss
Proceeds in respect of such condemnation award shall be paid to Administrative
Agent on behalf of Beneficiary (as agent for all of the Lenders) and applied to
the indebtedness due to Beneficiary and the Lenders under the Credit Agreement,
with any excess to be paid to Grantor.
(b) Subject to subsection (c) below, in the event of damage to or
destruction of the Trust Property, or in the event of a partial condemnation of
the Trust Property, all Loss Proceeds shall be paid to Grantor, and Grantor
shall commence to repair and restore the Trust Property pursuant to Section
6.5(b) of the Credit Agreement.
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(c) If pursuant to Section 6.5(b) of the Credit Agreement Loss
Proceeds are required to be paid to the Administrative Agent and held as
collateral for application in accordance with the Security Documents, such Loss
Proceeds shall be applied, and repair and restoration shall be undertaken, as
follows: Grantor shall commence to repair and restore the Trust Property
pursuant to plans and specifications approved by Beneficiary, in its reasonable
discretion, within ninety (90) days from the date of such condemnation, damage
or destruction, and shall complete the same with reasonable diligence and as
promptly as may be practicable after Beneficiary approves the plans and
specifications. Any Loss Proceeds received in connection with such condemnation,
damage or destruction shall be payable to Beneficiary to be applied in
accordance with the following provisions:
(i) If the Loss Proceeds received are less than $50,000, then such
proceeds shall be given to Grantor to be held in trust for Beneficiary and the
Lenders and applied only for the purpose of repairing, restoring, replacing or
rebuilding the Trust Property. Any excess held by Grantor, after such
restoration, may be retained by Grantor.
(ii) In all other cases, the net amount of the Loss Proceeds on
account of such condemnation, damage or destruction to the Trust Property, after
reimbursement out of such proceeds for any costs and expenses (including
reasonable attorneys' fees and disbursements) for collection thereof (such net
proceeds and deposits, and any other deposits made therein as provided below,
being herein collectively called the "Fund") shall be received and held by
Beneficiary and applied in accordance with the following provisions:
(A) If the net amount of Loss Proceeds shall be insufficient
to pay the entire cost of restoring the Trust Property (as estimated by a
registered architect or professional engineer reasonably satisfactory to
Beneficiary, which estimate shall be delivered to Beneficiary before the
commencement of any such work), Grantor shall, prior to allowing such work to
commence, deposit the amount of the deficiency into the Fund, and thereafter
from time to time such additional amounts as shall be needed to meet any
increases in estimates made by said registered architect or professional
engineer. If the net amount of said proceeds shall be insufficient to pay the
entire cost of such work, Grantor shall pay and be responsible for the
deficiency.
(B) Grantor shall be entitled out of the Fund to ninety
percent (90%) of the cost of making temporary repairs or doing other work to
protect the Trust Property pending adjustment of the insurance loss or the
making of permanent repairs, restoration, replacements or rebuilding.
(C) Grantor shall be entitled out of the Fund to payments from
time to time as the work progresses in amounts equal to a maximum of ninety
percent (90%) of the cost of labor and material incorporated into and used in
such work and architects' and engineers' fees, provided and upon condition that
(1) the work shall have been done in accordance with the plans and
specifications therefor, any other requirements contained in this Section, (2)
the remaining amount of the Fund shall be sufficient to pay in full for all of
the remaining work, and (3) a certificate of an independent registered architect
or professional engineer satisfactory to Beneficiary stating that such
conditions have been met shall have been delivered to Beneficiary.
(D) Grantor shall be entitled out of the Fund so the remaining
ten percent (10%) of the cost of labor and material incorporated into and used
in such work and architects' and engineers' fees when such work shall have been
fully completed and paid for and a certificate of an
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<PAGE>
independent registered architect or professional engineer satisfactory to
Beneficiary stating that such conditions have been met shall have been delivered
to Beneficiary.
(E) At Beneficiary's request, Grantor shall furnish to
Beneficiary at the time of any such progress or final payment, a title search or
other evidence reasonably satisfactory to Beneficiary (including waivers of lien
agreements from the general contractor supervising such work, or in the absence
of a general contractor, all contractors, materialmen and others providing labor
or services in connection therewith) that the Trust Property and the interests
therein of Beneficiary and Grantor shall be free from (1) liens for labor
performed or claimed to have been performed or materials supplied or claimed to
have been supplied, unless the same are bonded, and (2) chattel mortgages,
conditional sales contacts, title retention agreements, security interests and
agreements, financing agreements, financing statements and any similar
agreements, in connection with such work. Notwithstanding any provision to the
contrary, Grantor shall not be entitled to any amount out of the Fund (x) while
any such lien or other encumbrance shall remain unsatisfied of record, unless in
the case of a lien the same is bonded or (y) during the continuance of any Event
of Default.
(F) If any of such Loss Proceeds shall remain after the full
completion of, and payment for, such repairs, restoration, replacements or
rebuilding, the excess shall be paid to Grantor.
1.9 Inspection. Beneficiary and any persons authorized by
Beneficiary shall have the right to enter and inspect the Trust Property at all
reasonable times upon reasonable notice.
1.10 Utilities. Grantor shall pay when due all utility, sprinkler
system and protective services charges which are furnished to the Trust
Property, whether public or private.
1.11 Action by Mortgagee to Preserve Trust Property. Should Grantor
fail to make any payment or do any act as and in the manner provided in this
Deed of Trust, Beneficiary without obligation so to do and without notice to or
demand upon Grantor and without releasing Grantor from any obligation, may make
or do the same in such manner and to such extent as it may deem necessary
therefor. Grantor shall, upon demand therefor by Beneficiary pay all reasonable
costs and expenses incurred by Beneficiary in connection with the exercise by
Beneficiary of the foregoing rights (including, without limitation, reasonable
attorneys' fees and expenses) together with interest thereon from the date of
each such expenditure until paid, calculated at the Default Rate and the same
shall be deemed part of the indebtedness secured by this Deed of Trust.
SECTION 2. DEFAULT
2.1 Remedies. (a) Upon the occurrence of any Event of Default, in
addition to any other rights and remedies Beneficiary may have pursuant to the
Credit Documents, or as provided by law, and without limitation, (a) if such
event is an Event of Default specified in clause (a) or (b) of Section 8 of the
Credit Agreement, automatically the indebtedness secured hereby and all other
amounts owing under the Deed of Trust and the other Credit Documents immediately
shall become due and payable, and (b) if such event is any other Event of
Default, by notice to Grantor, Beneficiary may declare the indebtedness secured
hereby and all other amounts payable under this Deed of Trust and the other
Credit Documents to be immediately due and payable. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived. In addition, upon the occurrence of any Event
of Default, Beneficiary may immediately take such action, without notice or
demand, as it deems advisable to
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protect and enforce its rights against Grantor and in and to the Trust Property,
including, without limitation, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such manner as
Beneficiary may determine, in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Beneficiary:
(i) Beneficiary may, to the extent permitted by law, elect to cause
the Trust Property or any part thereof to be sold as follows: The Trustee,
his successor or substitute, is authorized and empowered and it shall be
his special duty at the request of Beneficiary to enter and take
possession of the Trust Property, and before or after such entry to
[INSERT STATE SPECIFIC REQUIREMENTS FOR SALE] advertise the sale of the
Trust Property for ___ days by ___ weekly notices in some newspaper
published in the county where such sale is to be made and to sell the
Trust Property or any part thereof situated in the State(s) of [________]
at the [courthouse door of any county] in the State(s) of
[_______________] in which any part of the Trust Property is situated, at
public vendue to the highest bidder for cash between the hours of
[__________________] of the day fixed in the notice. Said sale shall be
free from equity of redemption, statutory right of redemption, homestead,
dower, and all other rights and exemptions of every kind, all of which are
hereby waived, and the Trustee shall execute a conveyance to the purchaser
and deliver possession to the purchaser, which Grantor binds itself shall
be given without obstruction, hindrance or delay. Any sale made by the
Trustee hereunder may be as an entirety or in such parcels or parts as
Beneficiary may request, and any sale may be adjourned by announcement at
the time and place appointed for such sale without further notice except
as may be required by law. The sale by the Trustee of less than the whole
of the Trust Property shall not exhaust the power of sale herein granted,
and the Trustee is specifically empowered to make successive sale or sales
under such power until the whole of the Trust Property shall be sold; and,
if the proceeds of such sale of less then the whole of the Trust Property
shall be less than the aggregate of the indebtedness secured hereby and
the expense of executing this trust as provided herein, this Deed of Trust
and the lien hereof shall remain in full force and effect as to the unsold
portion of the Trust Property just as though no sale had been made;
provided, however, that Grantor shall never have any right to require the
sale of less than the whole of the Trust Property but Beneficiary shall
have the right, at its sole election, to request the Trustee to sell less
than the whole of the Trust Property. After each sale, the Trustee shall
make to the purchaser or purchasers at such sale good and sufficient
conveyances, conveying the property so sold to the purchaser or purchasers
with general warranty of title as then possessed by the Trustee, and after
each sale the Trustee shall receive the proceeds of said sale or sales and
apply the same as herein provided. The power of sale granted herein shall
not be exhausted by any sale held hereunder by the Trustee or his
substitute or successor, and such power of sale may be exercised from time
to time and as many times as the Beneficiary may deem necessary until all
the Trust Property has been duly sold and all secured indebtedness has
been fully paid. In the event any sale hereunder is not completed or is
defective in the opinion of the Beneficiary, such sale shall not exhaust
the power of sale hereunder and the Beneficiary shall have the right to
cause a subsequent sale or sales to be made hereunder. Any and all
statements of fact or other recitals made in any deed or deeds given by
the Trustee or any successor or substitute appointed hereunder as to
nonpayment of the indebtedness secured hereby or as to the occurrence of
any default, or as to Beneficiary having declared all such indebtedness to
be due and payable, or as to the request to sell, or as to notice of time,
place and terms of sale and the properties to be sold having been duly
given, or as to the refusal, failure or inability to act of the Trustee or
any substitute or successor, or as to the appointment of any substitute or
successor, shall be taken as prima facie evidence of the truth of the
facts so stated and
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recited. [The Trustee, his successor or substitute, may appoint or
delegate any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by the Trustee, including the
posting of notices and the conduct of sale, but in the name and on behalf
of the Trustee, his successor or substitute.] This Deed of Trust shall be
effective as a mortgage as well as a deed of trust and upon the occurrence
of a default may be foreclosed as to any of the Trust Property in any
manner permitted by the laws of the State[s] of [_____________] or of any
other state in which any part of the Trust Property is situated, and any
foreclosure suit may be brought by the Trustee or by Beneficiary. In the
event a foreclosure hereunder shall be commenced by the Trustee, or his
substitute or successor, Beneficiary may at any time before the sale of
the Trust Property direct the said Trustee to abandon the sale, and may
then institute suit for the collection of the indebtedness and obligations
secured hereby, and for the foreclosure of the lien of this Deed of Trust.
It is agreed that if Beneficiary should institute a suit for the
collection of the secured indebtedness and for the foreclosure of the lien
of this Deed of Trust, Beneficiary may at any time before the entry of a
final judgment in said suit dismiss the same, and require the Trustee, his
substitute or successor to sell the property in accordance with the
provisions of this Deed of Trust.
(ii) Beneficiary may, to the extent permitted by applicable law, (A)
institute and maintain an action of judicial foreclosure against all or
any part of the Trust Property, (B) institute and maintain an action on
the Subsidiaries' Guarantee, or (C) take such other action at law or in
equity for the enforcement of this Deed of Trust or any of the Credit
Documents as the law may allow. Beneficiary may proceed in any such action
to final judgment and execution thereon for all sums due hereunder,
together with interest thereon at the Default Rate and all costs of suit,
including, without limitation, reasonable attorneys' fees and
disbursements. Interest at the Default Rate shall be due on any judgment
obtained by Beneficiary from the date of judgment until actual payment is
made of the full amount of the judgment.
(iii) Beneficiary may personally, or by its agents, attorneys and
employees and without regard to the adequacy or inadequacy of the Trust
Property or any other collateral as security for the indebtedness and
obligations secured hereby enter into and upon the Trust Property and each
and every part thereof and exclude Grantor and its agents and employees
therefrom without liability for trespass, damage or otherwise (Grantor
hereby agreeing to surrender possession of the Trust Property to
Beneficiary upon demand at any such time) and use, operate, manage,
maintain and control the Trust Property and every part thereof. Following
such entry and taking of possession, Beneficiary shall be entitled,
without limitation, (x) to lease all or any part or parts of the Trust
Property for such periods of time and upon such conditions as Beneficiary
may, in its discretion, deem proper, (y) to enforce, cancel or modify any
lease on such property and (z) generally to execute, do and perform any
other act, deed, matter or thing concerning the Trust Property as
Beneficiary shall deem appropriate as fully as Grantor might do.
(b) Beneficiary, in any action to foreclose this Deed of Trust in a
judicial procedure or in connection with the exercise of any non-judicial power
of sale by Trustee, shall be entitled to the appointment of a receiver. In case
of a trustee's sale or foreclosure sale, the Trust Property may be sold, at
Beneficiary's election, in one parcel or in more than one parcel and Beneficiary
is specifically empowered (without being required to do so, and in its sole and
absolute discretion) to cause successive sales of portions of the Trust Property
to be held.
8
<PAGE>
(c) In the event of any breach of any of the covenants, agreements,
terms or conditions contained in this Deed of Trust, Beneficiary or Trustee
shall be entitled to enjoin such breach and obtain specific performance of any
covenant, agreement, term or condition and Beneficiary and Trustee shall have
the right to invoke any equitable right or remedy as though other remedies were
not provided for in this Deed of Trust.
2.2. Appointment of Receiver. If an Event of Default shall have
occurred and be continuing, Beneficiary, shall, as a matter of right, be
entitled to the appointment of a receiver for the Trust Property, and Grantor
hereby consents to such appointment and waives notice of any application
therefor.
2.3 Remedies, etc. Cumulative. Each right, power and remedy of
Beneficiary provided for herein and now or hereafter existing at law or in
equity or by statute or otherwise shall be cumulative, and the exercise by
Beneficiary of any one or more of such rights, powers or remedies shall not
preclude the simultaneous or later exercise by Beneficiary of any or all such
other rights, powers or remedies.
SECTION 3. MISCELLANEOUS
3.1 Agreement. This Deed of Trust has been executed and delivered
pursuant to the Credit Agreement and is entitled to the benefits thereof.
3.2 Notices. All notices, requests, demands and other communications
hereunder shall be given as provided in the Credit Agreement, except that
notices to Trustee shall be given at the address set forth at the beginning of
this Deed of Trust.
3.3 No Oral Modification. This Deed of Trust may not be changed or
terminated orally.
3.4 Terms Subject to Applicable Law. All rights, powers and remedies
provided herein may be exercised only to the extent that the exercise thereof
does not violate any applicable law, and are intended to be limited to the
extent necessary so that they will not render this Deed of Trust invalid,
unenforceable or not entitled to be recorded, registered or filed under any
applicable law. In the event any one or more of the terms contained in this Deed
of Trust shall be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other term
hereof.
3.5 Successors and Assigns. All terms of this Deed of Trust shall
run with the land and bind Grantor, its successors and assigns, and all persons
claiming under or through Grantor or any such successor or assign and shall
inure to the benefit of Trustee and Beneficiary, and their respective successors
and assigns.
3.6 Warranty of Title. Grantor represents that it has good and
marketable fee simple title to the Trust Property, subject only to the permitted
exceptions shown on the title insurance policy delivered to the Beneficiary
pursuant to subsection 5.1(r) of the Credit Agreement and to other Liens
permitted under Section 7.3 of the Credit Agreement, and has the right to
mortgage the Trust Property. Grantor will warrant and defend to Beneficiary such
title and the lien and interest of this Deed of Trust as a valid and enforceable
first deed of trust thereon.
9
<PAGE>
3.7 Successor Trustee. Beneficiary shall have the right to appoint a
substitute, or a successor trustee, to act as Trustee hereunder by written
designation. Such right shall extend to the appointment of other successor and
substitute trustees successively until the indebtedness hereby secured has been
paid in full or until the Trust Property is sold hereunder, and each substitute
and successor trustee shall succeed to all of the rights and powers of the
original Trustee named herein. [ADD ADDITIONAL STATE SPECIFIC REQUIREMENTS]
3.8 Multiple Security. If (a) the Premises shall consist of one or
more parcels, whether or not contiguous and whether or not located in the same
county, or (b) in addition to this Deed of Trust, Beneficiary shall now or
hereafter hold or be the beneficiary of one or more additional mortgages, liens,
deeds of trust or other security (directly or indirectly) for the indebtedness
secured hereby upon other property in the State in which the Premises are
located (whether or not such property is owned by Grantor or by others) or (c)
both the circumstances described in clauses (a) and (b) shall be true, then to
the fullest extent permitted by law, Beneficiary may, at its election, commence
or consolidate in a single trustee's sale or foreclosure action, as the case may
be, all sale or foreclosure proceedings against all such collateral securing the
indebtedness secured hereby (including the Trust Property), which action may be
brought or consolidated in the courts of, or sale conducted in, any county in
which any of such collateral is located. Grantor acknowledges that the right to
maintain a consolidated sale or foreclosure action is a specific inducement to
Beneficiary and the Lenders to extend the indebtedness secured hereby, and
Grantor expressly and irrevocably waives any objections to the commencement or
consolidation of the sale or foreclosure proceedings in a single action and any
objections to the laying of venue or based on the grounds of forum non
conveniens which it may now or hereafter have. Grantor further agrees that if
Trustee or Beneficiary shall be prosecuting one or more sales, foreclosure or
other proceedings against a portion of the Trust Property or against any
collateral other than the Trust Property, which collateral directly or
indirectly secures the indebtedness secured hereby, or if Beneficiary shall have
obtained a judgment of foreclosure and sale or similar judgment against such
collateral (or, in the case of a trustee's sale, shall have met the statutory
requirements therefor with respect to such collateral), then, whether or not
such proceedings are being maintained or judgments were obtained in or outside
the State in which the Premises are located, Beneficiary may commence or
continue any sale or foreclosure proceedings and exercise its other remedies
granted in this Deed of Trust against all or any part of the Trust Property and
Grantor waives any objections to the commencement or continuation of a sale of
the Premises or foreclosure of this Deed of Trust or exercise of any other
remedies hereunder based on such other proceedings or judgments, and waives any
right to seek to dismiss, stay, remove, transfer or consolidate either any
action under this Deed of Trust or such other proceedings on such basis. The
commencement or continuation of proceedings to sell the Trust Property in a
trustee's sale, to foreclose this Deed of Trust or the exercise of any other
rights hereunder or the recovery of any judgment by Beneficiary or the
occurrence of any sale by the Trustee in any such proceedings shall not
prejudice, limit or preclude Beneficiary's right to commence or continue one or
more sales, foreclosure or other proceedings or obtain a judgment against (or,
in the case of a trustee's sale, to meet the statutory requirements for, any
such sale of) any other collateral (either in or outside the State in which the
Premises are located) which directly or indirectly secures the indebtedness
secured hereby, and Grantor expressly waives any objections to the commencement
of, continuation of, or entry of a judgment in such other sales, foreclosure or
proceedings or exercise of any remedies in such sales, foreclosure or
proceedings based upon any action or judgment connected to this Deed of Trust,
and Grantor also waives any right to seek to dismiss, stay, remove, transfer or
consolidate either such other sales, foreclosure or proceedings or any sale or
action under this Deed of Trust on such basis.
10
<PAGE>
3.9. Receipt of Copy. Grantor acknowledges that it has received a
true copy of this Deed of Trust.
3.10. State Specific Clauses. [ADD ADDITIONAL STATE REQUIRED
CLAUSES]
11
<PAGE>
IN WITNESS WHEREOF, this Deed of Trust has been duly executed by
Grantor and its corporate seal has been duly affixed hereto.
_________________________________
By: _____________________________
Name:
Title:
12
<PAGE>
[ACKNOWLEDGEMENT]
13
<PAGE>
EXHIBIT A
to
Deed of Trust
REAL PROPERTY DESCRIPTION
14
<PAGE>
EXHIBIT D-1
[LETTERHEAD OF SIMPSON THACHER & BARTLETT]
April 30, 1997
Lehman Commercial Paper Inc.,
as Arranger, Syndication Agent and Documentation Agent
3 World Financial Center, 9th Floor
New York, New York 10285
Bank of America NT & SA,
as Administrative Agent
335 Madison Avenue
New York, New York 10017
The Lenders Listed on Schedule 1 hereto
Ladies and Gentlemen:
We have acted as special counsel to L-3 Communications Holdings,
Inc., a Delaware corporation ("Holdings"), and L-3 Communications Corporation, a
Delaware corporation (the "Borrower", collectively with Holdings, the "Loan
Parties"), in connection with the preparation, execution and delivery of the
following documents: (i) the Credit Agreement dated as of April 30, 1997 (the
"Credit Agreement") among the Borrower, the Lenders parties thereto, Lehman
Commercial Paper Inc., as Arranger, Syndication Agent and Documentation Agent,
and Bank of America NT & SA, as Administrative Agent, (ii) the Notes, (iii) the
Parent Pledge and Security Agreement, (iv) the Borrower Pledge and Security
Agreement, (v) the Parent Guarantee and (vi) the
<PAGE>
SIMPSON THACHER & BARTLETT
Lehman Commercial Paper Inc.
Bank of America NT & SA -2- April 30, 1997
Mortgages (the documents referred to in clauses (i) through (vi) are referred to
herein collectively as the "Loan Documents"). Terms defined in the Loan
Documents are used herein as therein defined. This opinion is being delivered to
you pursuant to Section 5.1(p) of the Credit Agreement.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of each of the
Loan Documents. In addition, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such records, agreements,
instruments and other documents and have made such other investigations as we
have deemed relevant and necessary as a basis for the opinions hereinafter set
forth.
For the purposes hereof, we have assumed, with your permissions, the
genuineness of all signatures, the legal capacity of natural persons and the
authenticity and regularity of all documents examined by us. As to questions of
fact relevant to this opinion, we have relied upon, and assume the accuracy of,
the representations and warranties of the Loan Parties in the Loan Documents and
have relied upon certificates and oral or written statements and other
information of public officials, officers and representatives of the Loan
Parties and others and assume compliance on the part of all parties to the Loan
Documents with their covenants and agreements contained therein.
In rendering the opinions expressed below, we have assumed, with
your permission and without any independent investigation or verification of any
kind, that (a) the Loan Documents constitute the valid and legally binding
obligations of each party to
<PAGE>
SIMPSON THACHER & BARTLETT
Lehman Commercial Paper Inc.
Bank of America NT & SA -3- April 30, 1997
the Loan Documents other than the Loan Parties, enforceable against such parties
in accordance with their respective terms, and (b) the execution, delivery and
performance by each Loan Party of each Loan Document to which it is a party do
not (i) contravene, or require any order, consent, approval, license,
authorization, validation, filing, recording, registration or exemption not
obtained or made under, any applicable provision of any law, statute, rule or
regulation (other than any law, statute, rule or regulation of the United States
of America or the State of New York and the Delaware General Corporation Law) or
any order, writ, injunction or decree of any court or other governmental
authority binding upon such Loan Party or (ii) contravene, or require any
consent not obtained under, any contractual obligation applicable to or binding
upon such Loan Party (other than the Transaction Documents).
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. The Borrower has been duly incorporated and is validly existing
and in good standing under the laws of the State of Delaware with
corporate power and authority to conduct its business as now conducted and
to own, or hold under lease, its assets and to enter into the Credit
Agreement, the Notes, the Borrower Pledge and Security Agreement, and the
Mortgages (collectively, the "Borrower Credit Documents") and perform its
obligations thereunder. Based solely on certificates from public
officials, we confirm that the Borrower is qualified to do business in
each State where such qualification is required, except where the failure
to be so qualified could not reasonably be expected to have a Material
Adverse Effect.
2. Holdings has been duly incorporated and is validly existing and
in good standing under the laws of the State of Delaware with corporate
power and authority to conduct its business as now conducted and to own,
or hold under lease, its assets and to enter into the Parent Guarantee and
the Parent Pledge and Security Agreement (collectively, the "Guarantor
Documents") and perform its obligations
<PAGE>
SIMPSON THACHER & BARTLETT
Lehman Commercial Paper Inc.
Bank of America NT & SA -4- April 30, 1997
thereunder. Based solely on certificates from public officials, we confirm
that Holdings is qualified to do business in New York.
3. The execution, delivery and performance of the Borrower Credit
Documents have been duly authorized by all necessary corporate action of
the Borrower, and the Borrower Credit Documents have been duly executed
and delivered by the Borrower.
4. The execution, delivery and performance of the Guarantor
Documents have been duly authorized by all necessary corporate action of
Holdings, and the Guarantor Documents have been duly executed and
delivered by Holdings.
5. Each of the Borrower Credit Documents (other than any Mortgage
which by its terms is governed by the laws of a jurisdiction other than
New York State) constitutes a legally valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms.
6. Each of the Guarantor Documents constitutes a legally valid and
binding obligation of Holdings, enforceable against Holdings in accordance
with its terms.
7. The execution and delivery of the Borrower Credit Documents by
the Borrower, the borrowing and granting of security interests by the
Borrower under the Borrower Credit Documents and the consummation of the
Transaction on the date hereof do not: (a) violate any federal or New York
statute, rule or regulation applicable to the Borrower or the Delaware
General Corporation Law (including, without limitation, Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System, but
excluding any government procurement statute or regulations issued
pursuant thereto, as to which we understand that you have obtained the
opinion of Fried, Frank, Harris, Schriver & Jacobsen), (b) violate the
provisions of its certificate of incorporation or by-laws, (c) result in
(i) the breach of or a default under any of the Transaction Documents to
which the Borrower is a party or (ii) the creation of any lien under any
of the Transaction Documents to which the Borrower is a party, except for
liens arising under the Security Documents (as defined below), or (d)
require any consents, approvals, authorizations, registrations,
declarations or filings by the Borrower under any federal or New York
State statute, rule or regulation applicable to the Borrower, except (i)
the filing of the Financing Statements (as defined below) naming the
Borrower as the debtor, (ii) approvals required by the Hart-Scott-Rodino
Antitrust Improvements Act which have been obtained, (iii) the consents
under the Assignment of Claims Act and (iv) those other consents,
approvals, authorizations, registrations, declarations and filings
required under any federal or New York State statute, rule or regulation
and listed on Schedule 4.4 to the Credit Agreement.
<PAGE>
SIMPSON THACHER & BARTLETT
Lehman Commercial Paper Inc.
Bank of America NT & SA -5- April 30, 1997
8. The execution and delivery of the Guarantor Documents by
Holdings, the making of the guarantee and granting of the security
interests by Holdings under the Guarantor Documents and the consummation
of the Transaction on the date hereof do not: (a) violate any federal or
New York statute, rule or regulation applicable to Holdings or the
Delaware General Corporation Law (including, without limitation.
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System, but excluding any government procurement statute or regulations
issued pursuant thereto, as to which we understand that you have obtained
the opinion of Fried, Frank, Harris, Schriver & Jacobsen), (b) violate the
provisions of its certificate of incorporation or by-laws, (c) result in
(i) the breach of or a default under any of the Transaction Documents to
which Holdings is a party or (ii) the creation of any lien under any of
the Transaction Documents to which Holdings is a party, except for liens
arising under the Security Documents (as defined below), or (d) require
any consents, approvals, authorizations, registrations, declarations or
filings by Holdings under any federal or state statute, rule or regulation
applicable to Holdings, except (i) the filing of the Financing Statements
(as defined below) naming Holdings as the debtor, (ii) approvals required
by the Hart-Scott-Rodino Antitrust Improvements Act which have been
obtained, (iii) the consents under the Assignment of Claims Act and (iv)
those other consents, approvals, authorizations, registrations,
declarations and filings required under any federal or New York State
statute, rule or regulation and listed on Schedule 4.4 to the Credit
Agreement.
9. The provisions of the Borrower Pledge and Security Agreement are
effective to create valid security interests in favor of the
Administrative Agent in that portion of the collateral described in the
Borrower Pledge and Security Agreement which is subject to Article 9 of
the New York UCC (the "Borrower Collateral") as security for the payment,
to the extent set forth therein, of all obligations of the Borrower to the
Agents and the Lenders under the Borrower Credit Documents.
10. The provisions of the Parent Pledge and Security Agreement are
effective to create valid security interests in favor of the
Administrative Agent in that portion of the collateral described in the
Parent Pledge and Security Agreement which is subject to Article 9 of the
New York UCC (the "Parent Collateral" and, together with the Borrower
Collateral, the "Collateral") as security for the payment, to the extent
set forth therein, of all obligations of the Holdings to the Agents and
the Lenders under the Guarantor Documents.
11. The UCC-1 financing statements naming the Borrower as debtor
which are attached hereto as Exhibit A (the "Borrower Financing
Statements") and the UCC-1 financing statements naming Holdings as debtor
which are attached hereto
<PAGE>
SIMPSON THACHER & BARTLETT
Lehman Commercial Paper Inc.
Bank of America NT & SA -6- April 30, 1997
as Exhibit B (the "Holdings Financing Statements"; the Borrower Financing
Statements and the Holdings Financing Statements, collectively, the
"Financing Statements") are in appropriate form for filing in the Office
of the Secretary of State of New York, the Office of the New York City
Register and the Office of the Suffolk County Clerk (collectively, the
"Filing Offices"). Upon the proper filing of the Financing Statements in
the Filing Offices, the security interest in favor of the Administrative
Agent in the Collateral will be perfected to the extent a security
interest in such Collateral can be perfected by filing a financing
statement under the provisions of the New York UCC.
12. Assuming the Administrative Agent takes possession of and holds
the shares of capital stock listed on Schedule 1 to the Parent Pledge and
Security Agreement (the "Pledged Shares"), delivered to the Administrative
Agent pursuant to the Parent Pledge and Security Agreement, with undated
stock powers duly indorsed in blank, in the State of New York, the Parent
Pledge and Security Agreement will create a valid and perfected security
interest in favor of the Administrative Agent in the rights in such
Pledged Shares which Holdings has or has actual authority to convey, as
security for the payment, to the extent set forth in the Parent Pledge and
Security Agreement, of all obligations of Holdings to the Lenders under
the Guarantor Documents.
13. The Borrower's authorized capital stock consists of 100 shares
of common stock, all of which have been duly authorized and validly
issued, are fully paid and nonassessable, are free of preemptive rights
and, based solely on our review of the Borrower's stock records, are owned
of record by Holdings free and clear of all liens, claims, charges, or
encumbrances other than Liens created or permitted by the Security
Documents. Holdings has no direct or indirect Subsidiaries other than the
Borrower.
14. Assuming the Mortgage covering the Borrower's real property
located in Hauppauge, New York (the "New York Mortgage") is recorded in
the appropriate public records and that all necessary mortgage recording
taxes have been paid, the New York Mortgage will constitute a valid and
enforceable lien on the property described therein, securing the
Borrower's obligations under the Notes.
15. The Borrower is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
16. Holdings is not an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
<PAGE>
SIMPSON THACHER & BARTLETT
Lehman Commercial Paper Inc.
Bank of America NT & SA -7- April 30, 1997
17. The choice of New York law to govern each Loan Document in which
such choice is stipulated is a valid and effective choice of law under the
laws of the State of New York.
Our opinions in paragraphs 5 and 6 above are subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing. Our opinions in
paragraphs 5 and 6 above are also subject to the qualification that certain
remedial and exculpatory provisions of, and waivers of rights contained in, the
Borrower Pledge and Security Agreement, the Parent Pledge and Security Agreement
and the New York Mortgage (together, the "Security Documents") are or may be
unenforceable in whole or in part under the laws of the State of New York, but
such laws do not, in our opinion, make the remedies afforded by the Security
Documents inadequate for the practical realization of the benefits intended to
be provided thereby.
Our opinions in paragraph 9, 10 and 11 above are limited to Article
9 of the New York UCC and our opinion in paragraph 12 above is limited to
Article 8 of the New York UCC and therefore those opinion paragraphs do not
address (i) the laws of jurisdictions other than New York, (ii) the laws of New
York except for Article 8 or 9, as the case may be, of the New York UCC, (iii)
collateral of a type not subject to Article 8 or 9, as the case may be, of the
New York UCC and (iv) what law governs perfection of the security interests
granted in the collateral covered by this opinion letter under New
<PAGE>
SIMPSON THACHER & BARTLETT
Lehman Commercial Paper Inc.
Bank of America NT & SA -8- April 30, 1997
York UCC ss. 9-103. Our opinions in paragraphs 9, 10, 11 and 12 above should be
interpreted in accordance with the Special Report by the TriBar Opinion
Committee: U.C.C. Security Interest Opinions. 49 Bus. Law. 359 (1993).
With your permission, we express no opinion as to (a) the perfection
of the Administrative Agent's security interests in Pledged Securities with
respect to which a security interest may be perfected only through methods other
than the possession of certificates representing the Pledged Securities; (b) any
provision of the Loan Documents which is intended (i) to establish any standard
as the measure of the performance by any party thereto of such party's
obligations of good faith, diligence, fair dealing, reasonableness or care or
the fulfillment of the duties imposed on any secured creditor with respect to
the disposition or redemption of collateral, accounting for surplus proceeds of
collateral or accepting collateral in discharge of liabilities owed to any
creditor or unsecured creditor or (ii) to permit modification thereof only by
means of an agreement in writing signed by the parties thereto; (c) except as
set forth in paragraphs 9, 10, 11 and 12 above, the attachment, creation,
perfection, enforceability or priority of any liens or security interests
purported to be granted under the Loan Documents; (d) any provision of the Loan
Documents (i) requiring payment of attorneys' fees, except to the extent a court
determines such fees to be reasonable or (ii) waiving objections based on forum
non-conveniens; (e) the effect of the compliance or noncompliance with any
federal or state laws or regulations applicable to the Lenders or their
affiliates because of their legal or regulatory status or the nature of their
businesses; (f) any provision of the
<PAGE>
SIMPSON THACHER & BARTLETT
Lehman Commercial Paper Inc.
Bank of America NT & SA -9- April 30, 1997
Loan Documents insofar as it purports to grant a right of setoff in respect of
any Loan Party's or its subsidiaries' assets (i) to any person other than a
creditor of such Loan Party or subsidiary, as the case may be, or (ii) to any
Lender in an amount greater than the amount owing by such Loan Party or
subsidiary, as the case may be, to such Lender; (g) the right, title or interest
of any person in or to, or the condition of title or ownership of, or the
existence of, any property purported to be subject to the Loan Documents; (h)
Section 2.9(c) of the Credit Agreement (and corresponding provisions in each of
the other Loan Documents) insofar as they relate to post-judgment or default
interest rates or interest on overdue amounts; (i) any provision of the Loan
Documents which purports to require that any collateral or property be held in
trust or imposes fiduciary duties on any party thereto; (j) any provisions of
any Loan Document that provides that a Loan Party's liability thereunder shall
not be affected by action or failure to act on the part of the beneficiaries of
any Loan Document or by amendments or waivers of provisions of documents
governing the guaranteed or secured obligations; (k) with respect to the
validity, binding effect or enforceability of any provision of any Loan Document
which purports to authorize you to sign or file financing statements or other
documents without the signature of the applicable Loan Party (except to the
extent a secured party may execute and file financing statements without the
signature of the debtor under Section 9-402(2) of the New York UCC); (l) as to
the enforceability of the indemnification provisions of the Loan Documents
insofar as said provisions contravene public policy; and (m) the enforceability
of the provisions of any agreement or document to the extent
<PAGE>
SIMPSON THACHER & BARTLETT
Lehman Commercial Paper Inc.
Bank of America NT & SA -10- April 30, 1997
that such provisions constitute a waiver of illegality as a defense to
performance of contract obligations or any other defense to performance which
cannot, as a matter of law, be effectively waived.
We wish to point out that (a) in the case of property that becomes
collateral under the Loan Documents after the date hereof, Section 552 of Title
11 of the United States Bankruptcy Code limits the extent to which property
acquired by a debtor after the commencement of a case under the Bankruptcy Code
may be subject to a security interest arising from a security agreement entered
into by the debtor before the commencement of such case and (b) the perfection
of the Administrative Agent's security interest in proceeds is limited to the
extent set forth in 9-306 of the New York UCC.
In addition, we express no opinion as to the enforceability of any
provision of any Loan Document whereby any Loan Party purports to submit to the
subject matter jurisdiction of the United States District Court for the Southern
District of New York. We note the limitations of 28 U.S.C. ss. 1332 on federal
court jurisdiction where diversity of citizenship is lacking, and we also note
that such submissions cannot supersede that court's discretion in determining
whether to transfer an action from one federal court to another under 28 U.S.C.
ss. 1404(a).
We are members of the Bar of the State of New York and we express no
opinion as to the laws of any jurisdiction other than the federal laws of the
United States of America, the laws of the State of New York and the General
Corporation Law of the State of Delaware. We express no opinion as to the
enforceability, attachment, creation,
<PAGE>
SIMPSON THACHER & BARTLETT
Lehman Commercial Paper Inc.
Bank of America NT & SA -11- April 30, 1997
perfection or priority of any security interest in or lien on patents, trade
names, trademarks, copyrights, other intellectual property or any agreements,
licenses or instruments relating thereto.
This opinion is rendered to you in connection with the
above-described transactions. This opinion may not be relied upon by you for any
other purpose, or relied upon by any other person, firm or corporation without
our prior written consent.
Very truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
Schedule 1
LENDERS
LEHMAN COMMERCIAL PAPER INC.
BANK OF AMERICA NT & SA
CREDIT LYONNAIS, NEW YORK BRANCH
FLEET NATIONAL BANK
MARINE MIDLAND BANK
BANK OF NOVA SCOTIA
BANKBOSTON, N.A.
THE FIRST NATIONAL BANK OF CHICAGO
THE FUJI BANK, LIMITED NEW YORK BRANCH
CANADIAN IMPERIAL BANK OF COMMERCE
CITIBANK, N.A.
THE ING CAPITAL SENIOR SECURED HIGH INCOME FUND, L.P.
KZH HOLDING CORPORATION II
KZH HOLDING CORPORATION
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
METROPOLITAN LIFE INSURANCE COMPANY
OAK HILL SECURITIES FUND, L.P.
OCTAGON CREDIT INVESTORS LOAN PORTFOLIO
(a unit of the Chase Manhattan Bank)
PARIBAS CAPITAL FUNDING LLC
PILGRIM AMERICA PRIME RATE TRUST
PRIME INCOME TRUST
ROYALTON COMPANY
CRESCENT / MACH I PARTNERS L.P.
UNITED COMPANIES LIFE INSURANCE COMPANY
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
BANK OF MONTREAL
BANK OF TOKYO - MITSUBISHI TRUST COMPANY
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
BHF - BANK AKTIENGESELLSCHAFT GRAND CAYMAN BRANCH
CORESTATES BANK, N.A.
GOLDMAN SACHS CREDIT PARTNERS L.P.
PNC BANK, NATIONAL ASSOCIATION
SKANDINAVISKA ENSKILDA BANKEN CORPORATION
SOCIETE GENERALE, NEW YORK BRANCH
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH
THE BANK OF NEW YORK
THE MITSUBISHI TRUST AND BANKING CORPORATION
TRANSAMERICA BUSINESS CREDIT CORPORATION
U.S. BANK
<PAGE>
EXHIBIT A
STATE OF NEW YORK
Uniform Commercial Code - FINANCING STATEMENT - Form UCC-1
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing Officer for filing
pursuant to the Uniform Commercial Code
- --------------------------------------------------------------------------------
No of Additional
Sheets Presented
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es)
L-3 COMMUNICATIONS
CORPORATION
600 Third Avenue, 34th Fl.
New York, New York 10016
13-3937436
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
BANK OF AMERICA NT & SA, as
ADMINISTRATIVE AGENT
335 Madison Avenue
New York, New York 10017
94-168-7665
- --------------------------------------------------------------------------------
3. |_| The debtor is a transmitting utility
- --------------------------------------------------------------------------------
4. For Filing Officer Date, Time No Filing Office
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
All Accounts; Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment;
Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory;
Investment Property; Pledged Securities; books and records pertaining to the
collateral; and proceeds and products of the foregoing as more particularly
defined and described on Exhibit A attached hereto and made a part hereof.
FILED WITH: NEW YORK COUNTY
|X| Products of the Collateral are also covered
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on*
|_| The described goods are to be affixed to*
|_| The timber to be cut or minerals or the like (including oil and gas) is
on*
*(Describe Real Estate Below)
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to a
security interest in another jurisdiction:
|_| when the collateral was brought into this state, or
|_| when the debtor's location was changed to this state
L-3 COMMUNICATIONS CORPORATION BANK OF AMERICA NT & SA,
as ADMINISTRATIVE AGENT
- ----------------------------------- -----------------------------------
By /s/ [Illegible] By /s/ [Illegible]
-------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy - Numerical
STANDARD FORM - FORM UCC-1
- --------------------------------------------------------------------------------
INSTRUCTIONS
(1) Remove Secured Party and Debtor copies and send other three copies to the
filing officer.
(2) Filing fee - for filing in the office of the Secretary of State, see
section 96-a of the Executive Law; for filing in the office of the County
Clerk or New York City Register see section 8021(f) at the Civil Practice
Law and Rules; or you may contact any of the respective offices for
information relative to fees.
(3) If the space provided for any item(s) on the form is inadequate, the
item(s) should be continued on additional sheets, preferably 7-1" x 10" or
7-1" x 8". Only one copy of such additional sheets need be presented to
the filing officer with a set of three copies of this financing statement.
(4) If collateral is crops or goods which are or are to become fixtures or
timber to be cut, or minerals or the like (including oil and gas), check
the appropriate box in Item 7; check the box in Item 8 the real estate by
street and number, if any or if none, by description sufficient to
identify it, such as "The real property described in Liber ____ of Deeds
(or Mortgages) at Page ____", and by city or town and county, if any, and
if in New York City, or Nassau or Onondaga County where the "block" system
of recording or registering and indexing conveyances is in use, by the
number of the Block and of the Section, if any, and of the Lot, if any, of
the real estate involved. Also give the name(s) of a record owner of the
real estate in Item 9.
(5) When a copy of the security agreement is used as a Financing Statement,
the filing fee is that of a non-standard form filing. It is requested that
it be accompanied by a completed but unsigned set of these forms.
(6) At the time of original filing, filing officer will return second copy as
an acknowledgement.
<PAGE>
EXHIBIT A
TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT NAMING
L-3 COMMUNICATIONS CORPORATION, AS DEBTOR
AND
BANK OF AMERICA NT AND SA, AS ADMINISTRATIVE AGENT,
AS SECURED PARTY
================================================================================
DEBTOR: SECURED PARTY
L-3 Communications Corporation Bank of America NT & SA, as
_____________________________ Administrative Agent
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________
Fed. Taxpayer I.D. # __________
================================================================================
The Collateral covered by this financing statement includes all of the
above-named Debtor's right, title and interest in, all of the following property
now owned or at any time hereafter acquired by the Debtor or in which the Debtor
now has or at any time in the future may acquire any right (collectively, the
"Collateral"): all Accounts; all Chattel Paper; Contracts; Documents; Deposit
Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual
Property; Inventory; Investment Property; Pledged Securities; Real
Property-Related Collateral; books and records pertaining to the Collateral; and
to the extent not otherwise included, all Proceeds and products of any and all
of the foregoing and all collateral security and guarantees given by any Person
with respect to any of the foregoing; provided, however, except as permitted by
Section 9-318(4) of the NY UCC (hereinafter defined), the Collateral shall not
include any Contract, General Intangible, Patent License or Trademark License to
the extent that such Contract, General Intangible, Patent License or Trademark
License, or the instruments giving the same, would prohibit such assignment.
As used herein:
(a) The following terms which are defined in the Uniform Commercial
Code as in effect in the State of New York on April 30, 1997 (the "NY UCC") are
used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents,
Equipment, Fixtures, Instruments and Inventory.
(b) The following terms shall have the following meanings:
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
1
<PAGE>
"Contracts" means all contracts and agreements to which the Debtor
is or becomes a party, including, without limitation, (i) all rights of the
Debtor to receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii)
all rights of the Debtor to perform and to exercise all remedies thereunder.
"Credit Agreement" means that certain Credit Agreement dated as of
April 30. 1997 by and among L-3 Communications Corporation, a Delaware
corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication
agent and documentation agent and Bank of America NT & SA, as administrative
agent for the Lenders, as the same be amended, restated and/or otherwise
modified from time to time.
"Copyrights" means (i) all copyrights arising under the laws of
the United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to obtain
all renewals thereof.
"Copyright Licenses" means any written agreement naming the Debtor
as licensor or licensee, granting any right under any Copyright, including,
without limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"General Intangibles" means all "general intangibles" as such term
is defined in Section 9-106 of the NY UCC and, in any event, including, without
limitation, with respect to the Debtor, all contracts, agreements, instruments
and indentures in any form, and portions thereof, to which the Debtor is a party
or under which the Debtor has any right, title or interest or to which the
Debtor or any property of the Debtor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of the Debtor to receive moneys due and to become due
to it thereunder or in connection therewith, (ii) all rights of the Debtor to
damages arising thereunder and (iii) all rights of the Debtor to perform and to
exercise all remedies thereunder, in each case to the extent the grant by the
Debtor of a security interest in its right, title and interest in such contract,
agreement, instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any other party
thereto, would not give any other party to such contract, agreement, instrument
or indenture the right to terminate its obligations thereunder, or is permitted
with consent if all necessary consents to such grant of a security interest have
been obtained from the other parties thereto (it being understood that the
foregoing shall not be deemed to obligate the Debtor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit, restrict or
impair the grant by the Debtor of a security interest to the Secured Party in
any Receivable or any money or other amounts due or to become due under any such
contract, agreement, instrument or indenture.
2
<PAGE>
"Government Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Government Contract" means a Contract with a Government Authority.
"Intellectual Property" means the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"Intercompany Note" means any promissory note evidencing loans made
by the Debtor to any of its subsidiaries.
"Investment Property" has the meaning ascribed thereto in the
Uniform Commercial Code as in effect on April 30, 1997 in the State of
California.
"Patents" means (i) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, (ii) all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"Patent License" means all agreements, whether written or oral,
providing for the grant by or to the Debtor of any right to manufacture, use or
sell any invention covered in whole or in part by a Patent.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Pledged Notes" means all promissory notes, all Intercompany Notes
at any time issued to the Debtor and all other promissory notes issued to or
held by the Debtor (other than promissory notes issued in connection with
extensions of trade credit by the Debtor in the ordinary course of business).
"Pledged Securities" means the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock" means all shares of Capital Stock, together with any
other shares, stock certificates, options or rights of any nature whatsoever in
respect of the Capital Stock of any Person that may from time to time be issued
or granted to, or held by, the Debtor.
3
<PAGE>
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the NY UCC and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
"Real Property-Related Collateral" means (i) all buildings,
improvements and fixtures (the "Improvements") now or hereafter located or
erected on the real property described in Exhibit A to each of the Mortgages (as
such term is defined in the Credit Agreement (as defined above)) (the
"Premises"), (ii) any and all leases, underlettings and licenses of the Premises
or Improvements, or any part thereof, now existing or hereafter entered into by
the mortgagors, and/or grantors, as applicable, under the Mortgages
(collectively, the "Grantor"), including, without limitation, upon the happening
and during the continuance of an Event of Default (as defined in the Credit
Agreement), the right to receive and collect the rents, issues and profits
derived or to be derived by the Grantor therefrom, and (iv) all right, title and
interest of Grantor in and to (a) all and singular, the tenements,
hereditaments, rights of way, easements, waters, water courses, riparian rights,
appendages and appurtenances and property rights belonging or in any way
pertaining to the Premises or the Improvements and (b) all estate, right, title,
claim or demand whatsoever, either in law or in equity, in possession or
expectancy, of, in and to the Premises and the Improvements.
"Receivable" means any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Restricted Government Contract" means Government Contracts which,
by their terms, prohibit the assignment or Receivables thereunder.
"Trademarks" means (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, and (ii) the right to obtain all renewals thereof.
"Trademark License" means any agreement, whether written or oral,
providing for the grant by or to the Debtor of any right to use any Trademark.
The Secured Party acts as "Administrative Agent" for the various "Lenders" from
time to time party to that certain Credit Agreement dated as of April 30, 1997
by and among L-3 Communications Corporation, a Delaware corporation, the
Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and
documentation
4
<PAGE>
agent and Bank of America NT & SA, as administrative agent for the Lenders, as
the same be amended, restated and/or otherwise modified from time to time.
Debtor: L-3 COMMUNICATIONS CORPORATION
By: /s/ [Illegible]
---------------------------------
Name:
Title:
5
<PAGE>
STATE OF NEW YORK
Uniform Commercial Code - FINANCING STATEMENT - Form UCC-1
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing Officer for filing
pursuant to the Uniform Commercial Code
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es)
L-3 COMMUNICATIONS
CORPORATION
600 Third Avenue, 34th Fl.
New York, New York 10016
13-3937436
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
BANK OF AMERICA NT & SA, as
ADMINISTRATIVE AGENT
335 Madison Avenue
New York, New York 10017
94-168-7665
- --------------------------------------------------------------------------------
3. |_| The debtor is a transmitting utility
- --------------------------------------------------------------------------------
4. For Filing Officer Date, Time No Filing Office
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
All Accounts; Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment;
Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory;
Investment Property; Pledged Securities; books and records pertaining to the
collateral; and proceeds and products of the foregoing as more particularly
defined and described on Exhibit A attached hereto and made a part hereof.
FILED WITH: Secretary of State
|X| Products of the Collateral are also covered
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on*
|_| The described goods are to be affixed to*
|_| The timber to be cut or minerals or the like (including oil and gas) is
on*
*(Describe Real Estate Below)
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to a
security interest in another jurisdiction:
|_| when the collateral was brought into this state, or
|_| when the debtor's location was changed to this state
L-3 COMMUNICATIONS CORPORATION BANK OF AMERICA NT & SA,
as ADMINISTRATIVE AGENT
- ----------------------------------- -----------------------------------
By /s/ [Illegible] By /s/ [Illegible]
-------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy - Numerical
STANDARD FORM - FORM UCC-1
- --------------------------------------------------------------------------------
INSTRUCTIONS
(1) Remove Secured Party and Debtor copies and send other three copies to the
filing officer.
(2) Filing fee - for filing in the office of the Secretary of State, see
section 96-a of the Executive Law; for filing in the office at the County
Clerk or New York City Register see section 8021(f) at the Civil Practice
Law and Rules; or you may contact any at the respective offices for
information relative to fees.
(3) If the space provided for any item(s) on the form is inadequate, the
item(s) should be continued on additional sheets, preferably 7-1" x 10" or
7-1" x 8". Only one copy of such additional sheets need be presented to
the filing officer with a set of three copies of this financing statement.
(4) If collateral is crops or goods which are or are to become fixtures or
timber to be cut, or minerals or the like (including oil and gas), check
the appropriate box in Item 7; check the box in Item 8 the real estate by
street and number, if any or if none, by description sufficient to
identify it, such as "The real property described in Liber ____ of Deeds
(or Mortgages) at Page ____", and by city or town and county, if any, and
if in New York City, or Nassau or Onondaga County where the "block" system
of recording or registering and indexing conveyances is in use, by the
number of the Block and of the Section, if any, and of the Lot, if any, of
the real estate involved. Also give the name(s) of a record owner of the
real estate in Item 9.
(5) When a copy of the security agreement is used as a Financing Statement,
the filing fee is that of a non-standard form filing. It is requested that
it be accompanied by a completed but unsigned set of these forms.
(6) At the time of original filing, filing officer will return second copy as
an acknowledgement.
<PAGE>
EXHIBIT A
TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT NAMING
L-3 COMMUNICATIONS CORPORATION, AS DEBTOR
AND
BANK OF AMERICA NT AND SA, AS ADMINISTRATIVE AGENT,
AS SECURED PARTY
================================================================================
DEBTOR: SECURED PARTY:
L-3 Communications Corporation Bank of America NT & SA, as
_____________________________ Administrative Agent
_____________________________ _____________________________
_____________________________ _____________________________
_____________________________
Fed. Taxpayer I.D. # __________
================================================================================
The Collateral covered by this financing statement includes all of the
above-named Debtor's right, title and interest in, all of the following property
now owned or at any time hereafter acquired by the Debtor or in which the Debtor
now has or at any time in the future may acquire any right (collectively, the
"Collateral"): all Accounts; all Chattel Paper; Contracts; Documents; Deposit
Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual
Property; Inventory; Investment Property; Pledged Securities; Real
Property-Related Collateral; books and records pertaining to the Collateral; and
to the extent not otherwise included, all Proceeds and products of any and all
of the foregoing and all collateral security and guarantees given by any Person
with respect to any of the foregoing; provided, however, except as permitted by
Section 9-318(4) of the NY UCC (hereinafter defined), the Collateral shall not
include any Contract, General Intangible, Patent License or Trademark License to
the extent that such Contract, General Intangible, Patent License or Trademark
License, or the instruments giving the same, would prohibit such assignment.
As used herein:
(a) The following terms which are defined in the Uniform Commercial
Code as in effect in the State of New York on April 30, 1997 (the "NY UCC") are
used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents,
Equipment, Fixtures, Instruments and Inventory,
(b) The following terms shall have the following meanings:
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
1
<PAGE>
"Contracts" means all contracts and agreements to which the Debtor
is or becomes a party, including, without limitation, (i) all rights of the
Debtor to receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii)
all rights of the Debtor to perform and to exercise all remedies thereunder.
"Credit Agreement" means that certain Credit Agreement dated as of
April 30, 1997 by and among L-3 Communications Corporation, a Delaware
corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication
agent and documentation agent and Bank of America NT & SA, as administrative
agent for the Lenders, as the same be amended, restated and/or otherwise
modified from time to time.
"Copyrights" means (i) all copyrights arising under the laws of
the United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to obtain
all renewals thereof.
"Copyright Licenses" means any written agreement naming the Debtor
as licensor or licensee, granting any right under any Copyright, including,
without limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"General Intangibles" means all "general intangibles" as such term
is defined in Section 9-106 of the NY UCC and, in any event, including, without
limitation, with respect to the Debtor, all contracts, agreements, instruments,
and indentures in any form, and portions thereof, to which the Debtor is a party
or under which the Debtor has any right, title or interest or to which the
Debtor or any property of the Debtor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of the Debtor to receive moneys due and to become due
to it thereunder or in connection therewith, (ii) all rights of the Debtor to
damages arising thereunder and (iii) all rights of the Debtor to perform and to
exercise all remedies thereunder, in each case to the extent the grant by the
Debtor of a security interest in its right, title and interest in such contract,
agreement, instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any other party
thereto, would not give any other party to such contract, agreement, instrument
or indenture the right to terminate its obligations thereunder, or is permitted
with consent if all necessary consents to such grant of a security interest have
been obtained from the other parties thereto (it being understood that the
foregoing shall not be deemed to obligate the Debtor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit, restrict or
impair the grant by the Debtor of a security interest to the Secured Party in
any Receivable or any money or other amounts due or to become due under any such
contract, agreement, instrument or indenture.
2
<PAGE>
"Government Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Government Contract" means a Contract with a Government Authority.
"Intellectual Property" means the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"Intercompany Note" means any promissory note evidencing loans made
by the Debtor to any of its subsidiaries.
"Investment Property" has the meaning ascribed thereto in the
Uniform Commercial Code as in effect on April 30, 1997 in the State of
California.
"Patents" means (i) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, (ii) all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"Patent License" means all agreements, whether written or oral,
providing for the grant by or to the Debtor of any right to manufacture, use or
sell any invention covered in whole or in part by a Patent.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Pledged Notes" means all promissory notes, all Intercompany Notes
at any time issued to the Debtor and all other promissory notes issued to or
held by the Debtor (other than promissory notes issued in connection with
extensions of trade credit by the Debtor in the ordinary course of business).
"Pledged Securities" means the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock" means all shares of Capital Stock, together with any
other shares, stock certificates, options or rights of any nature whatsoever in
respect of the Capital Stock of any Person that may from time to time be issued
or granted to, or held by, the Debtor.
3
<PAGE>
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the NY UCC and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
"Real Property-Related Collateral" means (i) all buildings,
improvements and fixtures (the "Improvements") now or hereafter located or
erected on the real property described in Exhibit A to each of the Mortgages (as
such term is defined in the Credit Agreement (as defined above)) (the
"Premises"), (ii) any and all leases, underlettings and licenses of the Premises
or Improvements, or any part thereof, now existing or hereafter entered into by
the mortgagors and/or grantors, as applicable, under the Mortgages
(collectively, the "Grantor"), including, without limitation, upon the happening
and during the continuance of an Event of Default (as defined in the Credit
Agreement), the right to receive and collect the rents, issues and profits
derived or to be derived by the Grantor therefrom, and (iv) all right, title and
interest of Grantor in and to (a) all and singular, the tenements,
hereditaments, rights of way, easements, waters, water courses, riparian rights,
appendages and appurtenances and property rights belonging or in any way
pertaining to the Premises or the Improvements and (b) all estate, right, title,
claim or demand whatsoever, either in law or in equity, in possession or
expectancy, of, in and to the Premises and the Improvements.
"Receivable" means any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Restricted Government Contract" means Government Contracts which,
by their terms, prohibit the assignment or Receivables thereunder.
"Trademarks" means (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, and (ii) the right to obtain all renewals thereof.
"Trademark License" means any agreement, whether written or oral,
providing for the grant by or to the Debtor of any right to use any Trademark.
The Secured Party acts as "Administrative Agent" for the various "Lenders" from
time to time party to that certain Credit Agreement dated as of April 30, 1997
by and among L-3 Communications Corporation, a Delaware corporation, the
Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and
documentation
4
<PAGE>
agent and Bank of America NT & SA, as administrative agent for the Lenders, as
the same be amended, restated and/or otherwise modified from time to time.
Debtor: L-3 COMMUNICATIONS CORPORATION
By: /s/ [Illegible]
---------------------------------
Name:
Title:
5
<PAGE>
STATE OF NEW YORK Exhibit B
Uniform Commercial Code - FINANCING STATEMENT - Form UCC-1
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing Officer for filing
pursuant to the Uniform Commercial Code
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es)
L-3 COMMUNICATIONS HOLDINGS, INC.
600 Third Avenue, 34th Fl.
New York, New York 10016
13-3937434
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
BANK OF AMERICA NT & SA, as
ADMINISTRATIVE AGENT
335 Madison Avenue
New York, New York 10017
94-168-7665
- --------------------------------------------------------------------------------
3. |_| The debtor is a transmitting utility
- --------------------------------------------------------------------------------
4. For Filing Officer Date, Time No Filing Office
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items of) property:
All Accounts; Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment;
Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory;
Investment Property; Pledged Securities; books and records pertaining to the
collateral; and proceeds and products of the foregoing as more particularly
defined and described on Exhibit A attached hereto and made a part hereof.
Filed with New York County
|X| Products of the Collateral are also covered
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on*
|_| The described goods are to be affixed to*
|_| The timber to be cut or minerals or the like (including oil and gas) is
on*
*(Describe Real Estate Below)
- --------------------------------------------------------------------------------
8. Describe Real Estate Here: |_| This statement is to be indexed in
the Real Estate Records
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to a
security interest in another jurisdiction:
|_| when the collateral was brought into this state, or
|_| when the debtor's location was changed to this state
L-3 COMMUNICATIONS HOLDINGS, INC. BANK OF AMERICA NT & SA,
as ADMINISTRATIVE AGENT
- ----------------------------------- -----------------------------------
By /s/ [Illegible] By /s/ [Illegible]
-------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy - Numerical
STANDARD FORM - FORM UCC-1
- --------------------------------------------------------------------------------
INSTRUCTIONS
(1) Remove Secured Party and Debtor copies and send other three copies to the
filing officer.
(2) Filing fee - for filing in the office of the Secretary of State, see
section 96-a of the Executive Law; for filing in the office of the County
Clerk or New York City Register see section 8021(f) at the Civil Practice
Law and Rules; or you may contact any of the respective offices for
information relative to fees.
(3) If the space provided for any item(s) on the form is inadequate, the
item(s) should be continued on additional sheets, preferably 7-1" x 10" or
7-1" x 8". Only one copy of such additional sheets need be presented to
the filing officer with a set of three copies of this financing statement.
(4) If collateral is crops or goods which are or are to become fixtures or
timber to be cut, or minerals or the like (including oil and gas), check
the appropriate box in Item 7; check the box in Item 8 the real estate by
street and number, if any or if none, by description sufficient to
identify it, such as "The real property described in Liber ____ of Deeds
(or Mortgages) at Page ____", and by city or town and county, if any, and
if in New York City, or Nassau or Onondaga County where the "block" system
of recording or registering and indexing conveyances is in use, by the
number of the Block and of the Section, if any, and of the Lot, if any, of
the real estate involved. Also give the name(s) of a record owner of the
real estate in Item 9.
(5) When a copy of the security agreement is used as a Financing Statement,
the filing fee is that of a non-standard form filing. It is requested that
it be accompanied by a completed but unsigned set of these forms.
(6) At the time of original filing, filing officer will return second copy as
an acknowledgement.
<PAGE>
EXHIBIT A
TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT NAMING
L-3 COMMUNICATIONS HOLDINGS, INC., AS DEBTOR
AND
BANK OF AMERICA NT AND SA, AS ADMINISTRATIVE AGENT,
AS SECURED PARTY
================================================================================
DEBTOR: SECURED PARTY:
L-3 Communications Holdings, Inc. Bank of America NT & SA, as
600 Third Avenue, 34th Floor Administrative Agent
New York, New York 10016 335 Madison Avenue
New York, New York 10017
Fed. Taxpayer I.D. # 13-3937434
================================================================================
The Collateral covered by this financing statement includes all of the
above-named Debtor's right, title and interest in, all of the following property
now owned or at any time hereafter acquired by the Debtor or in which the Debtor
now has or at any time in the future may acquire any right (collectively, the
"Collateral"): all Accounts; all Chattel Paper; Contracts; Documents; Deposit
Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual
Property; Inventory; Investment Property; Pledged Securities; books and records
pertaining to the Collateral; and to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing; provided, however, except as permitted by Section 9-318(4) of the NY
UCC (hereinafter defined), the Collateral shall not include any Contract,
General Intangible, Patent License or Trademark License to the extent that such
Contract, General Intangible, Patent License or Trademark License, or the
instruments giving the same, would prohibit such assignment.
As used herein:
(a) The following terms which are defined in the Uniform Commercial
Code as in effect in the State of New York on April 30, 1997 (the "NY UCC") are
used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents,
Equipment, Fixtures, Instruments and Inventory,
(b) The following terms shall have the following meanings:
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
1
<PAGE>
"Contracts" means all contracts and agreements to which the Debtor
is or becomes a party, including, without limitation, (i) all rights of the
Debtor to receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii)
all rights of the Debtor to perform and to exercise all remedies thereunder.
"Copyrights" means (i) all copyrights arising under the laws of
the United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to obtain
all renewals thereof.
"Copyright Licenses" means any written agreement naming the Debtor
as licensor or licensee, granting any right under any Copyright, including,
without limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"General Intangibles" means all "general intangibles" as such term
is defined in Section 9-106 of the NY UCC and, in any event, including, without
limitation, with respect to the Debtor, all contracts, agreements, instruments,
and indentures in any form, and portions thereof, to which the Debtor is a party
or under which the Debtor has any right, title or interest or to which the
Debtor or any property of the Debtor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of the Debtor to receive moneys due and to become due
to it thereunder or in connection therewith, (ii) all rights of the Debtor to
damages arising thereunder and (iii) all rights of the Debtor to perform and to
exercise all remedies thereunder, in each case to the extent the grant by the
Debtor of a security interest in its right, title and interest in such contract,
agreement, instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any other party
thereto, would not give any other party to such contract, agreement, instrument
or indenture the right to terminate its obligations thereunder, or is permitted
with consent if all necessary consents to such grant of a security interest have
been obtained from the other parties thereto (it being understood that the
foregoing shall not be deemed to obligate the Debtor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit, restrict or
impair the grant by the Debtor of a security interest to the Secured Party in
any Receivable or any money or other amounts due or to become due under any such
contract, agreement, instrument or indenture.
"Government Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Government Contract" means a Contract with a Government Authority.
2
<PAGE>
"Intellectual Property" means the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"Intercompany Note" means any promissory note evidencing loans made
by the Debtor to any of its subsidiaries.
"Investment Property" has the meaning ascribed thereto in the
Uniform Commercial Code as in effect on April 30, 1997 in the State of
California.
"Patents" means (i) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, (ii) all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"Patent License" means all agreements, whether written or oral,
providing for the grant by or to the Debtor of any right to manufacture, use or
sell any invention covered in whole or in part by a Patent.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Pledged Notes" means all promissory notes, all Intercompany Notes
at any time issued to the Debtor and all other promissory notes issued to or
held by the Debtor (other than promissory notes issued in connection with
extensions of trade credit by the Debtor in the ordinary course of business).
"Pledged Securities" means the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock" means all shares of Capital Stock, together with any
other shares, stock certificates, options or rights of any nature whatsoever in
respect of the Capital Stock of any Person that may from time to time be issued
or granted to, or held by, the Debtor.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the NY UCC and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
3
<PAGE>
"Receivable" means any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Restricted Government Contract" means Government Contracts which,
by their terms, prohibit the assignment or Receivables thereunder.
"Trademarks" means (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, and (ii) the right to obtain all renewals thereof.
"Trademark License" means any agreement, whether written or oral,
providing for the grant by or to the Debtor of any right to use any Trademark.
The Secured Party acts as "Administrative Agent" for the various "Lenders" from
time to time party to that certain Credit Agreement dated as of April 30, 1997
by and among L-3 Communications Corporation, a Delaware corporation, the
Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and
documentation agent and Bank of America NT & SA, as administrative agent for
the Lenders, as the same be amended, restated and/or otherwise modified from
time to time.
Debtor: L-3 COMMUNICATIONS HOLDINGS, INC.
By: /s/ [Illegible]
---------------------------------
Name:
Title:
4
<PAGE>
STATE OF NEW YORK
Uniform Commercial Code - FINANCING STATEMENT - Form UCC-1
- --------------------------------------------------------------------------------
This FINANCING STATEMENT is presented to a Filing Officer for filing
pursuant to the Uniform Commercial Code
- --------------------------------------------------------------------------------
No. of Additional
Sheets Presented
- --------------------------------------------------------------------------------
1. Debtor(s) (Last Name First) and Address(es)
L-3 COMMUNICATIONS
HOLDINGS, INC.
600 Third Avenue, 34th Fl.
New York, New York 10016
13-3937434
- --------------------------------------------------------------------------------
2. Secured Party(ies) Name(s) and Address(es)
BANK OF AMERICA NT & SA, as
ADMINISTRATIVE AGENT
335 Madison Avenue
New York, New York 10017
94-168-7665
- --------------------------------------------------------------------------------
3. |_| The debtor is a transmitting utility
- --------------------------------------------------------------------------------
4. For Filing Officer Date, Time No Filing Office
- --------------------------------------------------------------------------------
5. This Financing Statement covers the following types (or items) of property:
All Accounts; Chattel Paper; Contracts; Documents; Deposit Accounts; Equipment;
Fixtures; General Intangibles; Instruments; Intellectual Property; Inventory;
Investment Property; Pledged Securities; books and records pertaining to the
collateral; and proceeds and products of the foregoing as more particularly
defined and described on Exhibit A attached hereto and made a part hereof.
Filed with Secretary of State
|X| Products of the Collateral are also covered
- --------------------------------------------------------------------------------
6. Assignee(s) of Secured Party and Address(es)
- --------------------------------------------------------------------------------
7. |_| The described crops are growing or to be grown on*
|_| The described goods are to be affixed to*
|_| The timber to be cut or minerals or the like (including oil and gas) is
on*
*(Describe Real Estate Below)
- --------------------------------------------------------------------------------
8. Describe Real Estate here: |_| This statement is to be indexed in
the Real Estate Records
No. & Street Town or City County Section Block Lot
- --------------------------------------------------------------------------------
9. Name of a Record Owner
- --------------------------------------------------------------------------------
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party to
file this statement, or
|_| which is proceeds of the original collateral described above in which a
security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of the
debtor, or |_| as to which the filing has lapsed, or already subject to a
security interest in another jurisdiction:
|_| when the collateral was brought into this state, or
|_| when the debtor's location was changed to this state
L-3 COMMUNICATIONS HOLDINGS, INC. BANK OF AMERICA NT & SA,
as ADMINISTRATIVE AGENT
- ----------------------------------- -----------------------------------
By /s/ [Illegible] By /s/ [Illegible]
-------------------------------- ------------------------------------
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) Filing Officer Copy - Numerical
STANDARD FORM - FORM UCC-1
- --------------------------------------------------------------------------------
INSTRUCTIONS
(1) Remove Secured Party and Debtor copies and send other three copies to the
filing officer.
(2) Filing fee - for filing in the office of the Secretary of State, see
section 96-a of the Executive Law; for filing in the office of the County
Clerk or New York City Register see section 8021(f) at the Civil Practice
Law and Rules; or you may contact any of the respective offices for
information relative to fees.
(3) If the space provided for any item(s) on the form is inadequate, the
item(s) should be continued on additional sheets, preferably 7-1" x 10" or
7-1" x 8". Only one copy of such additional sheets need be presented to
the filing officer with a set of three copies of this financing statement.
(4) If collateral is crops or goods which are or are to become fixtures or
timber to be cut, or minerals or the like (including oil and gas), check
the appropriate box in Item 7; check the box in Item 8 the real estate by
street and number, if any or if none, by description sufficient to
identify it, such as "The real property described in Liber ____ of Deeds
(or Mortgages) at Page ____", and by city or town and county, if any, and
if in New York City, or Nassau or Onondaga County where the "block" system
of recording or registering and indexing conveyances is in use, by the
number of the Block and of the Section, if any, and of the Lot, if any, of
the real estate involved. Also give the name(s) of a record owner of the
real estate in Item 9.
(5) When a copy of the security agreement is used as a Financing Statement,
the filing fee is that of a non-standard form filing. It is requested that
it be accompanied by a completed but unsigned set of these forms.
(6) At the time of original filing, filing officer will return second copy as
an acknowledgement.
<PAGE>
EXHIBIT A
TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT NAMING
L-3 COMMUNICATIONS HOLDINGS, INC. AS DEBTOR
AND
BANK OF AMERICA NT AND SA, AS ADMINISTRATIVE AGENT,
AS SECURED PARTY
================================================================================
DEBTOR: SECURED PARTY:
L-3 Communications Holdings, Inc. Bank of America NT & SA, as
600 Third Avenue, 34th Floor Administrative Agent
New York, New York 10016 305 Madison Avenue
New York, New York 10017
Fed. Taxpayer I.D. # 13-3937434
================================================================================
The Collateral covered by this financing statement includes all of the
above-named Debtor's right, title and interest in, all of the following property
now owned or at any time hereafter acquired by the Debtor or in which the Debtor
now has or at any time in the future may acquire any right (collectively, the
"Collateral"): all Accounts; all Chattel Paper; Contracts; Documents; Deposit
Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual
Property; Inventory; Investment Property; Pledged Securities; books and records
pertaining to the Collateral; and to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing; provided, however, except as permitted by Section 9-318(4) of the NY
UCC (hereinafter defined), the Collateral shall not include any Contract,
General Intangible, Patent License or Trademark License to the extent that such
Contract, General Intangible, Patent License or Trademark License, or the
instruments giving the same, would prohibit such assignment.
As used herein:
(a) The following terms which are defined in the Uniform Commercial
Code as in effect in the State of New York on April 30, 1997 (the "NY UCC") are
used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents,
Equipment, Fixtures, Instruments and Inventory,
(b) The following terms shall have the following meanings:
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
1
<PAGE>
"Contracts" means all contracts and agreements to which the Debtor
is or becomes a party, including, without limitation, (i) all rights of the
Debtor to receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii)
all rights of the Debtor to perform and to exercise all remedies thereunder.
"Copyrights" means (i) all copyrights arising under the laws of
the United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to obtain
all renewals thereof.
"Copyright Licenses" means any written agreement naming the Debtor
as licensor or licensee, granting any right under any Copyright, including,
without limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"General Intangibles" means all "general intangibles" as such term
is defined in Section 9-106 of the NY UCC and, in any event, including, without
limitation, with respect to the Debtor, all contracts, agreements, instruments
and indentures in any form, and portions thereof, to which the Debtor is a party
or under which the Debtor has any right, title or interest or to which the
Debtor or any property of the Debtor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of the Debtor to receive moneys due and to become due
to it thereunder or in connection therewith, (ii) all rights of the Debtor to
damages arising thereunder and (iii) all rights of the Debtor to perform and to
exercise all remedies thereunder, in each case to the extent the grant by the
Debtor of a security interest in its right, title and interest in such contract,
agreement, instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any other party
thereto, would not give any other party to such contract, agreement, instrument
or indenture the right to terminate its obligations thereunder, or is permitted
with consent if all necessary consents to such grant of a security interest have
been obtained from the other parties thereto (it being understood that the
foregoing shall not be deemed to obligate the Debtor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit, restrict or
impair the grant by the Debtor of a security interest to the Secured Party in
any Receivable or any money or other amounts due or to become due under any such
contract, agreement, instrument or indenture.
"Government Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Government Contract" means a Contract with a Government Authority.
2
<PAGE>
"Intellectual Property" means the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"Intercompany Note" means any promissory note evidencing loans made
by the Debtor to any of its subsidiaries.
"Investment Property" has the meaning ascribed thereto in the
Uniform Commercial Code as in effect on April 30, 1997 in the State of
California.
"Patents" means (i) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, (ii) all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"Patent License" means all agreements, whether written or oral,
providing for the grant by or to the Debtor of any right to manufacture, use or
sell any invention covered in whole or in part by a Patent.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Pledged Notes" means all promissory notes, all Intercompany Notes
at any time issued to the Debtor and all other promissory notes issued to or
held by the Debtor (other than promissory notes issued in connection with
extensions of trade credit by the Debtor in the ordinary course of business).
"Pledged Securities" means the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock" means all shares of Capital Stock, together with any
other shares, stock certificates, options or rights of any nature whatsoever in
respect of the Capital Stock of any Person that may from time to time be issued
or granted to, or held by, the Debtor.
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the NY UCC and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
3
<PAGE>
"Receivable" means any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Restricted Government Contract" means Government Contracts which,
by their terms, prohibit the assignment or Receivables thereunder.
"Trademarks" means (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, and (ii) the right to obtain all renewals thereof.
"Trademark License" means any agreement, whether written or oral,
providing for the grant by or to the Debtor of any right to use any Trademark.
The Secured Party acts as "Administrative Agent" for the various "Lenders" from
time to time party to that certain Credit Agreement dated as of April 30, 1997
by and among L-3 Communications Corporation, a Delaware corporation, the
Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and
documentation agent and Bank of America NT & SA, as administrative agent for the
Lenders, as the same be amended, restated and/or otherwise modified from time to
time.
Debtor: L-3 COMMUNICATIONS HOLDINGS
By: /s/ [Illegible]
---------------------------------
Name:
Title:
4
<PAGE>
EXHIBIT A
TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT NAMING
L-3 COMMUNICATIONS HOLDINGS, INC. AS DEBTOR
AND
BANK OF AMERICA NT AND SA, AS ADMINISTRATIVE AGENT,
AS SECURED PARTY
================================================================================
DEBTOR: SECURED PARTY:
L-3 Communications Holdings, Inc. Bank of America NT & SA, as
600 Third Avenue, 34th Floor Administrative Agent
New York, New York 10016 305 Madison Avenue
New York, New York 10017
Fed. Taxpayer I.D. # 13-3937434
================================================================================
The Collateral covered by this financing statement includes all of the
above-named Debtor's right, title and interest in, all of the following property
now owned or at any time hereafter acquired by the Debtor or in which the Debtor
now has or at any time in the future may acquire any right (collectively, the
"Collateral"): all Accounts; all Chattel Paper; Contracts; Documents; Deposit
Accounts; Equipment; Fixtures; General Intangibles; Instruments; Intellectual
Property; Inventory; Investment Property; Pledged Securities; books and records
pertaining to the Collateral; and to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any of the
foregoing; provided, however, except as permitted by Section 9-318(4) of the NY
UCC (hereinafter defined), the Collateral shall not include any Contract,
General Intangible, Patent License or Trademark License to the extent that such
Contract, General Intangible, Patent License or Trademark License, or the
instruments giving the same, would prohibit such assignment.
As used herein:
(a) The following terms which are defined in the Uniform Commercial
Code as in effect in the State of New York on April 30, 1997 (the "NY UCC") are
used herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents,
Equipment, Fixtures, Instruments and Inventory,
(b) The following terms shall have the following meanings:
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
1
<PAGE>
"Contracts" means all contracts and agreements to which the Debtor
is or becomes a party, including, without limitation, (i) all rights of the
Debtor to receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of the Debtor to damages arising thereunder and (iii)
all rights of the Debtor to perform and to exercise all remedies thereunder.
"Credit Agreement" means that certain Credit Agreement dated as of
April 30, 1997 by and among L-3 Communications Corporation, a Delaware
corporation, the Lenders, Lehman Commercial Paper Inc., as arranger, syndication
agent and documentation agent and Bank of America NT & SA, as administrative
agent for the Lenders, as the same be amended, restated and/or otherwise
modified from time to time.
"Copyrights" means (i) all copyrights arising under the laws of
the United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to obtain
all renewals thereof.
"Copyright Licenses" means any written agreement naming the Debtor
as licensor or licensee, granting any right under any Copyright, including,
without limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"General Intangibles" means all "general intangibles" as such term
is defined in Section 9-106 of the NY UCC and, in any event, including, without
limitation, with respect to the Debtor, all contracts, agreements, instrument,
and indentures in any form, and portions thereof, to which the Debtor is a party
or under which the Debtor has any right, title or interest or to which the
Debtor or any property of the Debtor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including, without
limitation, (i) all rights of the Debtor to receive moneys due and to become due
to it thereunder or in connection therewith, (ii) all rights of the Debtor to
damages arising thereunder and (iii) all rights of the Debtor to perform and to
exercise all remedies thereunder, in each case to the extent the grant by the
Debtor of a security interest in its right, title and interest in such contract,
agreement, instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any other party
thereto, would not give any other party to such contract, agreement, instrument
or indenture the right to terminate its obligations thereunder, or is permitted
with consent if all necessary consents to such grant of a security interest have
been obtained from the other parties thereto (it being understood that the
foregoing shall not be deemed to obligate the Debtor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit, restrict or
impair the grant by the Debtor of a security interest to the Secured Party in
any Receivable or any money or other amounts due or to become due under any such
contract, agreement, instrument or indenture.
2
<PAGE>
"Government Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Government Contract" means a Contract with a Government Authority.
"Intellectual Property" means the collective reference to all
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"Intercompany Note" means any promissory note evidencing loans made
by the Debtor to any of its subsidiaries.
"Investment Property" has the meaning ascribed thereto in the
Uniform Commercial Code as in effect on April 30, 1997 in the State of
California.
"Patents" means (i) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, (ii) all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"Patent License" means all agreements, whether written or oral,
providing for the grant by or to the Debtor of any right to manufacture, use or
sell any invention covered in whole or in part by a Patent.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Pledged Notes" means all promissory notes, all Intercompany Notes
at any time issued to the Debtor and all other promissory notes issued to or
held by the Debtor (other than promissory notes issued in connection with
extensions of trade credit by the Debtor in the ordinary course of business).
"Pledged Securities" means the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock" means all shares of Capital Stock, together with any
other shares, stock certificates, options or rights of any nature whatsoever in
respect of the Capital Stock of any Person that may from time to time be issued
or granted to, or held by, the Debtor.
3
<PAGE>
"Proceeds" means all "proceeds" as such term is defined in Section
9-306(1) of the NY UCC and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
"Real Property-Related Collateral" means (i) all buildings,
improvements and fixtures (the "Improvements") now or hereafter located or
erected on the real property described in Exhibit A to each of the Mortgages (as
such term is defined in the Credit Agreement (as defined above)) (the
"Premises"), (ii) any and all leases, underlettings and licenses of the Premises
or Improvements, or any part thereof, now existing or hereafter entered into by
the mortgagors and/or grantors, as applicable, under the Mortgages
(collectively, the "Grantor"), including, without limitation, upon the happening
and during the continuance of an Event of Default (as defined in the Credit
Agreement), the right to receive and collect the rents, issues and profits
derived or to be derived by the Grantor therefrom, and (iv) all right, title and
interest of Grantor in and to (a) all and singular, the tenements,
hereditaments, rights of way, easements, waters, water courses, riparian rights,
appendages and appurtenances and property rights belonging or in any way
pertaining to the Premises or the Improvements and (b) all estate, right, title,
claim or demand whatsoever, either in law or in equity, in possession or
expectancy, of, in and to the Premises and the Improvements.
"Receivable" means any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Restricted Government Contract" means Government Contracts which,
by their terms, prohibit the assignment or Receivables thereunder.
"Trademarks" means (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, and (ii) the right to obtain all renewals thereof.
"Trademark License" means any agreement, whether written or oral,
providing for the grant by or to the Debtor of any right to use any Trademark.
The Secured Party acts as "Administrative Agent" for the various "Lenders" from
time to time party to that certain Credit Agreement dated as of April 30, 1997
by and among L-3 Communications Corporation, a Delaware corporation, the
Lenders, Lehman Commercial Paper Inc., as arranger, syndication agent and
documentation agent
<PAGE>
and Bank of America NT & SA, as administrative agent for the Lenders, as the
same be amended, restated and/or otherwise modified from time to time.
Debtor: L-3 COMMUNICATIONS CORPORATION
By: /s/ [Illegible]
---------------------------------
Name:
Title:
4
<PAGE>
EXHIBIT D-2
[Letterhead of FRIED, FRANK, HARRIS, SHRIVER & JACOBSON]
WRITER'S DIRECT LINE
202/639-7130
Lehman Commercial Paper Inc., as Arranger,
Syndication Agent and Documentation Agent
3 World Financial Center, 9th Floor
New York, New York 10285
Bank of America NT & SA.
as Administrative Agent
335 Madison Avenue
New York, New York 10017
The Lenders Listed on Schedule I hereto
Ladies and Gentlemen:
We are acting as special counsel to L-3 Communications Corporation, a
Delaware corporation (the "Company"), regarding Federal Government contract
matters, in connection with the Credit Agreement dated April 30, 1997. We are
delivering this opinion pursuant to Section 5.1(p)(i) of the Credit Agreement.
Capitalized terms used herein have the meaning given them in the Credit
Agreement unless such terms are otherwise defined herein.
Since we have acted only as special counsel to the Company, we have
limited knowledge of the affairs of the Company. This opinion is therefore based
on such knowledge of the affairs of the Company as we may have acquired in the
course of the instant representation. We convened our review on February 20,
1997 and, as instructed by the client, completed the review by February 25,
1997. In connection with our engagement, we visited Communications Systems,
Camden, NJ; Wideband, Salt Lake City, Utah; Advanced Recorders, Sarasota,
Florida; Conic, San Diego, California; and Display Systems, Atlanta, Georgia;
Telemetry & Instrumentation, San Diego, California and Randtron, Menlow Park,
California. We did not visit Hycor, Microcom and Narda East and West. In
connection with this review, we reviewed only those contracts specified on
Exhibit A. Accordingly, the opinions set forth below are limited only to those
contracts.
To the extent that it may be relevant to the opinions expressed herein, we
have assumed that the parties to the agreements described herein (other than the
parties whose actions are the
NEW YORK WASHINGTON LOS ANGELES LONDON
<PAGE>
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
Lehman Commercial Paper Inc.
Bank of America NT & SA
April 30, 1997
Page 2
subject of our opinions) have the power to enter into and perform such
agreements and that such agreements have been duly authorized, executed and
delivered by, and constitute legal, valid and binding obligations of, such
parties.
We have examined and relied upon the originals, or certified, conformed or
reproduced copies of all records, documents, certificates or other instruments
as in our judgment are necessary or appropriate to enable us to render the
opinions expressed below. In all such examinations we have assumed the
genuineness of all signatures on original or certified, conformed or
reproduction copies and the conformity to original or certified copies of all
copies submitted to us as conformed or reproduction copies. As to various
questions of fact relevant to such opinions, we have relied upon, and assumed
the accuracy of, certificates of public officials and oral or written statements
or certificates of officers or representatives of the Company and others.
Based upon and subject to the foregoing, and further subject to the
limitations and qualifications below, we are of the opinion that as of the date
hereof:
(i) None of the execution, delivery or performance by the Loan
Parties of the Credit Agreement or the transactions contemplated
thereby, compliance by the Loan Parties with the provisions of the
Credit Agreement nor consummation by the Loan Parties of the
transactions contemplated thereby: (i) with respect to U.S.
Government procurement matters (limited to our review of the
contracts set forth on Exhibit A hereto) requires any consent,
approval, authorization or other order of, or registration or filing
with any federal court, federal regulatory body, U.S.
administrative agency or other federal governmental body, agency or
official having authority over government procurement matters
(except for those governmental consents, approvals, authorizations
or other orders of, or registrations or filings with, any federal
court, federal regulatory body, U.S. administrative agency or other
federal governmental body, agency or official having authority over
federal government procurement matters contemplated in the
Transaction Agreement, the Shareholders Agreement and the Credit
Agreement, and except where the failure to obtain governmental
consents, approvals, authorizations or other orders of, or
registrations or filings with, any federal court, federal regulatory
body, U.S. administrative agency or other federal governmental body,
agency or official having authority over
<PAGE>
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
Lehman Commercial Paper Inc.
Bank of America NT & SA
April 30, 1997
Page 3
federal government procurement matters would not have material
adverse effect on the consummation by the Company of the
transactions contemplated by the Purchase Agreement, the Credit
Agreement, and the Transaction Agreement) or (ii) conflicts or will
conflict with or constitutes or will constitute a material breach
of, or material default under any material government procurement
contract (limited to our review of the contracts set forth on
Exhibit A hereto and with the exception of those governmental
consents, approvals, authorizations or other orders of, or
registrations or filings with, any federal court, federal regulatory
body, U.S. administrative agency or other federal governmental body,
agency or official having authority over government procurement
matters contemplated in the Transaction Agreement, the Shareholders
Agreement and the Credit Agreement) or will violate, in any material
respect, any law, statute, ordinance, governmental rule, regulation,
regarding U.S. Government procurement contracts to which it or its
property or assets may be subject or will result in the creation or
imposition of any material lien, charge or encumbrance upon any
property or assets of the Company pursuant to the terms of any
agreement or instrument (limited to our review of the contracts set
forth on Exhibit A hereto) to which it is a party or by which it may
be bound or to which any of its property or assets is subject
pursuant to any government procurement contract (limited to our
review of the contracts set forth on Exhibit A hereto).
Our opinions also are subject to the effect of, and we express no opinion
therein as to the application of notifications regarding any outstanding advance
payments, disposition of pension plans or other post-retirement benefits. Our
opinions are also subject to the effect of, and we express no opinion therein as
to the environmental, intellectual property, labor or tax laws relating to the
U.S. government contracts.
The opinions expressed herein are limited to the federal laws of the
United States.
<PAGE>
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
Lehman Commercial Paper Inc.
Bank of America NT & SA
April 30, 1997
Page 4
The opinions expressed herein are solely for your benefit and may not be
relied upon in any manner or for any purpose by any other person and may not be
quoted in whole or in part without our prior written consent.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ James J. McCullough
--------------------------------------
James J. McCullough
<PAGE>
EXHIBIT A
Telemetry & Instrumentation
Purchase Order No. 1288468 (Sales Order 14921)
Intra Lockheed Martin Work Transfer Agreement ("IWTA") No. AY-12-30001 (Sales
Order 15705)
Purchase Order No. 231-5-20023 (Sales Order 14923)
IWTA No. BY-12-00001 & 2 (Sales Order 15605)
Purchase Order No. 0277-6003601 (Sales Order 15361)
Contract No. F04611-93-D-0010 (Sales Order 16125 & 5008)
Contract No. NASIO 96013(B) (Sales Order 15538)
Purchase Order No. RQ33367, (Sales Order 15151 & 15686)
Purchase Order No. 229, (Sales Order 15251)
Purchase Order No. X10/45070814, (Sales Order 15684)
IWTA Nos. OD 96390 & OD 7042, (Sales Order 15537 & 15698)
Contract No. GS03F-5087 (Sales Order 15643)
Conic/TerraCom
Purchase Order No. 633EW (Sales Order 5512)
Purchase Order No. M6J3BSA-587 408D (Sales Order 5434)
Purchase Order No. S-612418-EKW (Sales Order 5283)
Purchase Order No. DP5-020005 (Sales Order 5264)
Purchase Order No. 1-3199675 (Sales Order 5218)
Purchase Order No. HE 36722159 (Sales Order 5189)
Purchase Order Nos. I-3199674 & I-3199675 (Sales Orders 5117 & 5218)
Purchase Order No. Z50791 (Sales Order 5105)
Purchase Order No. 51340015 (Sales Order 5087)
Purchase Order No. GGM57112 (Sales Order 5078)
Purchase Order No. Z50809 (Sales Order 5058)
Purchase Order No. PP5-535015 (Sales Order 4964)
Purchase Order No. Various (Sales Order 4962)
Purchase Order No. 100662000 (Sales Order 4956 & 5126)
Prime Contract Order No. F 08626-95-0216 (Sales Order 4955)
Purchase Order No. KS-612039R (Sales Order 4909)
Purchase Order No. 109177455/459 (Sales Order 4614)
Purchase Order No. C0041/93 (Sales Order 4536)
Purchase Order No. RL1-1200 44 (Sales Order 4283)
Inter Company Work Transfer Agreement ("IWTA") with Lockheed Martin Integrated
Systems (not yet listed on the Computer Sale Order listing):
TerraCom Purchase Order 1/200-96 (Sales Order 8058)
<PAGE>
-2-
Communications Systems
P.O. 940S9011 - A - International Space Station Alpha
MDA904-94-C-B091 - A - LMD/KP 2.0 LRIP
N00024-92-C-4164 - A - AN/STC-2 FY 92-94
N00024-91-C-4122 - A - AN/STC-2 FY 90/91
MDA904-94-C-8028 - A - Nervetrunk HW/SW Supp
N00024-95-C-4079 - A - IVCS FY95/96 Prod
MDA904-94-C-8075 - A - FIRESTAR T&M
MDA904-95-C-4051 - A - STE
NAS 5-32542 - A - NOAA N & N1
P.O. CSD-IMSE-97-003 - A - IMSE Program (FMS)
MDA904-93-G-0055 - 5002 - A - ANSWERER LRIP
N00039-90-C-0011 I - A - IRR Training Support
N00019-95-C-0199 - A - AMODSM
P.O. 4500010122 - A - Common Tier 1
MDA904-96-C-1641 - A - ANSWERER Production
N00039-96-C-0039 - A - Baseband (SBCS) Switch
MDA904-96-D-0025-0005 - A - STE 1st Prod
CLASS 95-C-6880 - A - Centerboard Support
N66001-97-C-0130 - A - IRR Field Support
N66001-95-C-0003 - A - IRR PDSS FY95-96
P.O. UAF1D7680D - A - D-5 Trans/Preamplifier Inc XII
CLASS 317069 - A - Refurbishment #7
CLASS 97-C-6462 - A - CROSSHAIR
N00383-89-G-K214 - 7004-A - P3C Repairs
DABT63-95-C-0052 - A - IUGS Data Fusion
P.O. CO-7382-SAT - A - NATO PTS
MDA904-95-C-3189 - A - FIREONE
P.O. 4405/2 - A - IREMBASS New Zealand
MDA904-95-C-5554 - A - Microbic Software Support
P.O. 470506 - A - DCR-500 Spares
N00104-96-C-AA33 - A - Depot Repairs
MDA904-94-C-B031 - A - HGPCLSI Study
MDA904-96-C-P018 - A - NUTSEDGE
MDA904-96-C-0291 - A - Maroon Archer OM&E
Wideband Systems
TACAWS (No. DAAH0l94CR250) - Internal No.: _______
IWTA supporting the Raptor Program - Internal No.: 41812
EIS Support Contract - Internal No.: 400164
IWTA LDS-A2 ENG SU - Internal No.: 400167
IWTA GPS-OCS Support - Internal No.: 400138
BGPHES Production - Internal No.: 41785
<PAGE>
-3-
ABIT (Airborne Information Transmission) Phase IV (No. F33657-95-C-5404) -
Internal No. 41786
Ridex (No. F33615-94-C-1566) - Internal No.: 41736
TEUAV Predator (No. N0001994C0069) - Internal No.: 41725
HSS Systems (P.O. #6451) - Internal No.: 41751
IWTA ULTRA-High Resolution Digital Framing Electro-Optical Camera - Internal
No.: 41802
CHBDL (Common High Band Width Data Link) Stage III Production
(N00039-91-C-0027) - Internal Nos. 41800 and 41801
HSS System (P.O. #65586 - Internal No.: 41787
Depot Support Contract (No. SC-96-773043) - Internal No.: 400092
LAMPS Flir (SC No. 608793) - Internal No.: 41724
Predator Support (No. N00019-95-G-0135) - Internal No.: OCB28
National Tests Facility Operations and Maintenance - Internal No.: 400018
IWTA between LMFSC and LMTCS - Internal No.: _______
ISISS Contract - Internal No.: OS4417
GFY 97 Fielded Systems Technology (No. F09604-97-C-0011) - Internal No.: 41797
Tactical Interoperable Ground Data Link Phase I (TIGDL) (No. F0960496-C-0104) -
Internal No. 41788
GFY 96 SR YEA - Internal No.: 41764
Direct Air-Satellite Relay ("DASR") - Internal No.: 41734
Guardrail A/B - Internal No.: 41682
GFY 93 DATALINK (No. F0900493-C-0011) - Internal No.: 41692
GFY 94 Data Link (No. F09604-94-C-0011) - Internal No.: 41717
GFY 95 SR.Y (No. F09604-95-C-0011) - Internal No.: 41735
Advanced Recorders
NOO163-96-D-0007
N00383-96-G-017J
N00383-93-D-033U
Randtron
Purchase Order No. IG0069922
Purchase Order No. SG006881
Purchase Order No. WT26342
Intra Lockheed Work Transfer ("IWT") Purchase Order No. 4325851
Purchase Order 4334545
Purchase Order No. 4325851
Purchase Order Amendment B2C452-95 regarding Job 1500000
Purchase Order No. 21-19577 regarding prime contract number N00019-94-C-0020
Purchase Order No. 21-19577. Amendment 17
Purchase Order No. 22-06002. Amendment 2 referencing Contract N00019-94-C-0020
Purchase Order No. E60119L
<PAGE>
-4-
Purchase Order No. 22-12213
Purchase Order No. E6011
Purchase Order No. 601119L. Chance Order No. 002
Change Order 5 to LSC Work Order S-95-102
Subcontract No. H-1565118
Subcontract 92-7807-G-00l
Master Purchase Order from Lockheed. Ft. Worth
Purchase Order No. M3324
Master Purchase Order No. M3696 for Job Nos. 1880400, 1880500 and 1880600
Contract F42620-93-D-01999
Subcontract S612187RSC
Purchase Order under Contract No. DAAB07-94-DM758
Purchase Order under Contract No. N00019-94-C-0020
Purchase Order to Remec Components dated August 5, 1996
Purchase Order under Contract No. DAAB07-94-D-M758
Display Systems
E-2C Programs. P.O. Nos. 22-12200
2209601
21-75010
4010382
22-09505
590697W
F-14. Development. P.O. No. 19-84457
F-14. Lot 1. P.O. No. 21-39015
V -22. Development. P.O. Nos. AEF960
AEF961
AEF962
AEF963
ADA855
ADA849
V-22. LRIP. P.O. Nos. AET310
AEL725
Contract No. N00019-94-C-0059
Contract No. N00383-95-G-002A
P.O. No. 96054-0519
95342-0844
96068-0563
Doc. =71245
<PAGE>
Exhibit E
to Credit Agreement
FORM OF BORROWING CERTIFICATE
Pursuant to subsection 5.1(j) of the Credit Agreement, dated as of
April 30, 1997 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") among L-3 Communications Corporation, a Delaware
corporation (the "Borrower"), the several banks and other financial institutions
from time to time parties thereto (the "Lenders"), Lehman Commercial Paper Inc.
("LCPI") as Arranger, Syndication Agent, and Documentation Agent, and Bank of
America NT & SA ("BOA"), as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), the undersigned hereby delivers this
Certificate.
The Borrower hereby requests that a [Eurodollar] [Base Rate] Loan be
made in the aggregate principal amount of ________________ on _____________,
[with an Interest Period of __ months].
The undersigned hereby certifies as follows:
(a)The representations and warranties made by the Borrower and each
of its Subsidiaries and each of the other Credit Parties in the Credit
Documents are true and correct in all material respects on and as of the
date hereof with the same effect as if made on the date hereof (except to
the extent they relate to a particular date, in which case they shall
remain true and correct as of such date); and
(b) No Default or Event of Default has occurred and is continuing on
the date hereof or after giving effect to the Loans and other extensions
of credit requested to be made on such date.
Capitalized terms used herein and not otherwise defined shall have
the meanings given to them in the Credit Agreement.
The Borrower agrees that if prior to the time of the borrowing
requested hereby any matter certified to herein by it will not be true and
correct in all material respects at such time as if then made, it will
immediately so notify the Administrative Agent. Except to the extent, if any,
that prior to the time of the borrowing requested hereby the Administrative
Agent shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed once again to be certified as true
and correct in all material respects at the date of such borrowing as if then
made.
Please wire transfer the proceeds of the borrowing to the account of
the Borrower at ________________ Routing No.: _____________ (Account
No.__________), or as otherwise directed by the Borrower on the attached
Schedule I.
<PAGE>
2
The Borrower has caused this Borrowing Certificate to be executed
and delivered, and the certification and warranties contained herein to be made,
by its Responsible Officer this ___ day of ______________________, _____.
L-3 COMMUNICATION CORPORATION
By: ________________________
Name:
Title:
<PAGE>
Exhibit F
to Credit Agreement
FORM OF EXEMPTION CERTIFICATE
Referenceis made to the Credit Agreement, dated as of April 30, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") among L-3 Communications Corporation, a Delaware Corporation (the
"Borrower"), the several banks and other financial institutions from time to
time parties thereto (the "Lenders"), Lehman Commercial Paper Inc, ("LCPI") as
Arranger, Syndication Agent and Documentation Agent, and Bank of America NT & SA
("BOA"), as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"). Capitalized terms used herein that are not defined
herein shall have the meanings ascribed to them in the Credit Agreement.
_______________________ (the "Non-U.S. Lender") is providing this certificate
pursuant to subsection 2.15(b) of the Credit Agreement. Under penalties of
perjury, the Non-U.S. Lender hereby represents and warrants that:
1.The Non-U.S. Lender is the sole record and beneficial owner of the
Note(s) in respect of which it is providing this certificate and it shall remain
the sole beneficial owner of such Note(s) at all times during which it is the
record holder of such Note(s).
2.The Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In
this regard, the Non-U.S. Lender further represents and warrants that:
(a)the Non-U.S. Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction;
(b) the Non-U.S. Lender has not been treated as a bank for purposes
of any tax, securities law or other filing or submission made to any
Governmental Authority, any application made to a rating agency or
qualification for any exemption from tax, securities law or other
legal requirements;
(c) the Non-U.S. Lender is not a 10-percent shareholder within the
meaning of Section 881(c)(3)(B) of the Code;
(d) the Non-U.S. Lender is not a controlled foreign corporation
receiving interest from a related person within the meaning of
Section 881(c)(3)(C) of the Code;
<PAGE>
2
3. The Non-U.S. Lender meets all of the requirements under Code
Section 871(h) or 881(c) to be eligible for a complete exemption from
withholding of U.S. Taxes on interest payments made to it under the Credit
Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate.
[NAME OF NON-U.S. LENDER]
By: _________________________________
Name:
Title:
Date:___________________
<PAGE>
Exhibit G
to Credit Agreement
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of April 30,
1997 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among L-3 Communication Corporation, a Delaware
corporation, (the "Borrower"), the Lenders named therein, Lehman Commercial
Paper Inc, ("LCPI"), as Arranger, Syndication Agent and Documentation Agent, and
Bank of America NT & SA ("BOA"), as administrative agent for the Lenders (in
such capacity, the "Administrative Agent"). Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
The Assignor identified on Schedule I hereto (the "Assignor") and
the Assignee identified on Schedule I hereto (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule I hereto
(the "Assigned Interest") in and to the Assignor's rights and obligations under
the Credit Agreement with respect to the credit facility contained in the Credit
Agreement as set forth on Schedule I hereto (the "Assigned Facility"), in a
principal amount for the Assigned Facility as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, any other Credit Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any other Credit Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Notes held
by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached Notes
for a new Note or Notes payable to the Assignee and (ii) if the Assignor has
retained any interest in the Assigned Facility, requests that the Administrative
Agent exchange the attached Notes for a new Note or Notes payable to the
Assignor, in each case in amounts which reflect the assignment being made hereby
(and after giving effect to any other assignments which have become effective on
the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant to subsection 4.1 thereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (c)
agrees that it will, independently and without reliance upon
<PAGE>
2
the Assignor, the Administrative Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement, the other Credit Documents or any other instrument or document
furnished pursuant hereto or thereto; (d) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement, the other Credit
Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are incidental thereto; and (e) agrees that it will
be bound by the provisions of the Credit Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender including, if it is
organized under the laws of a jurisdiction outside the United States, its
obligation pursuant to subsection 2.15(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule I hereto (the "Effective
Date"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance by it and recording by the
Administrative Agent pursuant to the Credit Agreement, effective as of the
Effective Date (which shall not, unless otherwise agreed to by the
Administrative Agent, be earlier than five Business Days after the date of such
acceptance and recording by the Administrative Agent).
5. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Credit Documents and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule I hereto.
<PAGE>
Schedule I
to Assignment and Acceptance
Name of Assignor: __________________________________
Name of Assignee: __________________________________
Effective Date of Assignment: _________________________
Credit Principal Commitment Percentage Assigned(1)
Facility Assigned Amount Assigned ---------------------------------
- ----------------- ---------------
$ _______ _______________%
[Name of Assignee] [Name of Assignor]
By: __________________________________ By: __________________________________
Title: Title:
Accepted: Consented To:
BANK OF AMERICA NT & SA, L-3 COMMUNICATION CORPORATION(2)
as Administrative Agent
By: __________________________________ By: __________________________________
Title: Title:
- ----------
(1) Calculate the Commitment Percentage that is assigned to at least 9 decimal
places and show as a percentage of the aggregate commitments of all
Lenders.
(2) The Credit Agreement provides that the consent of the Borrower is required
unless the assignee already is a Lender under the Credit Agreement.
<PAGE>
Schedule I
To Credit Agreement
<TABLE>
<CAPTION>
Commitments and Addresses
Tranche A Term Tranche B Term Tranche C Term
Revolving Credit Loan Loan Loan
Lenders/Address for Notices Commitment Commitment Commitment Commitment
<S> <C> <C> <C> <C>
LEHMAN COMMERCIAL PAPER INC. 4,400,000.00 9,050,000.00 10,000,000.00 6,900,000.00
3 World Financial Center, 9th Floor
New York, New York 10285
Attention: Michelle Swanson
Telecopy: (212) 525-0819
BANK OF AMERICA NT & SA 4,400,000.00 3,300,000.00 0.00 0.00
335 Madison Avenue
New York, New York 10017
Attention: Linda A. Carper
Telecopy: (212) 503-7502
CITIBANK, N.A. 4,400,000.00 3,300,000.00 0.00 0.00
CREDIT LYONNAIS, NEW YORK 4,400,000.00 3,300,000.00 0.00 0.00
BRANCH
FLEET NATIONAL BANK 4,400,000.00 3,300,000.00 0.00 0.00
MARINE MIDLAND BANK 4,400,000.00 3,300,000.00 0.00 0.00
BANK OF NOVA SCOTIA 4,400,000.00 3,300,000.00 0.00 0.00
BANKBOSTON, N.A. 4,400,000.00 3,300,000.00 0.00 0.00
THE FIRST NATIONAL BANK OF 4,400,000.00 3,300,000.00 0.00 0.00
CHICAGO
THE FUJI BANK LIMITED NEW 4,400,000.00 3,300,000.00 0.00 0.00
YORK BRANCH
CANADIAN IMPERIAL BANK OF 0.00 1,375,000.00 2,500,000.00 1,650,000.00
COMMERCE
CITIBANK, N.A. 0.00 1,375,000.00 2,500,000.00 1,650,000.00
THE ING CAPITAL SENIOR 0.00 687,500.00 1,250,000.00 825,000.00
SECURED HIGH INCOME FUND, L.P.
KZH HOLDING CORPORATION II 0.00 687,500.00 1,250,000.00 825,000.00
KZH HOLDING CORPORATION 0.00 1,375,000.00 2,500,000.00 1,650,000.00
MERRILL LYNCH SENIOR 0.00 1,375,000.00 2,500,000.00 1,650,000.00
FLOATING RATE FUND, INC.
METROPOLITAN LIFE INSURANCE 0.00 1,375,000.00 2,500,000.00 1,650,000.00
COMPANY
OAK HILL SECURITIES FUND, L.P. 0.00 1,375,000.00 2,500,000.00 1,650,000.00
OCTAGON CREDIT INVESTORS 0.00 1,375,000.00 2,500,000.00 1,650,000.00
LOAN PORTFOLIO (a unit of the Chase
Manhattan Bank)
PARIBAS CAPITAL FUNDING LLC 0.00 1,375,000.00 2,500,000.00 1,650,000.00
PILGRIM AMERICA PRIME RATE 0.00 1,375,000.00 2,500,000.00 1,650,000.00
TRUST
PRIME INCOME TRUST 0.00 1,375,000.00 2,500,000.00 1,650,000.00
ROYALTON COMPANY 0.00 1,375,000.00 2,500,000.00 1,650,000.00
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
CRESCENT / MACH I PARTNERS L.P. 0.00 687,500.00 2,075,000.00 0.00
UNITED COMPANIES LIFE 0.00 687,500.00 425,000.00 1,650,000.00
INSURANCE COMPANY
VAN KAMPEN AMERICAN CAPITAL 0.00 1,375,000.00 2,500,000.00 1,650,000.00
PRIME RATE INCOME TRUST
BANK OF MONTREAL 4,000,000.00 3,000,000.00 0.00 0.00
BANK OF TOKYO - MITSUBISHI 4,000,000.00 3,000,000.00 0.00 0.00
TRUST COMPANY
BANQUE FRANCAISE DU 4,000,000.00 3,000,000.00 0.00 0.00
COMMERCE EXTERIEUR
BHF - BANK 4,000,000.00 3,000,000.00 0.00 0.00
AKTIENGESELLSCHAFT GRAND
CAYMAN BRANCH
CORESTATES BANK, N.A. 4,000,000.00 3,000,000.00 0.00 0.00
GOLDMAN SACHS CREDIT 4,000,000.00 3,000,000.00 0.00 0.00
PARTNERS L.P.
PNC BANK, NATIONAL 4,000,000.00 3,000,000.00 0.00 0.00
ASSOCIATION
SKANDINAVISKA ENSKILDA 4,000,000.00 3,000,000.00 0.00 0.00
BANKEN CORPORATION
SOCIETE GENERALE, NEW YORK 4,000,000.00 3,000,000.00 0.00 0.00
BRANCH
THE SUMITOMO BANK, LIMITED, 4,000,000.00 3,000,000.00 0.00 0.00
NEW YORK BRANCH
THE BANK OF NEW YORK 4,000,000.00 3,000,000.00 0.00 0.00
THE MITSUBISHI TRUST AND 4,000,000.00 3,000,000.00 0.00 0.00
BANKING CORPORATION
TRANSAMERICA BUSINESS CREDIT 4,000,000.00 3,000,000.00 0.00 0.00
CORPORATION
U.S. BANK 4,000,000.00 3,000,000.00 0.00 0.00
</TABLE>
<PAGE>
Schedule II
to Credit Agreement
PRICING GRID
<TABLE>
<CAPTION>
Debt Tranche A Term Tranche A Term Tranche B Tranche B Tranche C Tranche C Commitment
Ratio Loss and Loss and Term Loan Term Loan Term Loan Term Loan Fee*
Revolving Credit Revolving Credit Applicable Applicable Applicable Applicable
Facility Facility Margin- Margin- Margin- Margin-
Applicable Applicable Eurodollar Base Rate Eurodollar Base Rate
Margin-Eurodollar Margin-Base Rate Rate
Rate* Rate*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
24.75x 225 125 250 150 275 175 50
24.25x 200 100 250 150 275 175 50
23.75x 175 75 250 150 275 175 37.5
23.75x 150 5O 250 150 275 175 37.5
</TABLE>
- ----------
* Notwithstanding the foregoing grid: (a) the Applicable Margin for the
Tranche A Term Loan and the Revolving Credit Facility for the 5 months
following the Closing Date will be 1.25% for Base Rate Loans and 2.25% for
Eurodollar Loans, and (b) the Commitment Fee rate Revolving Credit
Facility for the 5 months following the Closing Date will be 0.50%.
<PAGE>
Schedule III
to the Credit Agreement
REAL PROPERTY TO BE MORTGAGED
Property Location
1. 6000 Fruitville Road,
Sarasota, FL
2. 6755, 6761, 6765 Peachtree Industrial Boulevard,
Atlanta, GA
3. 1355 Bluegrass Lakes Parkway,
Alpharetta, Georgia
4. 10 Gill Street,
Woburn, MA
5. 300 Neck Road
Haverhill, MA
6. 965 Thomas Drive.
Warminster, PA
7. 435 Moreland Road,
Hauppauge, NY
8. 9020 Balboa Avenue,
San Diego, CA
<PAGE>
Schedule IV
to the Credit Agreement
TRANSACTION DOCUMENTS
1. Transaction Agreement, dated as of March 28, 1997, by and among Lockheed
Martin Corporation, Lehman Brothers Capital Partners III, L.P., Frank C.
Lanza, Robert V. Lapenta and L-3 Communications Holdings, Inc., as the
same may be amended from time to time.
2. Transfer Agreement, dated as of March 28, 1997, by and between Lockheed
Martin and L-3 Communications, as the same may be amended from time to
time.
3. Exchange Agreement, dated as of the Closing Date, by and between Lockheed
Martin Corporation and L-3 Communications Holdings, Inc., as the same may
be amended from time to time.
4. Common Stock Subscription Agreements, dated as of the Closing Date and
entered into by each of Lockheed Martin and Lehman Brothers Capital
Partners III, L.P., Frank C. Lanza and Robert V. LaPenta, as the same may
be amended from time to time.
5. Stockholders Agreement, dated as of the Closing Date by and among L-3
Communications Holdings, Inc., Lockheed Martin, Lehman Brothers Capital
Partners III, L.P., Frank C. Lanza and Robert V. LaPenta, as the same may
be amended from time to time.
6. L-3 Communications Holdings, Inc., Certificate of Incorporation, as the
same may be amended from time to time.
7. L-3 Communications Holdings, Inc., By-Laws, as the same may be amended
from time to time.
8. Any exhibits or attachments to any of the foregoing.
<PAGE>
Schedule 4.4
to the Credit Agreement
REQUIRED CONSENTS
1. Compliance with any applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
2. Compliance with any applicable requirements of the New Jersey Industrial
Site Recovery Act.
3. The facilities clearance requirements of the Defense Investigative Service
of the United States Department of Defense ("DIS"), as set forth in the
DIS Industrial Security Regulation and the DIS Industrial Security Manual,
as each may be amended from time to time.
4. The novation of the government contracts as contemplated by Section 7.08
of the Transaction Agreement.
5. Compliance with any applicable requirements of the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, or any state
securities or "Blue Sky" law, in connection with the issuance of the
Subordinated Debt.
6. The Consents and Approvals Required Prior to Closing attached hereto.
7. Such other consents, approvals, authorizations, permits and filings the
failure to obtain or make would not have, in the aggregate, a Material
Adverse Effect on the business conducted by the Borrower.
<PAGE>
CONSENTS AND APPROVALS REQUIRED
PRIOR TO CLOSING
Conic Business Unit
1. Permit to Operate Wave Solder Machine - Permit No. 910189.
2. Permit to Operate Paint Spray Booth - Permit No. 911333.
3. Permit to Operate Paint Spray Booth - Permit No. 911334.
4. Permit to Operate Paint Spray Booth - Permit No. 911335.
5. Letter from California Water Resources Control Board dated May 16, 1996
re: acknowledgement of Lockheed as general Permittee.
6. Food Establishment Wastewater Discharge Permit issued on 2/15/96 -
Fac. No. 123-00014, expiration date 11/1/97.
Wideband Systems Business Unit
1. State of Utah, Department of Environmental Quality, Division of Water
Quality, Storm Water Permit No. UTR000412, issued August 13, 1996.
2. Salt Lake City Fire Department Hazardous Material Permit dated January 28,
1997.
3. State of Utah, Department of Environmental Quality, Division of Solid and
Hazardous Waste, EPA Identification No. UTR 000000307, Dated: May 6, 1996.
4. State of Utah, Department of Environmental Quality, Division of Air
Quality, Approval Order No. DAQE-1017-96, Dated: October 30, 1996.
5. Salt Lake City Corporation, Waste Water Division, Department of Public
Utilities, Industrial Wastewater Discharge Permit #8-95-01. Issue Date:
September 24, 1996.
6. Lease: Farnsworth Peak, Salt Lake City, Utah (prior landlord consent).
7. Lease: 3201 Skyway Drive, Santa Maria, CA (prior landlord consent).
<PAGE>
2
8. Lease dated May 4, 1995 with Harris Trust & Savings Bank, as amended
(prior landlord consent).
9. Lease dated May 5, 1995 with Unisys Corporation, as amended (prior
landlord consent).
10. Lease dated November 1, 1995 with KSL, as amended (prior landlord
consent).
11. Lease dated February 1, 1992 with The Mutual Life Insurance Company of
New York, as amended (prior landlord consent).
12. Lease dated November 15, 1984 with Airport Business Park Limited
Partnership, as amended (prior landlord consent).
13. Lease dated May 31, 1996 between The Prudential Insurance Company of
America, a New Jersey corporation, as landlord, and Lockheed Martin IMS,
as tenant, a portion of the premises of which are sublet to the business
unit (prior landlord consent).
14. Software license with Mentor Graphics dated July 1, 1995 (consent of third
party).
Randtron Business Unit
1. Three 1997 Fire Protection Permits issued by the Menlo Park Fire
Protection District.
2. Notice of Intent Forms for permitted facilities showing the change of name
and transmittal letter to the State Water Resources Control Board dated
4/30/96.
3. Mandatory Wastewater Discharge Permit WB 960401-4 issued by South Bayside
System Authority and transmittal letter dated 10/30 - 11/8/96.
4. Mandatory Wastewater Discharge Permit WB 960401-1 issued by South Bayside
System Authority and transmittal letter dated 10/30 - 11/8/96.
5. Permit to Operate for Plant No. 2877 issued by the Bay Area Air Quality
Management District with expiration date of 12/1/97.
6. Permits to Operate Liquified Petroleum Gas Tank Nos.: 20501-86, 1598-72,
3181-87, 3182-87, 3188-87, 865-83, 3302-91, 21025-88, 3182-91, all issued
by the Division of Occupational Safety and Health.
<PAGE>
3
7. Renewal of Radiation Machines Tubes Registration sent by the Department of
Health Services Radiological Health Branch dated 3/8/96.
8. Lease: 130 Constitution Drive, Menlo Park, CA (prior landlord consent).
9. Lease: 150 Constitution Drive, Menlo Park, CA (prior landlord consent).
10. Lease: 3455 Edison Way, Redwood, CA (prior landlord consent).
11. Lease: Ox Mountain, San Mateo County, CA (prior landlord consent).
12. Lease: Skylawn, 32992 Mission Blvd., Hayward, CA (prior landlord consent).
13. Lease Agreement dated December 19, 1971 with Prime Ventures, Ltd., as
amended (prior landlord consent).
14. Standard Industrial Lease dated September 1, 1981 with Menlo Associates,
as amended (prior landlord consent).
15. Lease Agreement dated February 4, 1985 with C&M Investments, as amended
(prior landlord consent).
16. Standard Industrial Lease Agreement with Alvin O. and Claire E. Lang dated
November 21, 1984, as amended (prior landlord consent).
17. Lease Agreement dated May 1, 1994 with Eberhard P. Woertz, Trustee for
Eric Eberstand Woerz Trust and Kristina Patricia Woerz Trust, as amended
(prior landlord consent).
18. Lease Agreement dated as of February 15, 1972 with Skylawn, a California
corporation (prior landlord consent).
19. Lease Agreement dated November 19, 1995 with James M. Portman, as amended
(prior landlord consent).
Narda Microwave West Business Unit
1. Permit Tracking Report dated 2/24/97. (To the extent this tracking report
lists environmental permits not otherwise listed in Schedule B.03 to the
Transaction Agreement, we would like those permits as well.)
<PAGE>
4
2. Sacramento Metropolitan Air Quality Agreement District Permit No. 10043 to
operate Vapor Degreaser, expires 7/1/93.
3. Renewal Invoice No. 950016 due 3/21/96 for Permit No. 10043.
4. Renewal of Radiation Machine (Tubes) Registration No. C0049556 dated
10/11/95.
5. Air Quality Permit No. 10043 issued by the Sacramento Metropolitan Air
Quality Management District to operate a vapor degreaser.
6. Lease dated August 15, 1996 with Lincoln-Whitehall Pacific, L.L.C. (prior
landlord consent).
7. Lease dated February 15, 1991 with 11,000 White Rock Limited Partnership,
as amended (prior landlord consent).
8. Lease dated May 31, 1996 between The Prudential Insurance Company of
America, a New Jersey corporation, as landlord, and Lockheed Martin IMS,
as tenant, a portion of the premises of which are sublet to the business
unit (prior landlord consent).
Narda East Business Unit (Includes FSI - Semiconductor)
1. EPA Notification of Hazardous Waste Activity dated: 5/20/96 (no expiration
date) (authorizes hazardous waste activities)
2. Suffolk County Sewer District #18 Discharge Certification permit number:
018-001-0028 expires: 8/2/98
(authorizes industrial wastewater pretreatment and discharge limitations)
3. N.Y.S.D.E.C. Air Emissions Permit(s), permit number: 1-4734-00124/00001-0
and 00003 through 00026
expires: 11/18/97
(authorizes 24 process air emission plants)
4. N.Y.S.D.E.C. Air Emissions Permits, permit number: 1-4734-00124/00002-0
expires: 11/19/97
(authorizes operation of one stationary combustion unit)
5. Suffolk County Storage Facility for Toxic and Hazardous Materials
expires: 5/31/97
(authorizes storage and handling of toxic and hazardous materials)
<PAGE>
5
6. D.O.T. Hazardous Materials Certificate of Registration Reg. No.: 052196
011 003E, expires: 6/30/97
(authorizes shipments of hazardous materials)
7. Town of Smithtown Fire Prevention
permit number: 96-5175 (flammable hazardous materials)
permit number: 96-0621 (cutting and welding)
permit number: 96-0622 (Spray booth)
permit number: 96-0620 (compressed gases)
expire: 9/97 (for all)
8. Lowell, MA Wastewater Permit--Industrial user Permit No. 031.
9. Net Leases dated April 1, 1985 with Roger P. Nordblum et al., as amended
(prior landlord consent).
Hycor Business Unit
1. Massachusetts permit for Class C Explosives dated November 15, 1996.
2. Massachusetts permit for various fluids dated June 9, 1996.
3. U.S. Hazardous Materials registration dated May 21, 1996.
4. U.S. Department of Transportation Explosives shipment authorization dated
August 17, 1988.
5. Massachusetts permit for Class B and Class C Explosives dated October
23, 1996.
6. Massachusetts License for Class B Explosives dated December 19, 1984.
7. Massachusetts License for Class A Explosives dated October 4, 1988.
8. Massachusetts Regulation for Flamables/Explosives dated March 11, 1996.
9. Lease of explosive test site commencing January 31, 1983 with Bene Vento
Sand and Gravel, Inc., as amended (prior landlord consent).
Display Systems Business Unit
1. Radioactive Materials License - issued by Georgia Department of Natural
Resources
(one in line air deionizer)
<PAGE>
6
2. LMDS Environmental Radioactive Materials License by GADNR referenced in
3.26.96 memo to G. Bryan from K. Flanagan.
3. Lease: 6670 Jones Mill Court, Suite F, Norcross, GA (prior landlord
consent)
4. Lease, dated August 11, 1992 with D&B No.3, a Georgia partnership, as
amended (prior landlord consent).
Advanced Recorders Business Unit
1. Air Agency Certificate No. LD7R612J dated May 24, 1994.
2. Air Agency Certificate No. MMF321-14 dated June 7, 1996.
3. Storm Water General Permit Coverage Notice - Permit No. FLR00B068 issued
by the U.S. Environmental Protection Agency.
4. Matters referred to in letter dated 9/12/96 from Florida Department of
Environmental Protection accepting transfer of Post Closure Permit No.
HF58-271405 and to the extent not already incorporated by reference, the
facility's water use and HSWA permits.
Communications Systems Business Unit
1. U.S. Nuclear Regulatory Commission Materials License No. 29-01788-03.
2. New Jersey Radioactive Materials Registration, Department of Environmental
Protection, Bureau of Environmental Radiation, NRC License No.
29-01788-03.
3. Registration of x-ray machine source equipment with the State of New
Jersey, Department of Environmental Protection, Bureau of Radiological
Health, NJDEP Registration Numbers 101424, 102952, 103062, 103071, 103454
and 103503, "Registration of a Radiation Producing Machine."
4. The Camden County Municipal Utilities Authority, Industrial Discharge
Final Permit Numbers 3669-CA-1 and 3669-CA-2.
5. New Jersey Department of Environmental Protection, Bureau of New Source
Review, Form VEM-040, Report on Amendment to Permits to Construct, Install
or Alter Control Apparatus or Equipment and Certificates to Operate
Control Apparatus or Equipment. NJ Stack ID
<PAGE>
7
Nos. 001, 002, 003, 005, 006, 007, 008, 009 and 010 at NJ Plant ID 50858.
6. State of New Jersey, Department of Community Affairs, Division of Fire
Safety, Life Hazard Use Certificate of Registration.
7. Approval pursuant to the New Jersey Industrial Site Recovery Act of the
Transaction.
Telemetry & Instrumentation Business Unit
1. Lease: 15378 Avenue of Science, San Diego, CA (prior landlord consent).
2. 1175 North Courtenay Parkway, Merritt Island, FL (prior landlord
consent).
3. Lease dated April 13, 1988 between Scripps Del Norte Center, Ltd. and
Gould, Inc., as amended (prior landlord consent).
4. Lease Agreement dated July 20, 1989 between Dennis Oberman and Loral, as
amended (prior landlord consent).
5. Commercial Lease dated February 22, 1996 with Westcourt Center Partnership
(prior landlord consent).
Chief Executive Office
1. Lease Agreement with 600 Third Avenue Associates (prior landlord consent).
<PAGE>
Schedule 4.5
to the Credit Agreement
NO LEGAL BAR
o Novations referred to in Section 6.13 of the Credit Agreement.
o Consents of the lessors of the real property referred to in
subsection 6.15(b).
<PAGE>
Schedule 4.6
to the Credit Agreement
MATERIAL LITIGATION
o Universal Navigation Corp., et al. v. Loral Corporation, et al.: the
Borrower's Aviation Recorders operation ("Aviation Recorders") is
subject to a suit by Universal Avionics Systems Corporation
("Universal"). Universal is seeking to recover at least $15 million
in damages it alleges it incurred as a result of certain actions by
Aviation Recorders in the cockpit voice recorder ("CVR") business.
If this matter were determined adversely to the Borrower in a
non-appealable final judgment, the Borrower could also be subject to
treble damages. Universal's complaint contains the following claims:
(i) antitrust claims alleging that Aviation Recorders has attempted
to monopolize the CVR business by, among other things, its
institution and maintenance of a bid protest, "petitioning" of the
Federal Aviation Administration and foreign aviation authorities
regarding CVR certification requirements and its marketing
activities, and (ii) Lanham Act and common law claims arising out of
alleged false statements regarding Universal's or Aviation
Recorders' CVRs. Management believes that there are substantial
defenses to Universal's claims and intends to defend itself
vigorously.
<PAGE>
Schedule 4.8 to the
Credit Agreement
ADVANCED RECORDERS BUSINESS UNIT
REAL PROPERTY
I. Owned Real Property
1. Professional Office Lease between Loral and Sarasota County dated
October 24, 1995.
(i) 6000 Fruitville Road, Sarasota, Florida
(ii) Loral Data Systems, Inc.
Encumbrances:
a. Professional office lease between Loral and Sarasota County
dated October 24, 1995.
b. Professional office lease between Lockheed Martin Advanced
Recorders and Medical Education Technologies, Inc. dated March
10, 1997.
<PAGE>
COMMUNICATIONS SYSTEMS BUSINESS UNIT
REAL PROPERTY
I. Owned Real Property
NONE
<PAGE>
CONIC BUSINESS UNIT
REAL PROPERTY
I. Owned Real Property
1. (i) 9020 Balboa Avenue, San Diego, California
(ii) LMADO
<PAGE>
DISPLAY SYSTEMS BUSINESS UNIT
REAL PROPERTY
I. Owned Real Property
1. Peachtree Facility
(i) Address - Building 1: 6765 Peachtree Industrial Blvd.,
Atlanta, GA 30360
Address - Building 2: 6761 Peachtree Industrial Blvd.,
Atlanta, GA 30360
Address - Building 3: 6755 Peachtree Industrial Blvd.,
Atlanta, GA 30360
(ii) Owner - Lockheed Martin Tactical Systems, Inc.
2. Alpharetta Facility
(i) 1355 Bluegrass Lakes Parkway, Alpharetta, GA 30201
(ii) Owner - LMC Properties, Inc.
Warranty Deed dated 7/1/96 between AEL Industries, Inc. and
LMC Properties, Inc.
Note: Owned subject to the following encumbrances:
BlueGrass, Ltd.: Declaration of Easements
BlueGrass, Ltd.: Access and Utilities Easement
BlueGrass, Ltd.: Temporary Construction Access Easement
BlueGrass, Ltd.: Water Retention and Detention Easements
<PAGE>
HYCOR BUSINESS UNIT
REAL PROPERTY
I. Owned Real Property
1. (i) Address: 300 Neck Road, Haverhill, Mass. 01830
(ii) Owner: Lockheed MArtin Tactical Systems, Inc.
2. (i) Address: 10 Gill Street, Woburn, Mass. 01801
(ii) Owner: Lockheed Martin Tactical Systems. Inc.
<PAGE>
MICROCOM BUSINESS UNIT
REAL PROPERTY
I. Owned Real Property
1. (i) Address: 965 Thomas Drive, Warminster, Bucks County, PA
18974
(ii) Owner: Microcom Corporation
<PAGE>
NARDA EAST BUSINESS UNIT
(INCLUDES FSI - SEMICONDUCTOR)
REAL PROPERTY
I. Owned Real Property
1. New York
(i) Address: 435 Moreland Road, Hauppauge, New York
(ii) Owner: The Narda Microwave Corporation
<PAGE>
NARDA MICROWAVE WEST BUSINESS UNIT
REAL PROPERTY
I. Owned Real Property
NONE
<PAGE>
RANDTRON BUSINESS UNIT
REAL PROPERTY
I. Owned Real Property
NONE
<PAGE>
TELEMETRY & INSTRUMENTATION BUSINESS UNIT
REAL PROPERTY
I. Owned Real Property
NONE
<PAGE>
WIDEBAND SYSTEMS BUSINESS UNIT
REAL PROPERTY
I. Owned Real Property
1. Offer to Purchase the following real property [ST-H-6(a)]:
Building B
(i) Address: 480 North 2200 West Street, Salt Lake City, Utah
(ii) Owner: Unisys Master Pension Trust Corporation;
2. Offer to Purchase the following leased property:
Building E
(i) Address: 640 North 2200 West Street, Salt Lake City, Utah
(ii) Owner: Unisys Master Pension Trust Corporation;
Building F
(i) Address: 640 North 2200 West Street, Salt Lake City, Utah
(ii) Owner: Unisys Master Pension Trust Corporation.
<PAGE>
Schedule 4.9 to the
Credit Agreement
ADVANCED RECORDERS BUSINESS UNIT
INTELLECTUAL PROPERTY
CLAIMS
I. The following are instances in which Lockheed Martin does not own, free
and clear of all Liens all right, title and interest in Intellectual
Property used primarily in the Business:
1. CPS-100 Non-Exclusive Licensing Agreement between Loral and
Witchey/Shaw dated October 11, 1995.
II. The following are instances in which the use of such Intellectual Property
in connection with the operation of the Business as heretofore conducted
conflicts with, infringes upon or violates the intellectual property
rights of other Persons:
NONE
II. The following are instances in which Lockheed Martin does not have the
right to use all Intellectual Property used by the Business and necessary
for the continued operation of the Business in substantially the same
manner as its operations have heretofore been conducted:
NONE
IV. The following is a list of any Intellectual Property, (patents,
copyrights, trademarks, etc.) that Lockheed Martin does not have the right
to transfer or license to the Business and which are necessary for the
continued operation of the Business as a whole in substantially the same
manner as its operations have heretofore been conducted:
NONE
<PAGE>
COMNILNICATIONS SYSTEMS BUSINESS UNIT
INTELLECTUAL PROPERTY
CLAIMS
I. The following are instances where Lockheed Martin does not own, free and
clear of all Liens all right, title and interest in Intellectual Property
used primarily in the Business:
NONE
II. The following are instances where the use of such Intellectual Property in
connection with the operation of the Business as heretofore conducted
conflicts with, infringes upon or violates the intellectual property
rights of any other Persons:
NONE
III. The following are instances where Lockheed Martin does not have the right
to use all Intellectual Property used by the Business and necessary for
the continued operation of the Business in substantially the same manner
as its operations have heretofore been conducted:
NONE
IV. The following is a list of any Intellectual Property, (patents,
copyrights, trademarks, etc.) which Lockheed Martin does not have the
right to transfer or license to the Business and which are necessary for
the continued operation of the Business as a whole in substantially the
same manner as its operations have heretofore been conducted:
NONE
<PAGE>
CONIC BUSINESS UNIT
INTELLECTUAL PROPERTY
CLAIMS
I. The following are instances in which Lockheed Martin does not own, free
and clear of all Liens all right, title and interest in Intellectual
Property used primarily in the Business:
NONE
II. The following are instances in which the use of such Intellectual Property
in connection with the operation of the Business as heretofore conducted
conflicts with, infringes upon or violates the intellectual property
rights of other Persons:
NONE
II. The following are instances in which Lockheed Martin does not have the
right to use all Intellectual Property used by the Business and necessary
for the continued operation of the Business in substantially the same
manner as its operations have heretofore been conducted:
NONE
IV. The following is a list of any Intellectual Property, (patents,
copyrights, trademarks, etc.) that Lockheed Martin does not have the right
to transfer or license to the Business and which are necessary for the
continued operation of the Business as a whole in substantially the same
manner as its operations have heretofore been conducted:
NONE
<PAGE>
DISPLAY SYSTEMS BUSINESS UNIT
INTELLECTUAL PROPERTY
CLAIMS
I. The following are instances in which Lockheed Martin does not own, free
and clear of all Liens all right, title and interest in Intellectual
Property used primarily in the Business:
NONE
II. The following are instances in which the use of such Intellectual Property
in connection with the operation of the Business as heretofore conducted
conflicts with, infringes upon or violates the intellectual property
rights of other Persons:
NONE
II. The following are instances in which Lockheed Martin does not have the
right to use all Intellectual Property used by the Business and necessary
for the continued operation of the Business in substantially the same
manner as its operations have heretofore been conducted:
NONE
IV. The following is a list of any Intellectual Property, (patents,
copyrights, trademarks, etc.) that Lockheed Martin does not have the right
to transfer or license to the Business and which are necessary for the
continued operation of the Business as a whole in substantially the same
manner as its operations have heretofore been conducted:
NONE
<PAGE>
HYCOR BUSINESS UNIT
INTELLECTUAL PROPERTY
CLAIMS
NONE
<PAGE>
MICROCOM BUSINESS UNIT
INTELLECTUAL PROPERTY
CLAIMS
NONE
I.
II.
II.
IV.
<PAGE>
NARDA EAST BUSINESS UNIT
(INCLUDES FSI - SEMICONDUCTOR)
INTELLECTUAL PROPERTY
CLAIMS
I. The following are instances in which Lockheed Martin does not own, free
and clear of all Liens all right, title and interest in Intellectual
Property used primarily in the Business:
NONE
II. The following are instances in which the use of such Intellectual Property
in connection with the operation of the Business as heretofore conducted
conflicts with, infringes upon or violates the intellectual property
rights of other Persons:
NONE
II. The following are instances in which Lockheed Martin does not have the
right to use all Intellectual Property used by the Business and necessary
for the continued operation of the Business in substantially the same
manner as its operations have heretofore been conducted:
NONE
IV. The following is a list of any Intellectual Property, (patents,
copyrights, trademarks, etc.) that Lockheed Martin does not have the right
to transfer or license to the Business and which are necessary for the
continued operation of the Business as a whole in substantially the same
manner as its operations have heretofore been conducted:
1. Letter dated 8/29/89 from The Narda Microwave Corporation to
Dr. Om P. Gandhi (letter agreement granting Narda exclusive
rights to certain inventions of Dr. Gandhi, including the
right to patent)
<PAGE>
NARDA MICROWAVE WEST BUSINESS UNIT
INTELLECTUAL PROPERTY
CLAIMS
I. The following are instances in which Lockheed Martin does not own, free
and clear of all Liens all right, title and interest in Intellectual
Property used primarily in the Business:
1. License for very small aperture transceiver with Titan Corporation
dated 2/9/95.
II. The following are instances in which the use of such Intellectual Property
in connection with the operation of the Business as heretofore conducted
conflicts with, infringes upon or violates the intellectual property
rights of other Persons:
NONE
III. The following are instances in which Lockheed Martin does not have the
right to use all Intellectual Property used by the Business and necessary
for the continued operation of the Business in substantially the same
manner as its operations have heretofore been conducted:
NONE
IV. The following is a list of any Intellectual Property, (patents,
copyrights, trademarks, etc.) that Lockheed Martin does not have the right
to transfer or license to the Business and which are necessary for the
continued operation of the Business as a whole in substantially the same
manner as its operations have heretofore been conducted:
1. License for very small aperture transceiver with Titan
Corporation dated 2/9/95.
<PAGE>
RANDTRON BUSINESS UNIT
INTELLECTUAL PROPERTY
CLAIMS
I. The following are instances in which Lockheed Martin does not own, free
and clear of all Liens all right, title and interest in Intellectual
Property used primarily in the Business:
The items and matters listed on Schedule B.10.III are incorporated
herein by reference
II. The following are instances in which the use of such Intellectual Property
in connection with the operation of the Business as heretofore conducted
conflicts with, infringes upon or violates the intellectual property
rights of other Persons:
NONE
II. The following are instances in which Lockheed Martin does not have the
right to use all Intellectual Property used by the Business and necessary
for the continued operation of the Business in substantially the same
manner as its operations have heretofore been conducted:
NONE
IV. The following is a list of any Intellectual Property, (patents,
copyrights, trademarks, etc.) that Lockheed Martin does not have the right
to transfer or license to the Business and which are necessary for the
continued operation of the Business as a whole in substantially the same
manner as its operations have heretofore been conducted:
NONE
<PAGE>
INTELLECTUAL PROPERTY
CLAIMS
I. The following are instances in which Lockheed Martin does not own, free
and clear of all Liens all right, title and interest in Intellectual
Property used primarily in the Business:
1. License Agreement between Loral and DataViews Corporation executed
on 1/26/95 and 1/20/95, together with Letter Amendment dated
8/28/96.
II. The following are instances in which the use of such Intellectual Property
in connection with the operation of the Business as heretofore conducted
conflicts with, infringes upon or violates the intellectual property
rights of other Persons:
NONE
II. The following are instances in which Lockheed Martin does not have the
right to use all Intellectual Property used by the Business and necessary
for the continued operation of the Business in substantially the same
manner as its operations have heretofore been conducted:
NONE
IV. The following is a list of any Intellectual Property, (patents,
copyrights, trademarks, etc.) that Lockheed Martin does not have the right
to transfer or license to the Business and which are necessary for the
continued operation of the Business as a whole in substantially the same
manner as its operations have heretofore been conducted:
NONE
<PAGE>
WIDEBAND SYSTEMS BUSINESS UNIT
INTELLECTUAL PROPERTY
CLAIMS
I. The following are instances in which Lockheed Martin does not own, free
and clear of all Liens all right, title and interest in Intellectual
Property used primarily in the Business:
1. Unisys has not yet provided Assignment documents for a number of
patents and patent applications developed at Wideband Systems.
2. Allegation by Purdue that Unisys/Loral (Wideband Systems) has
infringed two Purdue patents (4,191,031 and 4,222,115); Loral sent
a response on 3/1/96 denying any infringement; no further
correspondence has been received from Purdue.
3. Unisys claims that it should have retained ownership to two patent
applications which Loral claimed ownership to; these are on the
Transferred Asset List (08/606,285 and 08/606,378); Lockheed Martin
has taken the position that they are owned by Lockheed Martin.
4. Additional payments and royalties are due to Unisys in connection
with the license of Fixed Wireless Corp. technology.
II. The following are instances in which the use of such Intellectual Property
in connection with the operation of the Business as heretofore conducted
conflicts with, infringes upon or violates the intellectual property
rights of other Persons:
1. None
III. The following are instances in which Lockheed Martin does not have the
right to use all Intellectual Property used by the Business and necessary
for the continued operation of the Business in substantially the same
manner as its operations have heretofore been conducted:
1. Software license with Mentor Graphics dated July 1, 1995, permits
assignment to a successor in interest with 60 days advance notice
and subject to Mentor Graphics' then current transfer policy and
associated transfer fees.
<PAGE>
WIDEBAND SYSTEMS BUSINESS UNIT
IV. The following is a list of any Intellectual Property, (patents,
copyrights, trademarks, etc.) that Lockheed Martin does not have the right
to transfer or license to the Business and which are necessary for the
continued operation of the Business as a whole in substantially the same
manner as its operations have heretofore been conducted:
None
<PAGE>
DRAFT
Schedule 4.10
to the Credit Agreement
TAXES
NONE
<PAGE>
Schedule 4.14
to the Credit Agreement
SUBSIDIARIES
NONE
<PAGE>
Schedule 4.17 to the
Credit Agreement
FILING JURISDICTIONS
UCC-1 Financing Statements
I. ALABAMA
a. Alabama (Secretary of State)
b. Madison County, Alabama
II. ARIZONA
a. Arizona (Secretary of State)
b. Maricopa County, Arizona
III. CALIFORNIA
a. California (Secretary of State)
b. Los Angeles County, California
c. Sacramento County, California
d. San Diego County, California
e. San Mateo County, California
f. Santa Clara County, California
g. Santa Maria County, California
h. Ventura County, California
IV. COLORADO
a. Colorado (Secretary of State)
b. El Paso County, Colorado
V. GEORGIA
a. Georgia (Secretary of State)
b. Fulton County, Georgia
c. Gwinnett County, Georgia
<PAGE>
VI. FLORIDA
a. Florida (Secretary of State)
b. Brevard County, Florida
c. Sarasota County, Florida
VII. MASSACHUSETTS
a. Massachusetts (Secretary of State)
b. Haverhill, Massachusetts
c. Lowell, Massachusetts
d. Wilmington, Massachusetts
e. Woburn, Massachusetts
VIII. NEW JERSEY
a. New Jersey (Secretary of State)
b. Camden County, New Jersey
IX. NEW YORK
a. New York (Secretary of State)
b. Suffolk County, New York
c. New York County, New York
X. PENNSLYVANIA
a. Pennsylvania (Secretary of State)
b. Bucks County, Pennslyvania
c. Montgomery County, Pennslyvania
XI. UTAH
a. Utah (Secretary of State)
b. Salt Lake County, Utah
c. Tooele County, Utah
<PAGE>
Patent and Trademarks
I. U.S. Patent and Trademark Office
Mortgages
I. CALIFORNIA
a. San Diego County, California
II. FLORIDA
a. Sarasota County, Florida
III. GEORGIA
a. Fulton County, Atlanta
IV. MASSACHUSETTES
a. Essex County, Massachusettes
b. Middlesex County, Massachusettes
V. NEW YORK
a. Suffolk County, New York
VI. PENNSYLVANIA
a. Bucks County, Pennsylvania
<PAGE>
Schedule 6.5
to the Credit Agreement
INSURANCE
During the term of this contract, L3 Communications will maintain insurance
coverage for amounts not less than those shown below, and with deductibles
and/or self-insurance amounts not greater than those shown below:
<TABLE>
<CAPTION>
Insurance Amounts to be Insured/ Deductibles
- --------- Limits of Liability Retentions (Self Insurance)
------------------- ---------------------------
<S> <C> <C>
"All Risks" Property $100,000,000 Loss Limit $1,500,000 per occurrence
including Transit, Business with various sub-limits except 10% of Total
Interruption and Boiler for flood, earthquake, Insured value per location
& Machinery including windstorm and with respect to Flood &
Flood & Earthquake miscellaneous coverages. Earthquake.
Replacement Cost
Valuation.
Marine Cargo & Transit $1,000,000 $5,000
Workers Compensation Statutory $1,000,000
and Employers Liability $1,000,000 combined
Automobile Liability $1,000,000 $250,000
General Liability including $1,000,000 $250,000
Non-Aviation Products
Liability
Excess (Umbrella) Liability $10,000,000 Excess of above primary
Liability policies
Aviation Products Liability $100,000,000 $5,000,000
</TABLE>
<PAGE>
Schedule 6.10
to the Credit Agreement
CERTAIN REAL PROPERTY
Part I
1. 10 Gill Street
Woburn, MA
2. 300 Neck Road
Haverhill, MA
Part II
1. 6000 Fruitville Road,
Sarasota, FL
2. 6755, 6761, 6765 Peachtree Industrial Boulevard,
Atlanta, GA
3. 1355 Bluegrass Lakes Parkway,
Alpharetta, Georgia
4. 10 Gill Street,
Woburn, MA
5. 300 Neck Road
Haverhill, MA
6. 965 Thomas Drive,
Warminster, PA
7. 435 Moreland Road,
Hauppauge, NY
8. 9020 Balboa Avenue,
San Diego, CA
Part III
1. 6755, 6761, 6765 Peachtree Industrial Boulevard,
Atlanta, GA
<PAGE>
Schedule 7.2(f)
to thc Credit Agreement
EXISTING INDEBTEDNESS
Division Amount Description
- -------- ------ -----------
Microcom Business $280,439 Two capitalized leases for
Unit equipment
<PAGE>
Schedule 7.3(f)
to the Credit Agreement
EXISTING LIENS
As of April 30, 1997, the following lien search results have not yet been
received:
(i) Microcom Inc. - Montgomery County PA
(ii) Lockheed Martin Corporation - Wilmington, MA and Lowell, MA
(iii) Loral Corporation - Wilmington, MA and Lowell, MA
(iv) Lockheed Martin Tactical Systems - Wilmington, MA and Lowell, MA
(v) Hycor Inc. - Wilmington, MA and Lowell, MA
(vi) Lockheed Martin FSI - Secretary of State, MA, Middlesex County, MA and
Woburn, MA
(vii) L-3 Communications Holdings, Inc. - New York County, NY
(viii) L-3 Communications Corporation - New York County, NY
(ix) Narda Microwave Corporation - Sacramento County, CA
(x) Wideband Systems - Tooele County, UT
Liens may be in existence that would be reflected in search results not yet
received. This chart may be updated to reflect such liens.
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction Secured Party File No. Collateral
(Date)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Bucks Co., Meridian Leasing Inc. 92-61739 Used Machining
PA P0 Box 15204 (5/21/92) Center
Reading, PA 19612-5204
(Lessor)
- -------------------------------------------------------------------------------------------------------------
Bucks Co., Meridian Leasing Inc. 92-61740 Various Computer
PA P0 Box 15204 (5/27/92) Equipment, Computer
Reading, PA 19612-5204 Peripherals
(Lessor)
- -------------------------------------------------------------------------------------------------------------
Bucks Co. Meridian Leasing Inc. 10746 Telemetry System
PA P0 Box 15204 (10/12/93) Tester
Reading, PA 19612-5204
(Lessor)
- -------------------------------------------------------------------------------------------------------------
CA General Electric Capital Computer Leasing 94007615 All Equipment Leased
Corporation (1/14/94) Under Master
2000 Powell Street, Suite 200 Equipment Lease
Emeryville, CA 94608
- -------------------------------------------------------------------------------------------------------------
CA JLA Credit Corporation 9613560590 Rolm Phone System
970 W. 190th Street, Suite 710 (5/13/96)
Torrance, CA 90502
(Lessor)
- -------------------------------------------------------------------------------------------------------------
CA Konica Business Machines 9702260022 Photocopier Machine
500 Day Hill Road (1/21/97)
Windsor, CT 06095
Sanwa Leasing Corporation
P.O. Box 7023
Troy. MI 48007
- -------------------------------------------------------------------------------------------------------------
CA LPI Software Funding Group, Inc. 9705160201 Various Computer
One Glenhardie Corp. Center (2/13/97) Software, Software
1275 Drummers Lane Licenses and Software
Wayne, PA 19087 Agreements
- -------------------------------------------------------------------------------------------------------------
CA MetLife Capital Credit Corporation 88089181 Various Computer
Ten Stamford Forum (4/15/88) Equipment, Material
Stamford, CT 06904 Handling Equipment
and Laboratory Testing
Continuation: 5716188-007 Equipment
- new name: MetLife Capital Corporation (3/01/93)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
CA NationsBanc Leasing Corporation of 9435160029 Airframe, Engines,
North Carolina (12/15/94) Equipment
NationsBank Corporate Center
100 N. Tryon Street, NC 1-007-12-01
Charlotte, NC 28255-0001
(Lessor)
Vince Iaci, as Trustee UTC MCLP Aircraft
Leasing Trust Agreement Dated as of
November 16, 1993
10900 NE 4th Street, Suite 500
Bellevue, WA 98004
(Assignee)
- -------------------------------------------------------------------------------------------------------------
CA Security Leasing Services, Inc. 93191792 Various Alarm System
1505-A N.E. Darwin Road (9/20/93) Equipment
Kansas City, MO 64116
Avco Leasing Services, Inc.
3349 Michelson Drive
Irvine, CA 92715
(Assignee)
- -------------------------------------------------------------------------------------------------------------
Camden EUA Cogenex Corp. 0457-96 Various Energy
Co., NJ Boott Mills South (2/27/96) Efficient Lighting
100 Foot of John Street Fixtures
Lowell, MA 01852
- -------------------------------------------------------------------------------------------------------------
Camden EUA Cogenex Corp. 0458-96 Various Energy
Co., NJ Boott Mills South (2/27/96) Efficient Lighting
100 Foot of John Street Fixtures
Lowell, MA 01852
- -------------------------------------------------------------------------------------------------------------
FL Data & Electronic Services, Inc. 960000153545 Key Service Unit.
P.O. Box 1585 (7/24/96) LCD Display Kit,
Destin, FL 32540 Telephone Line
Protector, Battery
Backup Kit
- -------------------------------------------------------------------------------------------------------------
FL El Camino Resources, Ltd. 970000077136 Equipment Leased
21051 Warner Center Lane (4/11/97) Under Master Lease
Woodland Hills, CA 91367
(Lessor)
Republic National Bank of New York
452 Fifth Avenue, Tower 25
New York, NY 10018
(Assignee)
- -------------------------------------------------------------------------------------------------------------
FL IBM Federal Government Systems 950000246073 Model 9672 R21 and
6705 Rockledge Drive (12/08/95) Software Licenses
Bethesda, MD 20817
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
FL Orbotech, Inc. 960000051936 Automated Optical
44 Manning Road (3/14/96) Inspection System
Billerica, MA 01821
- -------------------------------------------------------------------------------------------------------------
Fulton Co., Canon Financial Services Inc. 000794080 Fax Machine
GA 200 Commerce Square Blvd. (6/14/93)
Burlington, NJ 08016
- -------------------------------------------------------------------------------------------------------------
Fulton Co., Canon Financial Services Inc. 000796004 Fax Machine
GA 200 Commerce Square Blvd. (7/21/93)
Burlington, NJ 08016
- -------------------------------------------------------------------------------------------------------------
Fulton Co., Cencor Capital Inc. 000820250 Leased Computer
GA 1701 East Woodfield Road, Suite 419 (11/8/94) Software
Schaumburge, Illinois 60173
Winona National and Savings Bank
P.O. Box 499, 204 Main Street
Winona MN 55987
(Assignee)
- -------------------------------------------------------------------------------------------------------------
Fulton Co., Cencor Capital Inc. 000820976 Leased Computer
GA 1701 E. Woodfield Road, Suite 419 (11/28/94) Software
Schaumburge, Ill. 60173-5129
Pioneer Bank and Trust Company
4000 West North Avenue
Chicago, Illinois 60639
(Assignee)
- -------------------------------------------------------------------------------------------------------------
Fulton Co., Memorandum of lease between Raldo S. Deed Book Memorandum of lease
GA Rowan and Larry Morris of 5.70 acres of 2631 Pg. 261
property leased at (3/25/71)
6755-6765 Peachtree Industrial Blvd.
Atlanta, GA 30360. Lease expires July 2031.
- -------------------------------------------------------------------------------------------------------------
GA BancBoston Leasing Inc. 106-97-001848
Statewide 100 Federal Street (4/09/97)
Authority Boston, MA 02110
- -------------------------------------------------------------------------------------------------------------
GA The Commonwealth of Australia 007-96-004149
Statewide Resident Project Team (RAAF) (9/20/96)
Authority Bldg. B95, 86 South Cobb Drive
Marietta, GA 30063-0584
- -------------------------------------------------------------------------------------------------------------
GA Fleet National Bank 115-97-000427 Equipment and
Statewide 777 Main Street (4/01/97) Fixtures
Authority Hartford, CT 06115
Meridian Trust Company (as Security Trustee)
P.O. Box 16003, 35 North Sixth Street
Reading, PA 19601
(Assignee)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
GA Fleet National Rank 00520-0838 Equipment and
Statewide 777 Main Street (8/21/95) Fixtures
Authority Hartford, CT 06115
Meridian Trust Company
35 North Sixth Street 115-96-001368
Reading, PA 19601 (9/17/96)
(Assignee)
- -------------------------------------------------------------------------------------------------------------
GA Fleet National Bank 115-95-000952 Equipment and
Statewide 777 Main Street (7/13/95) Fixtures
Authority Hartford, CT 06115
Meridian Trust Company, (as Security 115-96-001369
Trustee) (9/17/96)
P.O. Box 16003
Reading, PA 19601
(Assignee)
- -------------------------------------------------------------------------------------------------------------
GA IBM Credit Corporation 033-97-00l377 Equipment
Statewide 1133 Westchester Avenue (1/27/97)
Authority White Plains, NY 10604
- -------------------------------------------------------------------------------------------------------------
GA Leasing Solutions, Inc. 007-96-[ILLEGIBLE] ?
Statewide 10 Almaden Blvd., Suite 1500 (11/06/96)
Authority San Jose, CA 95113
The First National Bank of Boston, as Agent
435 Tasso Street, Suite 250
Palo Alto, CA 94301
(Assignee)
- -------------------------------------------------------------------------------------------------------------
GA Leasing Solutions, Inc. 007-96-002545 ?
Statewide 10 Almaden Blvd., Suite 1500 (7/12/96)
Authority San Jose, CA 95113
The First National Bank of Boston, as Agent
435 Tasso Street, Suite 250
Palo Alto, CA 94301
(Assignee)
- -------------------------------------------------------------------------------------------------------------
GA Leasing Solutions, Inc. 007-96-006686 ?
Statewide 10 Almaden Blvd., Suite 1500 (12/24/96)
Authority San Jose, CA 95113
The First National Bank of Boston, as Agent
435 Tasso Street, Suite 250
Palo Alto, CA 94301
(Assignee)
- -------------------------------------------------------------------------------------------------------------
GA Pitney Bowes Credit Corporation 044-97-003405 ?
Statewide 201 Merritt Seven (4/08/97)
Authority Norwalk, CT 06856
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] Shawmut Bank Connecticut, National ? ?
Statewide Association
Authority 777 Main Street
Hartford, CT 06115
Meridian Trust Company (As Secured
Trustee)
P.O. Box 16003
Reading, PA 19601
(Assignee)
- -------------------------------------------------------------------------------------------------------------
GA Unisys Corporation 033-96-012471 Goods/Inventory
Statewide 4151 Ashford Dunwoody Road (9/09/96)
Authority Atlanta, GA 30319
- -------------------------------------------------------------------------------------------------------------
Los Angeles NationsBanc Leasing Corporation of 9519260254 Airframe, Engines,
CA North Carolina Equipment
NationsBank Corporate Center
100 N. Tryon Street, NC 1-007-12-01
Charlotte, NC 28255-0001
(Lessor)
Vince Iaci, as Trustee UTC MCLP Aircraft
Leasing Trust Agreement Dated as of
November 16, 1993
10900 NE 4th Street, Suite 500
Bellevue, WA 98004
(Assignee)
- -------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] VMX Credit Corporation 099181 Port Line Card and
1650 Zanker Road, Suite 236 (6/23/92) Names Directories
San Jose, CA 95112
Hewlett-Packard Company 1563652 All Equipment leased
Finance & Remarketing Division (4/08/94) pursuant to Financing
1360 Kifer Road Agreement No. 4126-
Sunnyvale, CA 94086 99911
- -------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] ICX Corporation 1701385 Various Computer
3 Summit Park Drive, Suite 200 5/30/95 Equipment, Electrical
Cleveland, OH 44131 Equipment, Machine
Tools
Hitachi Credit America Corp.
777 West Putnam Avenue
Greenwich, CT 06830
(Assignee)
- -------------------------------------------------------------------------------------------------------------
[ILLEGIBLE] ICX Corporation 1717811 Various Computer
3 Summit Park Drive, Suite 200 (8/19/95) Equipment, Computer
Cleveland, OH 44131 Software
Hitachi Credit America Corp.
777 West Putnam Avenue
Greenwich, CT 06830
(Assignee)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
NJ ICX Corporation 1720128 Various Computer
3 Summit Park Drive, Suite 200 (9/4/96) Equipment, Computer
Cleveland, OH 44131 Peripherals
Hitachi Credit America Corp.
777 West Putnam Avenue
Greenwich, CT 06830
(Assignee)
- -------------------------------------------------------------------------------------------------------------
NJ ICX Corporation 1747596 Various Engineering
3 Summit Park Drive, Suite 200 (2/03/97) Devices, Electrical
Cleveland, OH 44131 Equipment
- -------------------------------------------------------------------------------------------------------------
NJ ICX Corporation 1744893 Various Equipment
3 Summit Park Drive, Suite 200 (1/15/97)
Cleveland, OH 44131
- -------------------------------------------------------------------------------------------------------------
NJ ICX Corporation 1744896 Various Equipment
3 Summit Park Drive, Suite 200 (1/15/97)
Cleveland, OH 44131
- -------------------------------------------------------------------------------------------------------------
NJ ICX Corporation 1744898 Various Equipment
3 Summit Park Drive, Suite 200 (1/15/97)
Cleveland, OH 4413l
- -------------------------------------------------------------------------------------------------------------
NJ ICX Corporation 1744901 Various Equipment
3 Summit Park Drive, Suite 200 (1/15/97)
Cleveland, OH 44131
- -------------------------------------------------------------------------------------------------------------
NJ ICX Corporation 1751955 Various Equipment
3 Summit Park Drive, Suite 200 (2/28/97)
Cleveland, OH 44131
- -------------------------------------------------------------------------------------------------------------
NJ ICX Corporation 1744966 Various Equipment
3 Summit Park Drive, Suite 200 (1/15/97)
Cleveland, OH 44131
- -------------------------------------------------------------------------------------------------------------
NJ ICX Corporation 1749533 Various Equipment
3 Summit Park Drive, Suite 200
Cleveland, OH 44131
- -------------------------------------------------------------------------------------------------------------
NJ National Micrographics Systems Inc 1750326 Various Equipment,
11941 Bournefield Way (2/10/97) Printer
Silver Spring, MD 20904
Norwest Financial LSG
P.O. Box 17229
Charlotte, NC 28227
(Assignee)
- -------------------------------------------------------------------------------------------------------------
NJ Pitney Bowes Credit Corporation 1672723 All Equipment subject
201 Merritt Seven (12/21/95) to Lease #0196741-
Norwalk, CT 06856 001
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
NJ Telecom Financial Services 1717308 Leased Equipment
220 Athens Way (8/16/96)
Nashville, TN 37228
(Lessor)
- -------------------------------------------------------------------------------------------------------------
NY BancBoston Leasing Inc. 071460 Various Computer
100 Federal Street (4/10/97) Equipment, Computer
Bostom, MA 02110 Peripherals, Computer
Software
- -------------------------------------------------------------------------------------------------------------
NY Canon Financial Services, Inc. 067688 Graphics
200 Commerce Square Blvd. (4/04/97)
Burlington, NJ 08016
(Lessor)
- -------------------------------------------------------------------------------------------------------------
NY Digital Financial Services, a division of GE 091925 All Equipment
Capital Corp. (5/07/96) Pursuant to DFS
1400 Computer Drive Lease Agreement No.
Westborough, MA 01581 6608812-001
- -------------------------------------------------------------------------------------------------------------
NY El Camino Resources, Ltd. 073271 Various Computer
21051 Warner Center Lane (4/11/97) Equipment, Computer
Woodland Hills, CA 91367 Peripherals,
Computer Software
Republic National Bank of New York
452 Fifth Avenue, Tower 25
New York, NY 10018
(Assignee)
- -------------------------------------------------------------------------------------------------------------
NY Fleet National Bank 057968 Machine Tools,
777 Main Street (3/21/97) Production Equipment
Hartford, CT 06115
(Lessor)
Meridian Trust Company
35 North Sixth Street
Reading, PA 19601
(Assignee)
- -------------------------------------------------------------------------------------------------------------
NY Fleet National Bank 057971 Machine Tools,
777 Main Street (3/21/97) Production Equipment
Hartford, CT 06115
Meridian Trust Company
35 North Sixth Street
Reading, PA 19601
(Assignee)
- -------------------------------------------------------------------------------------------------------------
NY General Electric Capital Corporation 109401 Universal Turning
1080 Elm Street (5/28/92) Centers, Universal
Rocky Hill, CT 06067 Chucking Centers
- -------------------------------------------------------------------------------------------------------------
NY Liquid Carbonic lndu. Gases 098236 Lease of 6 Ton Vessel
1280 Wall St. West (5/15/95)
Lyndhurst, NJ 07071
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
NY Meridian Trust Company 057934 Amendment of
35 North Sixth Street (3/21/97) #177404
Reading, PA 06911
- -------------------------------------------------------------------------------------------------------------
NY Metlife Capital Credit Corp. 065584 All Equipment Leased
Ten Stamford Forum (3/15/88) Under Master
Stamford, CT 06904 Equipment Lease
Agreement Dated
3/02/88
Continuation: 044207
- new name: MetLife Capital Corporation (3/02/93)
- -------------------------------------------------------------------------------------------------------------
NY Oce-USA, Inc. 047933 Oce Model 2400 with
5450 North Cumberland Ave. (3/14/94) All Spare Parts,
Chicago, IL 60656 Accessories,
Attachments,
Replacements
- -------------------------------------------------------------------------------------------------------------
NY Oce-USA, Inc. 047934 Oce Model 2500 with
5450 North Cumberland Ave. (3/14/94) All Spare Parts,
Chicago, IL 60656 Accessories,
Attachments,
Replacements
- -------------------------------------------------------------------------------------------------------------
NY Primetec Leasing, Inc. 246493 SPARCStatic and
1 New York Avenue (11/25/92) Related Accessories
Framingham, MA 01701
Sanwa Business Credit Corp. 256346
One South Wacker Drive (12/09/93)
Chicago, IL 60606
(Assignee)
- -------------------------------------------------------------------------------------------------------------
NY Shawmut Bank, National Association 177404 Machine Tools,
777 Main Street (8/30/95) Production Equipment
Hartford, CT 06115
(Lessor)
Meridian Trust Company, as Security Trustee
P.O. Box 16003
35 North Sixth Street
Reading, PA 19601
(Assignee)
- -------------------------------------------------------------------------------------------------------------
PA GE Capital Computer Leasing Corporation 24420563 Com 5/100XL, Com
6875 Jimmy Carter Blvd., Suite 3400 (6/26/95) 148188001
Norcross GA 30071
- -------------------------------------------------------------------------------------------------------------
PA GE Capital Computer Leasing Corporation 24921779 Various Computer
6875 Jimmy Carter Blvd., Suite 3400 (11/29/95) Equipment
Norcross, GA 30071
- -------------------------------------------------------------------------------------------------------------
PA GE Capital Computer Leasing Corporation 26441646 Various Computer
6875 Jimmy Carter Blvd., Suite 3400 (3/10/97) Equipment, Computer
Norcross, GA 30071 Peripherals
(Lessor)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PA General Electric Capital Corporation 20841296 Universal Turning
1080 Elm Street Centers, Chucking
Rocky Hill, CT 06067 Centers
- -------------------------------------------------------------------------------------------------------------
PA General Electric Capital Corporation 21431745 Various Computer
44-2 Old Ridgebury Road (12/07/92) Equipment, Computer
Danbury, CT 06810 Peripherals and
(Lessor) Computer Software
- -------------------------------------------------------------------------------------------------------------
PA Master Lease Div of Tokai Financial 21131620 PBX Phone System
Services, Inc. (8/26/92) Equipment/Lease
1055 Westlakes Drive
Berwyn, PA 19312
- -------------------------------------------------------------------------------------------------------------
PA Meridian Leasing Inc. 20840828 Computer System
P0 Box 15204 (5/27/92)
Reading, PA 19612-5204
(Lessor)
- -------------------------------------------------------------------------------------------------------------
PA Meridian Leasing Inc. 20840953 Machining Center
P0 Box 15204 (5/27/92)
Reading, PA 19612-5204
(Lessor)
- -------------------------------------------------------------------------------------------------------------
PA Meridian Leasing Inc. 22470322 Telemetry System
P0 Box 15204 (10/08/93) Tester
Reading, PA 19612-5204
(Lessor)
- -------------------------------------------------------------------------------------------------------------
PA United Financial Corporation 20860541 LaserJet Printers
275 N. Franklin Turnpike (6/02/92)
Ramsey, NJ 07446
- -------------------------------------------------------------------------------------------------------------
PA United Financial Corporation 21091553 Stand Alone Plain
275 N. Franklin Turnpike (8/14/92) Paper Fax Machine
Ramsey, NJ 07446
- -------------------------------------------------------------------------------------------------------------
PA United Financial Corporation 22760816 Various Computer
275 N. Franklin Turnpike (1/14/94) Equipment, Computer
Ramsey, NJ 07446 Peripherals and
Computer Software
- -------------------------------------------------------------------------------------------------------------
PA United Financial Corporation 22851575 Stencil Printer,
275 N. Franklin Turnpike Vacuum Fixture,
Ramsey, NJ 07446 Digital Dual Arm Pick
Place Dispense
System, Top Batch
Reflow Oven
- -------------------------------------------------------------------------------------------------------------
PA United Financial Corporation 22971496 On-line
275 N. Franklin Turnpike (3/30/94) Uninterruptable Power
Ramsey, NJ 07446 System
- -------------------------------------------------------------------------------------------------------------
PA United Financial Corporation 23261012 Computer Equipment
275 N. Franklin Turnpike (6/27/94)
Ramsey, NJ 07446
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PA United Financial Corporation 23420772 Various Computer
275 N. Franklin Turnpike (8/15/94) Equipment and
Ramsey, NJ 07446 Computer Peripherals
- -------------------------------------------------------------------------------------------------------------
PA United Financial Funding 21500639 Various Computer
275 N. Franklin Turnpike (12/29/92) Equipment, Computer
Ramsey, NJ 07446 Peripherals and
Computer Software
- -------------------------------------------------------------------------------------------------------------
PA United Financial Corporation 22300930 Various Computer
275 N. Franklin Turnpike (8/13/93) Equipment, Computer
Ramsey, NJ 07446 Peripherals and
Computer Software
Tilden Financial Corp.
190 Motor Parkway
Hauppauge, NY 11788
(Assignee)
- -------------------------------------------------------------------------------------------------------------
PA Vision Financial Group, Inc. 24941526 Apple Powerbook with
1100 Liberty Avenue (12/04/95) Powerpoint, Universal
Pittsburgh, PA 15222 Notebook Case,
(Lessor) Hardware Installation
- -------------------------------------------------------------------------------------------------------------
Suffolk American Classic Spoec Corp 18638 Freezer
Co., NY 1565D Fifth Industrial Court
Bayshore, NY 11706
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 7.4
to the Credit Agreement
EXISTING GUARANTEE OBLIGATIONS
1. Letters of Credit - see attached.
2. Surety Bonds - see attached.
<PAGE>
LETTERS OF CREDIT
<TABLE>
<CAPTION>
AMOUNT EXPIRATION
DIVISION BANK PROGRAM BENEFIT OF OUTSTANDING DATE
-------- ---- ------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
December 31, 1996
Microcom None
Wideband None
Display Systems None
Narda West None
Narda East None
Randtron None
Advanced Recorders None
Camden ABN AMRO 1-Renbass NZ New Zealand Ministry of Defense 552,688 1/8/98
Conic Bank of America Katron 59,500 * 8/15/97
Katron 158,034 * 10/15/97
DPA 37,833 6/10/97
KTA 22,990 5/20/97
DPA 22,223 * 6/30/98
Katron 75,305 * 8/1/97
Inisel 27,475 * 7/30/97
Hycor Canadian Imperial Bank of 1264/S ROK Defense Procurement Republic of 17,796 * 12/31/97
Commerce Korea
ARN AMRO 1272/Turkey Howaldtswerft Deutsche Werft, AG 64,005 * 12/31/97
ABN AMRO 1272/Turkey Blohm & Voss AG 246,645 * 7/31/98
Bayerische Landesbank 1258/Ecuador Blanco del Pacifico 5O0,000 * 10/31/97
Telemetry & Chase Manhattan Bank MOCR#2 PT Industri Pesawat Terbang 40,678 * 1/28/98
Instrumentation Nusantara
Chase Manhattan Bank Komstat K.A.R.I.
Imperial Bank M10724 JHT Electronics 2,000 * 11/30/98
43,450 3/31/97
---------
TOTAL 1,827,172
=========
</TABLE>
- ------------------------
* Letter of credit agrees to listing provided by Lockheed Martin legal.
<PAGE>
<TABLE>
<CAPTION>
AMOUNT EXPIRATION
DIVISION BANK PROGRAM BENEFIT OF OUTSTANDING DATE
-------- ---- ------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
March 31, 1997
Microcom None
Wideband None
Display Systems None
Narda West State Bank of India Filters 5,640 2/18/97
Narda East None
Randtron None
Advanced Recorders None
Camden ABN AMRO I-Renbass NZ New Zealand Ministry of Defense 921,148 1/8/98
Conic Bank of America Katron 40,000
Daeyoung 10,000
KTA 75,000
Katron 95,000
Hycor TBD 1272/Turkey Howaldtswerft Deutsche Werft, AG 48,499 Dec 1991
TBD 1277/Taiwan Defense Procurement, Taipei 292,000 April 1998
TBD F124/Germany German Gov't/Shipyard 300,000 1999
Saudi European Shipyard 600,000 1999
Telemetry & TBD MOCR #3 PT Industri Pesawat Terbang
Instrumentation TBD Nusantra 50,000
Rooivalk Denel Aviation 220,000
---------
TOTAL 2,657,487
=========
</TABLE>
<PAGE>
Additional letters of credit as reported by Lockheed Martin legal:
<TABLE>
<CAPTION>
AMOUNT EXPIRATION
DIVISION BANK OUTSTANDING DATE
- -------- ---- ----------- ----------
<S> <C> <C> <C>
Conic Bank of America 5,343 6/15/97
Conic Bank of America 27,155 4/30/97
Conic Bank of America 181,169 4/30/97
Telemetry & Instrum. Bank of America 29,054 11/28/97
Telemetry & Instrum. Chase Manhattan 162,712 3/31/97
Telemetry & Instrum. Bank of America 18,092 3/1/98
-------
TOTAL 423,525
=======
</TABLE>
<PAGE>
SURETY BONDS
<TABLE>
<CAPTION>
Principal Bond No. Description Obligee Eff/Exp Bond Amount
- --------- -------- ----------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
Conic Corporation 5234628 Seller State of CA 1/6/96-97 $10,000
Randtron Systems 960711003 Customs U.S. Customs 9/16/96 $100,000
Narda Microwave Corp. 960711005 Customs U.S. Customs 9/16/96 $100,000
Lockheed Martin Hycor 960711006 Customs U.S. Customs 9/16/96 $100,000
Conic Corporation 960711007 Customs U.S. Customs 9/16/96 $100,000
LM Communications 5857244 Turnpike Toll PA Turnpike Commission 4/18/96-97 $3,000
</TABLE>
<PAGE>
Schedule 7.9(c)
to the Credit Agreement
OFFICERS
Division Amount Explanation
- -------- ------ -----------
Display Systems $35,409 23 Employee loans
Conic $10,000 1 Employee loan
Narda East $14,030 28 Employee loans
<PAGE>
Schedule 7.9(g)
to the Credit Agreement
EXISTING INVESTMENTS
Division Amount Explanation
- -------- ------ -----------
Randtron $650 LM Securities and LM Tactical
Systems
Hycor $2,600 Hycor International; LM Tactical
Systems
Advanced Recorders $288,590 Medical Education Technologies,
Inc.
Narda West $1,060 Dynamics of America
Narda East -------- Dynamics of America
<PAGE>
Attachment I
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
COMBINED FINANCIAL STATEMENTS
As of December 31, 1996 and 1995 and
for the three years ended
December 31, 1996, 1995 and 1994
<PAGE>
[LETTERHEAD OF COOPERS & LYBRAND]
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors of
Lockheed Martin Corporation:
We have audited the accompanying combined balance sheet of the Lockheed
Martin Predecessor Businesses, as defined in Note 1 to the financial statements,
(the "Businesses") as of December 31, 1996 and the related combined statements
of operations and changes in invested equity and cash flows for the year then
ended. These financial statements are the responsibility of the Businesses,
management. Our responsibility is to express an opinion on these financial
statements based on our audit. We did not audit the financial statements of the
Communications Systems Division, which statements represent total assets and
sales constituting 35 percent and 30 percent of the related combined totals.
These statements were audited by other auditors whose report has been furnished
to us, and our opinion, insofar as it relates to the amounts included for the
Communication Systems Division, is based solely on the report of the other
auditors.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a tax basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audit and the report of the other auditors,
the financial statements referred to above present fairly, in all material
respects, the combined financial position of the Lockheed Martin Predecessor
Businesses as of December 31, 1996 and their combined results of operations and
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, New York
March 20, 1997
1
<PAGE>
[LETTERHEAD OF ERNST & YOUNG LLP]
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Lockheed Martin Corporation
We have audited the combined balance sheets of Lockheed Martin Communications
Systems Division, as defined in Note 1 to the financial statements, as of
December 31, 1996 and 1995, and the related combined statements of operations
and changes in invested equity, and cash flows for each of the three years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Division's and Lockheed Martin Corporation's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a tax basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Lockheed
Martin Communications Systems Division at December 31, 1996 (not presented
separately herein) and 1995, and the combined results of its operations and its
cash flows for the year ended December 31, 1996 (not presented separately
herein), and the results of its operations and its cash flows for each of the
two years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
March 7, 1997
2
Ernst & Young LLP is a member of Ernst & Young International Ltd.
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
COMBINED BALANCE SHEETS
(in thousands)
December 31,
-------------------
1996 1995
-------- --------
ASSETS
Current assets:
Contracts in process $185,320 $ 42,457
Other current assets 16,414 3,100
-------- --------
Total current assets 201,734 45,557
-------- --------
Property, plant and equipment 116,566 31,657
Less, accumulated depreciation and
amortization 24,983 15,018
-------- --------
91,683 16,539
-------- --------
Intangibles, primarily cost in excess of net assets
acquired, net of amortization 282,674 157,560
Other assets 17,307 8,753
-------- --------
$593,298 $228,509
======== ========
LIABILITIES AND INVESTED EQUITY
Current liabilities:
Accounts payable, trade $ 24,153 $ 9,583
Accrued employment costs 27,313 6,534
Customer advances and amounts in excess of
costs incurred 14,299 1,363
Other current liabilities 27,113 6,983
-------- --------
Total current Liabilities 102,888 24,463
-------- --------
Other liabilities 18,801 9,383
Commitments and contingencies (Note 8) 473,609 154,683
-------- --------
Invested equity $593,298 $228,509
======== ========
See notes to combined financial statements.
3
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
COMBINED STATEMENTS OF OPERATIONS AND CHANGES IN INVESTED EQUITY
(In thousands)
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Sales $543,081 $186,781 $218,845
Cost of sales 499,380 162,132 210,466
-------- -------- --------
Operating income 43,681 4,549 8,379
Allocated interest expense 24,197 4,475 5,450
-------- -------- --------
Earnings before income taxes 19,494 174 2,929
Income tax expense 7,798 1,186 2,293
-------- -------- --------
Net earnings (loss) 11,696 (1,012) 636
Invested equity - beginning of year 194,883 199,505 218,943
Advances from (repayments to)
Lockheed Martin 267,250 (3,831) (18,073)
-------- -------- --------
Invested equity - end of year $473,609 $194,663 $199,506
======== ======== ========
</TABLE>
See notes to combined financial statements.
4
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
COMBINED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Operating activities:
Net income $ 11,696 ($1,012) $ 636
Depreciation and amortization 25,039 11,578 11,487
Loss (gain) an disposition of property, plants
and equipment 265 25 (1,078)
Changes in operating assets and liabilities
Contracts in process 26,103 (3,257) 14,002
Other current assets 489 788 1,502
Other assets (5,248) 1,245 2,044
Accounts payable 3,198 (643) (3,099)
Accrued employment costs 2,282 (611) (528)
Customer advances and amounts in excess
of costs incurred (11,586) (2,041) 917
Other current liabilities 4,086 4,004 (3,304)
Other liabilities (25,327) (699) (751)
--------- ------- -------
Net cash from operating activities 30,999 9,383 21,808
--------- ------- -------
Investing activities:
Acquisition of business (287,803) - -
Capital expenditures (13,528) (5,532) (3,735)
Disposition of property, plant and equipment 3,082 - -
--------- ------- -------
Net cash used in investing activities (298,249) (5,532) (3,735)
--------- ------- -------
Financial activities:
Advances from (repayments to) Lockheed Martin 267,250 (3,831) (18,073)
--------- ------- -------
Net change in cash - - -
========= ======= =======
</TABLE>
See notes to combined financial statements.
5
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1996
(Dollars in thousands)
1. Background and Description of Businesses
On January 31, 1997, Lockheed Martin Corporation ("Lockheed Martin"),
Lahman Brothers Holdings Inc. ("Lehman"), Frank C. Lanza ("Lanza") and Robert V.
LaPenta ("LaPenta") entered into a Memorandum of Understanding regarding the
transfer of certain businesses of Lockheed Martin to a newly formed corporation
"Newco" owned by Lockheed Martin, Lehman, Lanza and LaPenta. The businesses
proposed to be transferred include Lockheed Martin's Wideband Systems, Division,
Communications Systems Division and Products Group, comprising eleven autonomous
operations (collectively the "Lockheed Martin Predecessor Businesses" or the
"Businesses"). Also included in the transaction is the acquisition of a
semiconductor product line of another business and certain leasehold
improvements in New York City.
Effective April 1, 1996, Lockheed Martin acquired substantially all the
assets and liabilities of the defense businesses of Loral Corporation (Loral),
including the Wideband Systems Division and the Products Group. The acquisition
of the Wideband Systems Division and Products Group businesses (the "Acquired
Businesses") has been accounted for as a purchase by Lockheed Martin
Communications Systems Division ("Division"). The acquisition has been reflected
in these financial statements based on the purchase price allocated to those
acquired businesses by Lockheed Martin. As such, the accompanying combined
financial statements reflect the results of operations of the Division and the
acquired businesses from the effective date of acquisition including the effects
of an allocated portion of cost in excess of net assets acquired resulting from
the acquisition. The assets and liabilities recorded in connection with the
purchase price allocation were $400,993 and $113,190, respectively.
Had the acquisition of Wideband Systems Division and the Products Group
occurred on January 1, 1995, the unaudited pro forma sales and net income for
the years ending December 31, 1996 and 1995 would have been $675,596 and
$14,351, and $691,136 and $4,790, respectively. The pro forma results, which are
based on various assumptions, are not necessarily indicative of what would have
occurred had the acquisition been consummated on January 1, 1995.
The Businesses are suppliers of sophisticated secure communication systems
and specialized communication products including secure, high data rate
communication systems, commercial fixed wireless communication products,
microwave components, avionic displays and recorders and instrument products.
The Company's consumers included the Department of Defense, selected U.S.
government intelligence agencies, major aerospace/defense prime contractors and
commercial customers. The Businesses operate primarily in one industry segment,
electronic components and systems.
Substantially all the Businesses' products are sold to agencies of the
U.S. Government, primarily the Department of Defense, to foreign government
agencies or to prime contractors or subcontractors thereof. All domestic
government contracts and subcontracts of the Businesses are subject to audit and
various cost controls, and include standard provisions for permission for the
convenience of the U.S. Government. Multi-year U.S. Government contracts and
related orders are subject to cancellation if funds for contract performance for
any subsequent year become unavailable. Foreign government contracts generally
include comparable provisions relating to termination for the convenience of the
government.
The decline in the U.S. defense budget since the mid 1980s has resulted in
program delays, cancellations and scope reduction for defense contracts in
general. These events may or may not have an effect on the Businesses' programs;
however, in the event that U.S. Government expenditures for products of the type
manufactured by the Businesses are reduced, and not offset by greater commercial
sales or other new programs or products, or acquisitions, there may be a
reduction in the volume of contracts or subcontracts awarded to the Businesses.
6
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS--(continued)
(Dollars in thousands)
2. Summary of Significant Accounting Policies
Basis of Presentation and Use of Estimates
The accompanying combined financial statements reflect the Businesses'
assets, liabilities and operations included in Lockheed Martin's historical
financial statements that will be transferred to Newco. Intercompany accounts
between Lockheed Martin and the Businesses have been included in invested
equity. Significant inter-business transactions and balances have been
eliminated. The assets and operations of the semiconductor product line and
certain other facilities, which are not material to the combined financial
statements, have been excluded from the combined financial statements.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Businesses' management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. The most significant of these estimates and assumptions
relate to contract estimates of sales and costs, allocations from Lockheed
Martin, recoverability of recorded amounts of fixed assets and cost in excess of
net assets acquired, litigation and environmental obligations. Actual results
could differ from these estimates.
Sales and Earnings
Sales and profits on cost reimbursable contracts are recognized as costs
are incurred. Sales and estimated profits under long-term contracts are
recognized under the percentage of completion method of accounting using the
cost-to-cost method. Amounts representing contract change orders or claims are
included in sales only when they can be reliably estimated and realization is
probable. Sales under short-term production-type contracts are recorded as units
are shipped; profits applicable to such shipments are recorded pro rata, based
upon estimated total profit at completion of the contract. Amounts representing
contract change orders or claims are included in sales only when they can be
reliably estimated and realization is probable. Losses on contracts are
recognized when determined. Revisions in profit estimates are reflected in the
period in which the facts which require the revision become known.
Contracts in Process
Costs accumulated under long-term contracts include direct costs, as well
as manufacturing overhead, and for government contracts, general and
administrative costs, independent research and development costs and bid and
proposal costs. Contracts in process contain ILLEGIBLE relating to contracts and
programs for which the related operating cycles are longer that one year. In
accordance with industry practice, these amounts are included in current assets.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is provided
primarily using an accelerated method over the estimated useful lives (5 to 20
years) of the related assets. Leasehold improvements are amortized over the
shorter of the lease term or the estimated useful life of the improvements.
Intangibles
Intangibles, primarily the excess of the cost of purchased businesses over
the fair value of the net assets acquired, is being amortized using a
straight-line method primarily over a 40-year period. Other intangibles are
7
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS--(continued)
(Dollars in thousands)
amortized over their estimated useful lives which range from 11-15 years.
Amortization expense was $10,115, $6,086 and $6,086 for 1996, 1995, and 1994,
respectively. Accumulated amortization was $26,524 and $16,738 at December 31,
1996 and 1995, respectively.
Intangibles include costs allocated to the Businesses relating to the
Request for Funding Authorization ("RFA"), consisting of over 20 restructuring
projects to reduce operating costs, initiated by General Electric ("GE")
Aerospace in 1990 and to the REC Advance Agreement ("RAA"), a restructuring plan
initiated after Lockheed Martin's acquisition of GE Aerospace. The RAA was
initiated to close two regional electronic manufacturing centers. Restructure
costs are reimbursable from the U.S. Government, if savings can be demonstrated
to exceed costs. The total cost of restructuring under the RFA and the RAA
represented approximately 15% of the estimated savings to the U.S. Government
and, therefore, a deferred asset has been recorded by Lockheed Martin. The
deferred asset is being allocated to all the former GE Aerospace sites including
the Communications Systems Division, on a basis that includes manufacturing
labor, overhead, and direct material less non-hardware subcontracts. As of
December 31, 1996 and 1995, approximately $4,400 and $7,500, respectively of
unamortized RFA and RAA costs were recorded on the Businesses' combined balance
sheet in other current assets and other assets.
The carrying values of intangible assets are reviewed if the facts and
circumstances indicate potential impairment of their carrying value. If this
review indicates that intangible assets are not recoverable, as determined based
on the undiscounted cash flows of the entity required over the remaining
amortization period, the Division's carrying values related to the intangible
assets are reduced by the estimated shortfall of cash flows.
Research and Development and Similar Costs
Research and development costs sponsored by the Businesses include
research and development and bid and proposal effort related to government
products and services. These costs are generally are allocated among all
contracts and programs in progress under U.S. Government contractual
arrangements. Customer-sponsored research and development costs incurred
pursuant to contracts are accounted for as contract costs.
Financial Instruments
At December 31, 1996, the carrying value of the Businesses' financial
instrument, such as receivables, accounts payable and accrued liabilities,
approximate fair value, based on the short-term maturities of these instruments.
New Accounting Pronouncements
Effective January 1, 1996, the Businesses adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of" ("SFAS 121"). SFAS 121
establishes the accounting standards for the impairment of long-lived assets,
certain intangible assets and cost in excess of net assets required to be held
and used for long-lived assets and certain intangible assets to be disposed of.
The impact of adopting SFAS 121 was not material.
Effective January 1, 1994, the Businesses adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postretirement
Benefits" ("SFAS 112"). SFAS 112 requires that the cost of benefits provided to
employees after employment but before retirement be recognized on an accrual
basis. The adoption of SFAS 112 did not have a material impact on the combined
results of operations of the Businesses.
8
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS--(continued)
(Dollars in thousands)
3. Transactions with Lockheed Martin
The Business rely on Lockheed Martin for certain services, including
treasury, cash management, employee benefits, taxes, risk management, internal
audit, financial reporting, contract administration and general corporate
services. Although certain assets, liabilities and expenses related to these
services have been allocated to Businesses, the combined financial position,
results of operations and cash flows presented in the accompanying combined
financial statements would not be the same as would have occurred had the
Businesses been independent entities. The following describes the related party
transactions.
Sales of Products
The Businesses sell products to Lockheed Martin and its affiliates, not
sales for which were $70,658, $25,874, and $9,983 in 1996, 1995 and 1994,
respectively, included in Contracts in Process are receivables from Lockheed
Martin and its affiliates of $10,924 and $30 at December 31, 1996 and 1995,
respectively.
Allocation of Corporate Expenses
The amount of allocated corporate expenses reflected in these combined
financial statements has been estimated primarily on an allocation methodology
prescribed by government regulations pertaining to government contractors.
Allocated costs to the Businesses were $10,057, $2,964 and $4,141 in 1996, 1995
and 1994, respectively.
Pensions
Certain of the Businesses participate in various Lockheed Martin-sponsored
pension plans covering certain employees. Eligibility for participation in these
plans varies, and benefits are generally based on members' compensation and
years of service. Lockheed Martin's funding policy is generally to contribute in
accordance with cost accounting standards that affect government contractors,
subject to the Internal Revenue code and regulations. Since the aforementioned
pension arrangements are part of certain Lockheed Martin defined benefit plans,
no separate actuarial data is available for the portion allocable to the
Businesses. Therefore, no liability or asset is reflected in the accompanying
combined financial statements. The Businesses have been allocated pension costs
based upon participant employee headcount. Net pension expense included in the
accompanying financial statements was $7,027, $4,134, and $3,675 in 1996, 1995
and 1994, respectively.
Postretirement Health Care and Life Insurance Benefits
In addition to participating in Lockheed Martin-sponsored pension plans,
certain of the Businesses provide varying levels of health care and life
insurance benefits for retired employees and dependents. Participants are
eligible for these benefits when they retire from service and meet the pension
plan eligibility requirements. These benefits are funded primarily on a
pay-as-you-go basis with the retiree generally paying a portion of the cost
through contributions, deductibles and [ILLEGIBLE] provisions.
Since the aforementioned postretirement benefits are part of certain
Lockheed Martin postretirement arrangements, no separate actuarial data is
available for the portion allocable to the Businesses. Accordingly, no liability
is reflected in the accompanying financial statements. The Businesses have been
allocated postretirement benefits cost based on participant employee headcount.
Postretirement benefits costs included in the accompanying financial statements
was $2,787, $2,124 and $1,694 in 1996, 1995 and 1994, respectively.
9
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS--(continued)
(Dollars in thousands)
Employee Savings Plans
Under the various employee savings plans sponsored by Lockheed Martin, the
Businesses match the contributions of participating employees up to a designated
level. The extent of the match, vesting terms and the form of the matching
contributions vary among the plans. Under the plans, the matching contributions,
in cash, common stock or both, for 1996, 1995 and 1994 were $3,940, $1,478, and
$1,842, respectively.
Interest Expenses
Interest expense has been allocated to the Businesses by applying Lockheed
Martin's weighted average consolidated interest rate to the portion of the
beginning of the period invested equity account deemed to be financed by
consolidated debt, which has been determined based on Lockheed Martin's debt to
equity ratio on such date, except that the acquisition of the defense business
of Loral Corporation ("Loral") has been assumed to be fully financed by debt.
Interest expense was calculated using the following balances and interest
rates:
For the years ended December 31,
-----------------------------------
1996 1995 1994
-------- -------- -----------
Invested Equity:
Communications Systems Division $194,663 $199,506 $ 216,943
Wideband Systems Division and
Products Group $287,803
Interest Rate 7.20% 7.40% 7.23%
Income Taxes
The Businesses are included in the consolidated Federal income tax return
and certain combined and separate state and local income tax returns of Lockheed
Martin. However, for purposes of these financial statements, the provision for
income taxes is computed as if the Businesses were a separate taxpayer;
accordingly, the provision for income taxes is based upon reported combined
income before income taxes. Income taxes, current and deferred, are considered
to have been paid or charged to Lockheed Martin and are recognized through the
invested equity account with Lockheed Martin. The principal components of the
deferred taxes are contract accounting methods, property, plant and equipment,
goodwill amortization and timing of accruals.
Statement of Cash Flows
The Businesses participate in Lockheed Martin's cash management system,
under which all cash is received and payments are made by Lockheed Martin. All
transactions between the Businesses and Lockheed Martin have been accounted for
as settled in cash at the time such transactions were recorded by the
Businesses.
10
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS--(continued)
(Dollars in thousands)
4. Contracts in Process
Billings and accumulated costs and profits on contracts, principally with
the U.S. Government, comprise the following:
December 31,
------------------------------
1996 1995
---- ----
Billed contract receivables $ 40,299 $10,237
Other billed receivables, principally
commercial 28,401 -
Unbilled contract receivables 91,053 23,643
Inventoried costs 61,380 10,830
-------- -------
221,133 44,710
Less, unliquidated progress payments (35,813) (2,253)
-------- -------
$185,320 $42,457
======== =======
The U.S. Government has title to, or a security interest in, inventories
to which program payments are applied. Unbilled contract receivables represent
accumulated costs and profits earned but not yet billed to customers at
year-end. The Businesses believe that substantially all such amounts will be
billed and collected within one year.
The following data has been used in the determination of cost of sales:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
General and administrative costs included in inventoried costs $14,700 $1,156 $ 193
General and administrative costs charged to inventory $25,400 $3,967 $3,640
Independent research and development and bid and proposal costs
charged to inventory $35,300 $2,558 $2,134
</TABLE>
5. Property, Plant and Equipment
December 31,
------------------------------
1996 1995
---- ----
Land $ 9,200
Buildings and Improvements 27,000
Machinery, equipment, furniture and fixtures 73,137 $29,216
Leasehold improvements 7,229 2,441
-------- -------
$116,566 $31,657
======== =======
Depreciation and amortization expense in 1996, 1995 and 1994 was $14,824,
$5,492, and $5,381, respectively.
11
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS-(continued)
(Dollars in thousands)
6. Income Taxes
The provision for income taxes was calculated by applying statutory tax
rates to the reported pretax income after considering items that do not enter
into the determination of taxable income and tax credits reflected in the
consolidated provision of Lockheed Martin, which are related to the Businesses.
For the years ended December 31, 1996, 1995 and 1994, it is estimated that the
provision for deferred taxes represent ($2,143), $3,994 and $1,252,
respectively. Substantially all the income of the Businesses are from domestic
operations.
The effective income tax rate differs from the statutory Federal income
tax rate for the following reasons:
1996 1995 1994
---- ---- ----
Statutory Federal income tax rate 35% 34% 34%
Amortization of cost in excess of net assets acquired 2 529 31
Research and development and other tax credits (2)
State and local income taxes, net of Federal
income tax benefits and state and local income tax credits 6 101 12
Foreign sales corporation tax benefit (1)
Other, net 17 1
--- --- ---
Effective income tax rates 40% 681% 78%
=== === ===
The difference between the statutory Federal income tax rate and the
effective income tax rate in 1995 and 1994 is primarily due to the amortization
of cost in excess of net assets acquired which is not deductible for income tax
purposes.
7. Sales to Principal Customers
The Businesses operate primarily in one industry segment, electronic
components and systems. Sales to principal customers are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
U.S. Government Agencies $425,033 $161,617 $216,034
Foreign (principally foreign government) 33,475 4,945 1,623
Other (principally U.S. Government agencies) 84,573 219 1,138
-------- -------- --------
$543,081 $166,781 $218,845
======== ======== ========
</TABLE>
8. Commitments and Contingencies
The Businesses lease certain facilities and equipment under agreements
expiring at various dates through 2011. At December 31, 1996, future minimum
payments for noncancellable operating leases with initial or remaining terms in
excess of one year are $11,400 for each of the years 1992 through 2001, and
$12,300 in total thereafter.
Leases covering major items of real estate and equipment contain renewal
and or purchase options which may be exercised by the Businesses. Rent expense,
net of sublease income from other Lockheed Martin entities, was $8,495, $4,772,
and $5,597 in 1996, 1995 and 1994, respectively.
12
<PAGE>
LOCKHEED MARTIN PREDECESSOR BUSINESSES
NOTES TO COMBINED FINANCIAL STATEMENTS-(continued)
(Dollars in thousands)
Management is continually assessing the Businesses' obligations with
respect to applicable environmental protection laws. While it is difficult to
determine the timing and ultimate cost to be incurred by the Businesses in order
to comply with these laws, based upon available internal and external
assessments, with respect to those environmental loss contingencies of which
management of the Businesses is aware, the Businesses believe that even without
considering potential insurance recoveries, if any, there are no environmental
loss contingencies that, individually or in the aggregate, would be material to
the Businesses' results of operations. The Businesses accrue for these
contingencies when it is probable that a liability has been incurred and the
amount of the loss can be reasonably estimated.
The Businesses are engaged in providing products and services under
contracts with the U.S. Government and to a lesser degree, under foreign
government contracts, some of which are funded by the U.S. Government. All such
contracts are subject to extensive legal and regulatory requirements, and, from
time to time, agencies of the U.S. Government investigate whether such contracts
were and are being conducted in accordance with these requirements. Under
government procurement regulations, an indictment of the Businesses by a federal
grand jury could result in the Businesses being suspended for a period of time
from eligibility for awards of new government contracts. A conviction could
result in debarment from contracting with the federal government for a specified
term.
The Businesses are periodically subject to litigation, claims or
assessments and various contingent liabilities (including environmental matters)
incidental to its business. With respect to those investigative actions, items
of litigation, claims or assessments of which they are aware, management of the
Businesses is of the opinion that the probability is remote that, after taking
into account certain provisions that have been made with respect to these
matters, the ultimate resolution of any such investigative actions, terms of
litigation, claims or assessments will have a material adverse effect on the
financial position of results of the Businesses.
13
<PAGE>
Attachment II
<PAGE>
L-3 Communications Holdings, Inc. Acquired-Entities
Combined Statement of Net Tangible Assets
December 31, 1996
With Report of Independent Auditors
<PAGE>
L-3 Communications Holdings, Inc. Acquired-Entities
Combined Statement of Net Tangible Assets
December 31, 1996
Contents
Report of Independent Auditors.............................................1
Combined Statement of Net Tangible Assets..................................2
Notes to Combined Statement of Net Tangible Assets......................3-12
<PAGE>
[LETTERHEAD OF ERNST & YOUNG LLP]
Report of Independent Auditors
Board of Directors
Lockheed Martin Corporation
We have audited the accompanying combined statement of net tangible assets of
the L-3 Communications Holdings, Inc. Acquired-Entities (as defined in Note 1)
as of December 31, 1996. This combined statement of net tangible assets is the
responsibility of Lockheed Martin Corporation's and the L-3 Communications
Holdings, Inc. Acquired-Entities' management. Our responsibility is to express
an opinion on the combined statement of net tangible assets based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined statement of net tangible assets is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined statement of net tangible
assets. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
combined statement of net tangible assets presentation. We believe that our
audit provides a reasonable basis for our opinion.
As described in Note 1, the accompanying combined statement of net tangible
assets as of December 31, 1996 has been prepared for the purpose of complying
with, and on the basis of, accounting practices specified in the Transaction
Agreement (as defined in Note 1). The combined statement of net tangible assets
is not intended to be a presentation in conformity with generally accepted
accounting principles, nor is the statement intended to be a compete
presentation of the L-3 Communications Holdings, Inc. Acquired-Entities'
combined assets, liabilities and net tangible assets.
In our opinion, the combined statement of net tangible assets referred to above
presents fairly, in all material respects, the net tangible assets of the L-3
Communications Holdings, Inc. Acquired-Entities at December 31, 1996, on the
basis of accounting described in Notes 1 and 2. The accompanying combined
statement of net tangible assets has been prepared assuming that the L-3
Communications Holdings, Inc. Acquired-Entities will continue as a going
concern.
This report is intended solely for the information and use of the parties
associated with the Transaction Agreement and should not be used for any other
purpose.
/s/ Ernst & Young LLP
February 28, 1997, except for Note 1,
as to which the date is March 31, 1997
1
Ernst & Young LLP is a member of Ernst & Young International, Ltd.
<PAGE>
L-3 Communications Holdings, Inc. Acquired-Entities
Combined Statement of Net Tangible Assets
December 31,
1996
--------------
(In thousands)
Assets
Receivables, net $ 69,884
Intercompany accounts receivables, net 10,724
Contracts in process 131,038
Property, plant and equipment, net 95,583
FSI Semiconductor Business net tangible assets 4,800
LMEAP assets 900
Other assets 16,568
--------
329,497
Liabilities
Accounts payable 34,194
Salaries, benefits and payroll taxes 23,113
Other liabilities 35,272
--------
Net tangible assets before Corporate pushdowns 236,918
Corporate pushdowns, net 600
--------
Net tangible assets $237,518
========
See accompanying notes.
2
<PAGE>
L-3 Communications Holdings, Inc. Acquired-Entities
Combined Statement of Net Tangible Assets
December 31, 1996
1. Description of Business and Basis of Presentation
Description of Business
On January 31, 1997, Lockheed Martin Corporation ("Lockheed Martin"), Lehman
Brothers Holdings Inc. ("Lehman Holdings"), Frank C. Lanza and Rober V. LaPenta
("Individual Purchasers") entered into a Memorandum of Understanding regarding
the transfer of the Products Group, Tactical Communication Systems ("Wideband
Systems") and Communications Systems ("Camden") businesses of Lockheed Martin to
a newly-formed corporation, L-3 Communications Holdings, Inc. ("L-3
Communications"), to be jointly owned by Lockheed Martin, Lehman Holdings and
its affiliates, and the Individual Purchasers.
The L-3 Communications Acquired-Entities are engaged in the design, engineering,
manufacturing, integration, operation and support of a broad array of products
and services for the electronics, command and control and communications
industries. The L-3 Communications Acquired-Entities serve customers in both
domestic and international defense, civilian, and commercial markets.
The accompanying combined statement of net tangible assets of the L-3
Communications Acquired-Entities include the accounts of the following business
units, which are combined for financial reporting purposes:
o Wideband Systems headquartered in Salt Lake City, Utah,
o Communications Systems headquartered in Camden, New Jersey,
o Display Systems headquartered in Atlanta, Georgia,
o Advanced Recorders headquartered in Sarasota, Florida,
o Conic headquartered in San Diego, California,
o Telemetry & Instrumentation headquartered in San Diego, California,
o Microcom headquartered in Warminster, Pennsylvania,
o Randtron headquartered in Menlo Park, California,
o Microwave--Narda East headquartered in Hauppauge, New York,
o Microwave--Narda West headquartered in Rancho Cordova, California,
o Hycor headquartered in Woburn, Massachusetts,
o FSI Semiconductor Business headquartered in Lowell, Massachusetts, and
o Airport Explosive Detection Business ("EDS") headquartered in Pinellas,
Florida.
3
<PAGE>
L-3 Communications Holdings, Inc. Acquired-Entities
Notes to Combined Statement of Net Tangible Assets (continued)
1. Description of Business and Basis of Presentation (continued)
Basis of Presentation
The accompanying combined statement of net tangible assets as of December 31,
1996 has been prepared for the purpose of complying with, and on the basis of
accounting practices specified in, the Transaction Agreement and related
attachments by and among L-3 Communications, Lockheed Martin, Lehman Brothers
Capital Partners III, L.P. ("Lehman"), and the Individual Purchasers dated March
28, 1997 ("Transaction Agreement"). This combined statement is not intended to
be a presentation in conformity with generally accepted accounting principles,
nor is this combined statement intended to be a complete presentation of the L-3
Communications Acquired-Entities' combined assets, liabilities and net tangible
assets.
The following intangible amounts are excluded from the accompanying combined
statement of net tangible assets, (1) goodwill, and (2) intangible assets
related to contracts and programs acquired. All other recorded assets are
considered tangible for purposes of this financial statement.
The accompanying combined statement of net tangible assets has been prepared
after giving effect to the conditions or adjustments specifically referenced in
the Transaction Agreement. Certain items were agreed to by and among Lockheed
Martin, Lehman, the Individual Purchasers and L-3 Communications including, but
not limited to:
The combined statement of net tangible assets specifically excludes the
following assets and liabilities: cash and cash equivalents; accounts or
notes receivable or payable from or to Lockheed Martin except for
receivables and payables relating to materials sold or services rendered;
all obligations and liabilities of Lockheed Martin not arising out of the
conduct of the business of the L-3 Communications Acquired-Entities; any
reserve, liability or asset resulting from pension benefits, retirement
benefits or other post-employment benefits; all accrued liabilities or
benefits for current or deferred federal or state income taxes.
All components of equity, including corporate intercompany advances, have
been excluded from the accompanying combined statement of net tangible
assets.
4
<PAGE>
L-3 Communications Holdings, Inc. Acquired-Entities
Notes to Combined Statement of Net Tangible Assets (continued)
1. Description of Business and Basis of Presentation (continued)
Basis of Presentation (continued)
Pursuant to the Transaction Agreement, any reserves or liabilities for the
following matters shall not be considered in the combined statement of net
tangible assets:
o Camden's CAS 410 Issue,
o Management Incentive Compensation Plan (NYHQ), and
o Advanced Recorders' Sarasota Asset Step Up Issue.
The following items specifically were assigned net tangible asset
(liability) values in the Transaction Agreement and are included in the
combined statement of net tangible assets before Corporate pushdowns at
the stated amount (in thousands):
FSI (Lowell, MA) Net Tangible Assets $4,800
LMEAP Assets 900
Microcom Earn Out 0
EDS Net Assets 0
EDS M&DS Subcontract Reserve 0
------
$5,700
======
The following net tangible asset increases (decreases) to the historical books
and records of the L-3 Communications Acquired-Entities were specifically agreed
upon and valued in the Transaction Agreement and are included in the combined
statement of net tangible assets before Corporate pushdowns (in thousands):
<TABLE>
<S> <C>
All L-3 Communications Acquired-Entities' Duplicate Pension/Benefit Liabilities $ 6,000
Display Systems' Alpharetta building 4,000
Conic's LMEAP Reserve Reversal 500
Advanced Recorders' ADC Settlement (300)
Wideband Systems' TSS Options (1,000)
Telemetry & Instrumentation G&A Costs in Inventory (1,000)
Camden's Aegis Power Supply Contract and Option (1,000)
All L-3 Communications Acquired-Entities' Cash/Negative Cash (1,600)
-------
$5,600
=======
</TABLE>
5
<PAGE>
L-3 Communications Holdings, Inc. Acquired-Entities
Notes to Combined Statement of Net Tangible Assets (continued)
1. Description of Business and Basis of Presentation (continued)
Basis of Presentation (continued)
The following pushdown assets (liabilities) were specifically agreed upon
and valued in the Transaction Agreement and are included in the combined
statement of net tangible assets as Corporate pushdowns, net (in
thousands):
Incurred but not reported Reserve $(4,100)
Environmental Reserve (3,200)
Workers Compensation (1,200)
Deferred Management Incentive Compensation Plan (300)
Vacation Accrual (300)
NY Overlays 1,800
NY Leasehold Improvements 3,500
RFA and RAA 4,400
-------
$ 600
=======
Net tangible asset changes from the historical books and records of the
L-3 Communications Acquired-Entities for the following matters were
specifically prohibited in the Transaction Agreement and therefore the
historical amounts are carried forward:
o All L-3 Communications Acquired-Entities' Building Writedown or Writeup,
o Advanced Recorders' Universal Litigation,
o Advanced Recorders' G&A in Inventory,
o Advanced Recorders' Reversal of Capitalized Certification Costs,
o Advanced Recorders' CPS-100 Audit Labor Mischarging Allegations,
o Advanced Recorders' Instrumentation Recorder Product Line,
o Camden's Unreasonable Indirect Labor Allegations,
o Camden's Old Receivables,
o Camden's DCAA Rate Close-Out Issues,
o Camden's NOAA Contract Defective Pricing Allegations,
o Camden's Reversal of Division Reserve,
o Camden's Truck Depot Severance Reserve,
o Wideband Systems' Fixed Wiereless Loop License Agreement, Deferred Cost,
and Reserve,
o Wideband Systems' Severance, and
o Conic's Pendleton Litigation Reserve.
The above items are not intended to completely represent the terms and
conditions of the Transaction Agreement.
6
<PAGE>
L-3 Communications Holdings, Inc. Acquired-Entities
Notes to Combined Statement of Net Tangible Assets (continued)
2. Summary of Significant Accounting Policies
Assumption Regarding Going Concern
The accompanying combined statement of net tangible assets has been prepared
assuming that the L-3 Communications Acquired-Entities will continue as a going
concern.
Use of Estimates
The preparation of the combined statement of net tangible assets requires
management to make estimates and assumptions that affect reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
December 31, 1996. The most significant of these estimates and assumptions
relate to contract estimates of total costs at completion and revenues in the
earnings recognition process, and commitments and contingencies. Actual results
could differ from those estimates.
As discussed in Note 1, the Transaction Agreement establishes the amount
reported for certain assets and liabilities. These amounts have been agreed to
by and among Lockheed Martin, Lehman, the Individual Purchasers and L-3
Communications and are not necessarily management's estimate of their value in
accordance with generally accepted accounting principles.
Revenue Recognition
The following L-3 Communications Acquired-Entities generally record revenues and
anticipated profits under long-term contracts on a percentage of completion
cost-to-cost basis of accounting where revenues and profits are recorded based
on the ration of costs incurred to estimated total costs at completion:
o Wideband Systems,
o Communications Systems,
o Display Systems,
o Microcom, and
o Hycor.
7
<PAGE>
L-3 Communications Holdings, Inc. Acquired-Entities
Notes to Combined Statement of Net Tangible Assets (continued)
2. Summary of Significant Accounting Polices (continued)
Revenue Recognition (continued)
The following L-3 Communications Acquired-Entities generally record revenues and
profits on products and services essentially under commercial terms and
conditions as units are shipped or specified tasks are completed; or on a
percentage of completion basis, using units of delivery as to measurement basis
for effort expended:
o Advanced Recorders,
o Conic,
o Telemetry & Instrumentation
o Randtron,
o Microwave-Narda East, end
o Microwave-Narda West.
For all L-3 Communications Acquired-Entities, revenues under
cost-reimbursement-type contracts are recorded as costs are incurred. Applicable
estimated profits are included in earnings in the proportion that incurred costs
bear to total estimated costs.
Revenues and earnings on contracts are based, in part, on estimates. These
estimates are revised periodically and adjustments to revenues and earnings
resulting from such revisions are recorded on a cumulative basis in the period
of revision. Incentives or penalties and awards applicable to performance on
contracts are considered in estimating revenues and profit rates and are
recorded when there is sufficient information to assess anticipated contract
performance. Amounts representing contract change orders, claims or other items
are included in revenues only when they can be reliably estimated and
realization is probable.
Any anticipated losses on contracts or programs are charged to earnings when
identified. Such losses encompass all costs, including general and
administrative expenses for L-3 Communications Acquired-Entities that include
general and administrative expenses in inventory, allocable to the contracts.
The L-3 Communications Acquired-Entities that expense general and administrative
expenses as incurred exclude such costs in determining anticipated losses.
Revenue arising from change orders or the claims process is not recognized
either as income or as an offset against a potential loss until it can be
reliably estimated and its realization is probable.
8
<PAGE>
L-3 Communications Holdings, Inc. Acquired-Entities
Notes to Combined Statement of Net Tangible Assets (continued)
2. Summary of Significant Accounting Polices (continued)
General and Administrative Expenses
The following L-3 Communications Acquired-Entities allocate general and
administrative expenses to contracts in process and therefor are included in
operating costs and expenses at the time of revenue recognition:
o Wideband Systems,
o Communications Systems,
o Display Systems,
o Conic, and
o Randtron.
The following L-3 Communications Acquired-Entities charge general and
administrative expenses to operations as incurred:
o Advanced Recorders,
o Telemetry & Instrumentation
o Microcom,
o Hycor,
o Microwave-Narda East, end
o Microwave-Narda West.
Lockheed Martin's corporate general and administrative costs attributed to the
L-3 Communications Acquired-Entities are charged to the individual entity in
accordance with allocation methodologies determined by Lockheed Martin and
applied to Lockheed Martin's various business units. Such expenses could vary
significantly if the L-3 Communications Acquired-Entities are operating as an
unaffiliated entity.
Research and Development Costs
Customer-sponsored research and development costs are accounted for as direct
costs. Reimbursable company-sponsored research and development costs are
accounted for in accordance with the Acquired-Entities' policy for general and
administrative expenses.
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L-3 Communications Holdings, Inc. Acquired-Entities
Notes to Combined Statement of Net Tangible Assets (continued)
2. Summary of Significant Accounting Policies (continued)
Contracts in Process
Contracts in process are stated at the lower of cost or estimated net realizable
value, except for those items specifically addressed in the Transaction
Agreement. Costs on contracts in process represent recoverable costs incurred
for production; allocable operating overhead; and, based on entity policy,
research and development and general and administrative expanses, less amounts
attributed to cost of sales. Pursuant to contract provisions, agencies of the
U.S. Government and other customers have title to, or a security interest in,
certain inventories as a result of progress payments and advances. In accordance
with industry practice, contracts in process contain amounts relating to
contracts with long production cycles, a portion of which may not be realized
within one year.
Property, Plant and Equipment
Property, plant and equipment are stated at historical book value. Depreciation
is provided primarily using the straight-line method over the estimated useful
lives of the related assets. Leasehold improvements are amortized over the
shorter of the lease term or the estimated useful life of the improvement.
Certification Costs
As part of the normal course of doing business, the Advanced Recorders entity is
required to incur certification costs prior to the production of new products.
Advanced Recorders' policy is to capitalize these costs and amortize them on a
straight-line basis over a 10 year period. As of December 31, 1996,
approximately $3.4 million of unamortized certification costs are included in
the combined statement of net tangible assets.
Financial Instruments
At December 31, 1996, the carrying value of the L-3 Communications financial
instruments such as receivables, accounts payable and accrued liabilities
approximate fair vale, based on the short-term maturities of these instruments.
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L-3 Communications Holdings, Inc. Acquired-Entities
Notes to Combined Statement of Net Tangible Assets (continued)
2. Summary of Significant Accounting Policies (continued)
Concentration of Credit Risk
The L-3 Communications Acquired-Entities conduct business with the U.S.
Government and commercial enterprises. Financial instruments which potentially
expose the L-3 Communications Acquired-Entities to concentrations of credit risk
consist primarily of commercial receivables. To minimize this risk, ongoing
credit evaluations of commercial customers' financial condition are performed.
In addition, the L-3 Communications Acquired-Entities maintain allowances for
potential credit losses and such losses, in the aggregate, have not exceeded
management expectations. None of the L-3 Communications Acquired-Entities'
commercial receivables are individually significant.
Intercompany Accounts Receivable, Net
All accounts receivable from and accounts payable to Lockheed Martin entities
are deemed to be valid and realizable from and payable to the appropriate
Lockheed Martin entities.
3. Contracts in Process
Contracts in process reflected in the combined statement of net tangible assets
consist of the following as of December 31, 1996 (in thousands):
Work in process $ 169,667
Progress billing receivable 4,631
Less--Advances and progress payments (43,260)
---------
$ 131,038
=========
Work in process includes finished goods and raw materials held in inventory. In
addition, work in process includes unbilled costs incurred plus estimated
earnings that will be billed to the customer upon the completion of certain
milestones. Revenue which has not yet been billed is included in unbilled
receivables, some of which will not be billed within one year.
Under the contractual arrangements by which progress payments are received, the
U.S. Government asserts that it has a security interest in the contracts process
identified by the related contracts.
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L-3 Communications Holdings, Inc. Acquired-Entities
Notes to Combined Statement of Net Tangible Assets (continued)
4. Property, Plant and Equipment, net
Property, plant and equipment consists of the following as of December 31, 1996
(in thousands):
Land and improvements $ 10,800
Building and improvements 36,666
Machinery, equipment, furniture and fixtures 73,137
--------
120,603
Less--Accumulated depreciation
and amortization (25,020)
--------
$ 95,583
========
5. Income Taxes
The accompanying combined statement of net tangible assets excludes the L-3
Communications Acquired-Entities' assets and liabilities relating to federal and
state income taxes, as discussed in Note 1.
6. Commitments and Contingencies
The L-3 Communications Acquired-Entities are engaged in providing products and
services under contracts with the U.S. Government and, to a lesser degree, under
foreign government contracts, some of which are funded by the U.S. Government.
All such contracts are subject to extensive legal and regulatory requirements,
and, from time to time, agencies of the U.S. Government investigate whether the
L-3 Communications Acquired-Entities were and are being conducted in accordance
with these requirements. Under government regulations, an indictment of an L-3
Communications Acquired-Entity could result in the L3 Communications
Acquired-Entity being suspended for a period of time from eligibility for awards
of new government contracts. A conviction could result in debarment from
contracting with the federal government for a specified term.
The L-3 Communications Acquired-Entities are periodically subject to litigation,
claims or assessments and various contingent liabilities (including
environmental matters) incidental to their business. With respect to those
investigative actions, items of litigation, claims or assessments of which they
are aware, management of the L-3 Communications Acquired-Entities are of the
opinion that, after taking into account certain provisions that have been made
with respect to these matters, pushdowns and matters addressed specifically in
the Transaction Agreement, the probability is remote that the ultimate
resolution of any such investigative actions, items of litigation, claims or
assessments will have a material adverse effect on the combined net tangible
assets of the L-3 Communications Acquired-Entities.
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Attachment III
<PAGE>
ATTACHMENT III
TRANSFER AGREEMENT
This Agreement is made as of the 28th day of March 1997, by and between
Lockheed Martin Corporation, a Maryland corporation ("Lockheed Martin"), and L-3
Communications Holdings, Inc., Delaware corporation ("Newco").
W I T N E S S E T H :
WHEREAS, the parties hereto, together with Lehman Brothers Capital
Partners III, L.P., Frank C. Lanza and Robert V. LaPenta, have entered into a
Transaction Agreement (the "Transaction Agreement"); and
WHEREAS, in connection with the execution of the Transaction Agreement the
parties hereto wish to enter into this Transfer Agreement to effect certain
transactions referred to in the Transaction Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Defined terms used in this Transfer Agreement
shall have the meanings specified in the Transaction Agreement (including all
Exhibits, Schedules and Attachments thereto).
ARTICLE II
TRANSFER OF ASSETS
Section 2.01. Transfer of Assets. Upon the terms and subject to the
conditions set forth in this Transfer Agreement and the Transaction Agreement,
Newco agrees to receive, acquire and accept from Lockheed Martin (and from each
Affiliated Transferor) and Lockheed Martin agrees to transfer, convey, assign
and deliver, or cause to be transferred, conveyed, assigned and delivered, to
Newco effective at 12:01 a.m. (Eastern Standard Time) on the Closing Date, free
and clear of all Liens, other than permitted Liens, the Transferred Assets.
Section 2.02. Assumption of Liabilities. Upon the terms and subject to the
conditions of this Transfer Agreement, Newco agrees,
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effective at 12:01 am. (Eastern Standard Time) on the Closing Date, to assume
the Assumed Liabilities.
Section 2.03. Assignment of Contracts and Rights.
(a) Anything in this Transfer Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Transferred Asset (other than with respect to the Owned Real Property) or any
claim or right or any benefit arising thereunder or resulting therefrom if an
attempted assignment thereof, without the consent of a third party thereto,
would constitute a breach or other contravention thereof, be ineffective with
respect to any party thereto or in any way adversely affect the rights of Newco
or Lockheed Martin (or any Affiliated Transferor) thereunder.
(b) With respect to any Government Contract or any claim, right or
benefit arising thereunder or resulting therefrom, Lockheed Martin and Newco
will use their best efforts to obtain the written consent of the other parties
to such Government Contract for the assignment or novation thereof to Newco or
written confirmation from such parties reasonably satisfactory in form and
substance to Lockheed Martin and Newco that such consent is not required. As
soon as practicable following the date hereof, (i) with respect to each Prime
Government Contract to which Lockheed Martin (or any Affiliated Transferor) is a
party, Lockheed Martin (or the appropriate Affiliated Transferor) shall either
obtain written confirmation reasonably satisfactory in form and substance to
Lockheed Martin and Newco that novation of such Prime Government Contract is not
required or submit to the relevant Responsible Contracting Officer a written
request in compliance with the applicable Federal Acquisition Regulation that
the U.S. Government enter into a Government Contract Novation with Lockheed
Martin and Newco with respect to such Prime Government Contract; and (ii) with
respect to each Government Contract that is not a Prime Government Contract,
Lockheed Martin (or the appropriate Affiliated Transferor) shall submit to the
parties thereto documentation reasonably satisfactory in form and substance to
Lockheed Martin and Newco seeking the written waiver or approval of the other
contracting party or parties thereto to the transfer and assignment of all of
Lockheed Martin (or the applicable Affiliated Transferor) claims, rights,
benefits and obligations thereunder to Newco at the Closing. In this regard,
Lockheed Martin (or the applicable Affiliated Transferor) shall take all actions
required under the applicable Federal Acquisition Regulation including, without
limitation, the guarantee by Lockheed Martin of Newco's obligations under any
novated Government Contracts, as may be required by Federal Acquisition
Regulation Section 42.104(d). Except as provided in this immediately preceding
sentence, in no event shall Lockheed Martin or Newco or any of their respective
Affiliates be obligated to pay any money to the U.S. Government or any other
Person or to offer or grant other financial or other accommodations to the U.S.
Government or any other Person in
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connection with obtaining any novation of a Government Contract or any such
consent or waiver.
(c) With respect to any Contract that is not a Government Contract
or any claim, right or benefit arising thereunder or resulting therefrom,
promptly after the date hereof, to the extent reasonably requested by Newco,
Lockheed Martin and Newco will use their best efforts to obtain the written
consent of the other parties to any such Contract for the assignment thereof to
Newco, or written confirmation from such parties reasonably satisfactory in form
and substance to Lockheed Martin and Newco confirming that such consent is not
required.
(d) If such consent, waiver or confirmation is not obtained with
respect to any such Government Contract or other Contract, as among the parties
hereto, Newco will obtain through a subcontracting arrangement or otherwise, and
subject to Applicable Law and the terms of such Government Contract or Contract,
the claims, rights and benefits of Lockheed Martin (or the applicable Affiliated
Transferor) and, to the extent possible, assume the. obligations under such
Contracts and Government Contracts in accordance with this Transfer Agreement,
and Lockheed Martin (or the applicable Affiliated Transferor) will enforce at
the request of and for the benefit of Newco, with Newco, to the extent set forth
in the Transaction Agreement, assuming Lockheed Martin's (or the applicable
Affiliated Transferor's) obligations, any and all claims, rights and benefits of
Lockheed Martin (or the applicable Affiliated Transferor) against a third party
thereto arising from any such Government Contract or Contract (including the
right to elect to terminate such Government Contract or Contract in accordance
with the terms thereof upon the request of Newco). Lockheed Martin (or the
applicable Affiliated Transferor) will promptly pay to Newco when received all
monies received by Lockheed Martin (or the applicable Affiliated Transferor)
under any Transferred Asset or any claim, right or benefit arising thereunder
not transferred pursuant to this Section 2.03.
Section 2.04. Exchange Consideration; Closing.
(a) The Exchange Consideration shall be as set forth in Section 2.02
of the Transaction Agreement, and the closing of the Transfer of the Transferred
Assets and the assumption of the Assumed Liabilities hereunder shall take place
as set forth in the Transaction Agreement.
(b) At the Closing, Lockheed Martin and Newco shall enter into an
Exchange Agreement substantially in the form of Attachment A, and Lockheed
Martin (or the applicable Affiliated Transferor) shall execute, acknowledge (if
appropriate) and deliver to Newco with respect to the Real Property, assignments
of all of Lockheed Martin's and the Affiliated Transferors' rights and interests
in the Leased Real Property and deeds with respect to all of Lockheed Martin's
and the Affiliated Transferors' rights and interests in the Owned Real Property
in recordable form sufficient
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to convey to Newco all of Lockheed Martin's and the Affiliated Transferors'
rights and interests in the Owned Real Property, and bills of sale,
endorsements, consents, assignments and other good and sufficient instruments of
conveyance and assignment as the Purchasers and their respective counsel may
reasonably request (but including, without limitation, affidavits of non-foreign
status as required by Section 1445(b)(2) of the Foreign Investment and Real
Property Tax Act, as amended and such other documents, affidavits and
instruments to facilitate and consummate the transfer of the Owned Real Property
to Newco and Newco's obtaining title insurance of the Owned Real Property to
Newco and Newco's obtaining title insurance as Purchasers may reasonably
request) so as to vest in Newco all of Lockheed Martin's (or the applicable
Affiliated Transferor's) right, title and interest in, to and under the
Transferred Assets.
ARTICLE III
EXCLUDED LIABILITIES
Section 3.01. Satisfaction of Excluded Liabilities. Lockheed Martin agrees, on
behalf of itself and its Affiliates, to pay, discharge and satisfy the Excluded
Liabilities.
ARTICLE IV
CONDITIONS TO CLOSING
Section 4.01. Conditions to the Obligations of Each Party. The obligations of
Lockheed Martin and Newco to consummate the closing of the Transfer Agreement
are as set forth in the Transaction Agreement.
ARTICLE V
SURVIVAL; INDEMNIFICATION
Section 5.01. Survival Indemnification. The parties agree as to matters of
survival and indemnification as set forth in Article XIII of the Transaction
Agreement.
ARTICLE VI
TERMINATION
Section 6.01. Grounds for Termination. This Agreement may be terminated as set
forth in Article XIV of the Transaction Agreement.
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<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.01. Miscellaneous. The provisions of Article XV of the Transaction
Agreement are incorporated hereby by reference.
IN WITNESS WHEREOF the parties hereto here caused this Transfer Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
WITNESS: LOCKHEED MARTIN CORPORATION
By:
- ----------------------------------- -----------------------------------
Name:
Title:
L-3 COMMUNICATIONS HOLDINGS, INC.
By:
- ----------------------------------- -----------------------------------
Name:
Title:
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<PAGE>
Attachment A
<PAGE>
Attachment A to Transfer Agreement
FORM OF EXCHANGE AGREEMENT
This Exchange Agreement is made as of the _______ day of __________ 1997,
by and between Lockheed Martin Corporation, a Maryland corporation ("Lockheed
Martin"), and L-3 Communications Holdings, Inc., a Delaware corporation
("Newco").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Transfer Agreement dated March 28, 1997,
by and between the undersigned (the "Transfer Agreement"), Lockheed Martin (or
the applicable Affiliated Transferor) has agreed to transfer to Newco, Lockheed
Martin's (and the Affiliated Transferors') interests in the Transferred Assets
(as defined in the Transfer Agreement); and
WHEREAS, pursuant to the Transfer Agreement, Newco has agreed, among other
things, to assume certain liabilities of Lockheed Martin and its Affiliates with
respect to the Transferred Assets and the Business;
NOW, THEREFORE, in consideration of the transfer of the Transferred
Assets, the assumption of such liabilities, the payment of the Exchange
Consideration and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lockheed Martin and Newco agree as
follows:
1. (a) Effective as of 12:01 a.m. (Eastern Standard Time) on the date
hereof, Lockheed Martin and the Affiliated Transferors, on and subject to all of
the terms and conditions of the Transaction Agreement, do hereby transfer,
assign and deliver to Newco all of the right, title and interest of such Persons
in, to and under the Transferred Assets.
(b) Effective as of 12:01 a.m. (Eastern Standard Time) on the date
hereof, Newco, on and subject to all of the terms and conditions of the
Transaction Agreement, does hereby accept all of the right, title and interest
of Lockheed Martin and the Affiliated Transferors in, to and under, and, on and
subject to all of the terms and conditions of the Transaction Agreement, accepts
all risk of loss with respect to, all of the Transferred Assets, and Newco, on
and subject to all of the terms and conditions of the Transaction Agreement,
assumes and agrees to pay, perform and discharge promptly and in full when due
all of the Assumed Liabilities.
<PAGE>
(c) The parties hereto agree that Newco does not hereby and shall
not otherwise receive or assume, as the case may be, any of the Excluded Assets
or any of the Excluded Liabilities.
2. This Agreement shall be construed in accordance with and governed by
the law of the State of New York without references to choice or conflict of law
principles.
3. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
4. All capitalized terms not otherwise defined herein shall have the
meanings given to them in the Transfer Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WITNESS: LOCKHEED MARTIN CORPORATION
By:
- ----------------------------------- -----------------------------------
Name:
Title:
L-3 COMMUNICATIONS HOLDINGS, INC.
By:
- ----------------------------------- -----------------------------------
Name:
Title:
- 2 -
<PAGE>
Attachment IV
<PAGE>
See Amendment No. 2 to the Transaction Agreement
<PAGE>
Attachment V
<PAGE>
See Amendment No. 2 to the Transaction Agreement
<PAGE>
Attachment VI
<PAGE>
Attachment VI
ADDITIONAL MATTERS RELATING TO THE CALCULATION OF
NET TANGIBLE ASSETS
The Net Tangible Assets on the December Statement and the determination of
the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset
Amount shall be in accordance with the terms and conditions of the Agreement and
in accordance with GAAP, except as provided in the December Statement and this
Attachment VI. The Proposed Final Net Tangible Asset Amount and the Final Net
Tangible Asset Amount will be determined on a basis consistent with the manner
in which the December Statement was prepared as disclosed in the notes to the
December Statement or as otherwise set forth in this Attachment VI. Therefore,
the Net Tangible Assets on the December Statement and the determination of the
Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount
may differ from the closing balances of Lockheed Martin and the Business Units
on December 31, 1996 and at the close of business on the Effective Date or the
Closing Date, and the opening balances of Newco on the Closing Date for tax and
financial reporting purposes.
Except as otherwise set forth in this Attachment VI, all principles,
classifications, methods, practices, assumptions and policies used in the
preparation of the December Statement (regardless of whether such principles,
classifications, methods, practices, assumptions and policies are in accordance
with GAAP) will be used or applied in the determination of the Proposed Final
Net Tangible Asset Amount and the Final Net Tangible Asset Amount. Accounting
pronouncements (as defined in Statement of Auditing Standards No. 69) not used
in the preparation of the December Statement will not be used in the
determination of the Proposed Final Net Tangible Asset Amount or the Final Net
Tangible Asset Amount. Except as otherwise set forth in this Attachment VI, the
estimates used in the determination of the Proposed Final Net Tangible Asset
Amount and the Final Net Tangible Asset Amount will be made on a basis
consistent with the principles, policies, methods, practices, factors and
underlying data used in making estimates in the preparation of the December
Statement.
Following are additional agreements and clarifications with respect to the
determination of the Net Tangible Assets on the December Statement and the
determination of the Proposed Final Net Tangible Asset Amount and the Final Net
Tangible Asset Amount:
Adjustment of Reserves and Valuation Accounts. In the determination of the
Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset
Amount, except as otherwise set forth in this Attachment VI, the amount of any
reserves or valuation accounts shall be determined by applying methods,
practices, assumptions, policies, factors and underlying data consistent with
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those used in determining the reserves or valuation accounts included in the
December Statement, and there shall be no changes made to any reserves or
valuation accounts (including, without limitation, contract reserves, purchase
accounting reserves, allowances for bad debts, inventory reserves of any kind,
warranty reserves and other reserves), except to the extent that such changes
are required by changes in facts and events occurring after December 31, 1996
and before the Effective Date, it being further understood that there shall be
no increase in the Proposed Final Net Tangible Asset Amount or the Final Net
Tangible Asset Amount as a result of any reversal or other usage of reserves
unless such reversal or usage arises out of facts or events that occur after
December 31, 1996; provided, however, that notwithstanding the foregoing any
reversal or other usage of the Advanced Recorders IR & VLDS Inventory Reserve of
$1,100,000 million, the Advanced Recorders IR & VLDS Capitalized G&A reserve of
$800,000 or the Advanced Recorders IR & VLDS fixed asset reserve of $1,030,000
in connection with any sale of all or a portion of such business to a third
party prior to the Effective Date will result in a corresponding increase in the
Proposed Final Net Tangible Asset Amount or the Final Net Tangible Asset Amount.
Inventory. For purposes of determining the Proposed Final Net Tangible
Asset Amount and the Final Net Tangible Asset Amount, the parties have agreed
contractually that an inventory observation, by the independent auditors as of
the Effective Date, will not be conducted. Furthermore, in the determination of
the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset
Amount, the raw materials and finished goods inventory relating to the Business
shall be recorded at an amount equal to their book value as included in the
December Statement, except to the extent that changes are required by normal
business activities (purchases, transfers to/from work in process or cost of
sales relief resulting from shipment of products) occurring after December 31,
1996 but before the close of business on the Effective Date, in each case
calculated in accordance with the policies and practices reflected in the
December Statement, it being understood, however, that there shall be no changes
relating to the valuation, existence, or lack of existence of raw materials and
finished goods inventory.
Reserves for Environmental Liabilities. The amount of the reserves for
Environmental Liabilities included in the December Statement shall be fixed at
$3.2 million and the amount used in the determination of the Proposed Final Net
Tangible Asset Amount and the Final Net Tangible Asset Amount shall be fixed at
$6.0 million.
Exclusion of Certain Reserves and Liabilities. There shall not be included
in the Net Tangible Assets in the December Statement or in the determination of
the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset
Amount any reserve or any liability to the extent such reserve or liability (i)
arises out of, results from or relates to an Excluded Asset or Excluded
Liability, (ii) arises out of, results from or relates to any action taken by
Newco or any of the Purchasers, including but
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not limited to any actions taken in connection with the Contemplated
Transactions, (iii) arises out of, results from or relates to any actions taken
or contemplated to be taken by Newco, Lockheed Martin, any of the Purchasers or
any of their Affiliates, contemporaneously with or subsequent to the Closing, or
(iv) is indemnified against by Lockheed Martin.
Estimates at Completion ("EAC"). In the determination of the Proposed
Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount, there
shall be no changes made to the EACs from those EACs used in the preparation of
the December Statement, except to the extent that such changes are required by
changes in facts and events occurring after December 31, 1996 and before the
Effective Date.
Loss Contracts. In the determination of the Proposed Final Net Tangible
Asset Amount and the Final Net Tangible Asset Amount, there shall be no changes
made to the provisions for loss contracts from those used in the preparation of
the December Statement, except to the extent that such changes are required by
changes in facts and events occurring after December 31, 1996 and before the
Effective Date.
Due Diligence Costs; Organization of Newco. There shall be no amount
accrued or reserved for in connection with the determination of the Proposed
Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount for any
obligations or liabilities incurred in connection with Newco's, Lockheed
Martin's or the Purchaser's due diligence efforts in connection with the
Contemplated Transactions, including without limitation any fees and expenses of
the counsel, independent accountants or other agents, advisors or consultants of
Newco, Lockheed Martin or any of the Purchasers, and there shall not be
considered in the determination of the Proposed Final Net Tangible Asset Amount
and the Final Net Tangible Asset Amount any fees, expenses, reserves (or
valuation accounts) or liabilities associated with the incorporation,
organization, formation, capitalization or financing of Newco or with any
restructuring of the Business or any of the Business Units contemplated or
implemented by Newco.
Certain Expenses. There shall not be considered in the determination of
the Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset
Amount any reserve or any liability to the extent such reserve or liability
relates to fees or expenses that, in accordance with the Transaction Documents,
are to be shared by Lockheed Martin and Newco including, without limitation, the
fees and expenses contemplated by Section 2.03(f) and Section 15.03 of the
Agreement, or in accordance with Section 15.03 of the Agreement are to be paid
by Newco if the Closing occurs.
Pensions, OPEBs, etc. There shall not be considered in the determination
of the Net Tangible Assets on the December Statement or the determination of the
Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset Amount
any reserve,
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liability or asset to the extent such reserve, liability or asset arises out of,
results from or relates to pension benefits, retirement benefits or other
post-employment benefits.
Going Concern. For purposes of determining the Net Tangible Assets in the
December Statement and determining the Proposed Final Net Tangible Asset Amount
and the Final Net Tangible Asset Amount, Newco and the Business Units, and the
businesses conducted and to be conducted by each of them, will be considered a
"going concern" and all of the Transferred Assets shall be deemed to be actively
used in the Business and not held for sale or disposal.
Miscellaneous. The matters referenced below shall be based on the
following principles:
(i) the Net Tangible Assets in the December Statement and the
determination of the Proposed Final Net Tangible Asset Amount and the
Final Net Tangible Asset Amount shall not include a reserve relating to
the Camden CAS 410 Issue;
(ii) there shall not be considered in the Net Tangible Assets in the
December Statement and the determination of the Proposed Final Net
Tangible Asset Amount and the Final Net Tangible Asset Amount any reserve
or liability relating to the Sarasota Asset Step-Up Issue;
(iii) there shall not be considered in the Net Tangible Assets in
the December Statement any reserve or liability relating to the Management
Incentive Compensation Plan with respect to the personnel at the location
covered by the NY Leases;
(iv) the Net Tangible Assets in the December Statement and the
Proposed Final Net Tangible Asset Amount and the Final Net Tangible Asset
Amount shall include assets relating to the LMEAP Assembly Plant in
Goodyear, Arizona which assets shall be recorded at $900,000 prior to the
LMEAP reserve recorded by the Conic Business Unit, which reserve shall be
retained by Lockheed Martin;
(v) in the determination of the Proposed Final Net Tangible Asset
Amount and the Final Net Tangible Asset Amount, the property, plant and
equipment relating to the Business shall be recorded at an amount equal to
their book value as included in the December Statement, except to the
extent that changes are required by changes in facts and events occurring
after December 31, 1996 (it being understood, however, that there shall be
no such changes relating to the valuation of the property, plant or
equipment), adjusted for additions or disposals and depreciation and
amortization from December 31, 1996 to the close of business on the
Effective Date, in each case calculated in accordance with the policies
and practices reflected in the December Statement;
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(vi) the Transferred Assets and Assumed Liabilities relating to the
Airport Explosive Detection Business shall be included in the Net Tangible
Assets in the December Statement at $0 and shall be included in the
determination of the Proposed Final Net Tangible Asset Amount and the
Final Net Tangible Asset Amount at ($600,000);
(vii) the Net Tangible Assets in the December Statement shall
include assets for the Instrumentation Recorder Product Line of the
Advanced Recorders Business Unit, net of any reserves or liabilities
associated with such assets, which net assets shall be recorded at
$700,000;
(viii) the Net Tangible Assets in the December Statement shall
assume that the reserve with respect to the exercise of TSS options at the
Wideband Business Unit shall be $1.0 million and such reserve used in the
determination of the Proposed Final Net Tangible Asset Amount and the
Final Net Tangible Asset Amount shall be assumed to be $2.0 million;
(ix) the Net Tangible Assets in the December Statement and the
determination of the Proposed Final Net Tangible Asset Amount and the
Final Net Tangible Asset Amount shall include in the inventory of the
Advanced Recorders Business Unit general and administrative expenses fixed
at $4.5 million with a related reserve of $1.8 million, and such general
and administrative expenses net of the related reserve shall be recorded
at $0 in the Proposed Final Net Tangible Asset Amount and the Final Net
Tangible Asset Amount;
(x) the Net Tangible Assets in the December Statement and the
determination of the Proposed Net Tangible Asset Amount and the Final Net
Tangible Asset Amount shall assume that the liability, if any, and related
asset, if any, with respect to the Microcom Business' earn out obligation
to its former stockholders net to $0; and
(xi) for purposes of determining the Net Tangible Assets in the
December Statement and determining the Proposed Final Net Tangible Asset
Amount and the Final Net Tangible Asset Amount, the parties have agreed
contractually to the following changes to the books and records of the
Business Units as of the referenced dates:
December 31, 1996 Effective Date(a)
----------------- --------------
(in millions) (in millions)
ALL
Eliminate Cash/Negative Cash $(1.6) (b)
Eliminate Duplicate Pension/Benefit 6.0 (b)
Liabilities(c)
Building Writedown or Writeup(c) 0.0 $ 0.0
EDS Net Assets 0.0 0.0
EDS M&DS Subcontract Reserve 0.0 (0.6)(d)
EXECUTION COPY
VI-5
<PAGE>
ADVANCED RECORDERS
Universal Litigation 0.0 0.0
G&A in Inventory Change(c) 0.0 (2.7)
Sarasota Asset Step-Up Issue(c) 0.0 0.0
Reversal of Capitalized Certification Costs 0.0 0.0
CPS-100 Audit Labor Mischarging Allegations 0.0 0.0
ADC Settlement (0.3) (b)
CAMDEN
Aegis Power Supply Contract and Option (1.0) (1.0)
Camden CAS 410 Issue(c) 0.0 0.0
Unreasonable Indirect Labor Allegations 0.0 0.0
Old Receivables 0.0 0.0
DCAA Rate Close-Out Issues 0.0 0.0
NOAA Contract Defective Pricing Allegations 0.0 0.0
Reversal of Division Reserve 0.0 0.0
Truck Depot Severance Reserve 0.0 (0.2)
WIDEBAND
Severance 0.0 0.0
TSS Options (1.0) (3.0)
Reverse Fixed Wireless Loop License Agreement 0.0 0.0
Reverse Fixed Wireless Loop Deferred cost 0.0 0.0
Reverse Fixed Wireless Loop Reserve 0.0 0.0
DISPLAYS
Add Alpharetta Building 4.0 (b)(e)
NARDA-EAST
Add FSI (Lowell, MA) Net Tangible Assets 4.8 (b)
TELEMETRY & INSTRUMENTATION
G&A Costs in Inventory (1.0) (1.0)
CONIC
Add LMEAP Assets 0.9 0.9
Pendelton Litigation Reserve 0.0 0.0
LMEAP Reserve Elimination 0.5 0.5
MICROCOM
Earn Out 0.0 0.0
CORPORATE PUSHDOWNS
NY Leasehold Improvements 3.5 3.5(e)
NY Overlays 1.8 1.8
RFA and RAA 4.4 (b)
Incurred but not reported Reserve (4.1) (4.1)
Environmental Reserve(c) (3.2) (6.0)
Workers Compensation (1.2) (1.2)
Management Incentive Compensation Plan (NYNC) 0.0 (b)
Deferred Management Incentive Compensation (0.3) (1.2)
Plan
Vacation Accrual (0.3) (0.3)
(a) Closing reflects the agreed upon changes as of the close of business on
the Effective Date.
(b) To be recorded based on the actual balance (after giving effect to the
December 31, 1996 adjustments) as of the close of business on the
Effective Date.
(c) As discussed above.
(d) As referenced in clause (vi) under "Miscellaneous" above.
(e) Subject to the specific provisions of clause (v) under "Miscellaneous"
above.
EXECUTION COPY
VI-6
<PAGE>
All amounts in parentheses in the foregoing table represent reductions to Net
Tangible Assets; amounts not in parentheses represent increases in Net Tangible
Assets.
The parties also have agreed that, with respect to the items referenced in
the foregoing table, other than as referenced above there will not be any
changes to the books and records of the Business Units from December 31, 1996 to
the Effective Date.
EXECUTION COPY
VI-7
<PAGE>
Attachment VII
<PAGE>
ATTACHMENT VII
EXCHANGE CONSIDERATION SCHEDULE
Transferor Exchange Consideration
---------- ----------------------
Lockheed Martin Corporation Stock: ______ shares of
Newco Class A Stock
Cash: $_____
Lockheed Martin Tactical Stock: _____ shares of
Systems, Inc. Newco Class A Stock
Cash: $______
Randtron Systems, Inc. Stock: ______ shares of
Newco Class A Stock
Cash: $______
Lockheed Martin Fairchild Stock: ______ shares of
Corporation Newco Class A Stock
Cash: $______
Conic Corporation Stock: ______ shares of
Newco Class A Stock
Cash: $______
Lockheed Martin Microcom Stock: ______ shares of
Corporation Newco Class A Stock
Cash: $______
Lockheed Martin Hycor, Inc. Stock: ______ shares of
Newco Class A Stock
Cash: $______
The NARDA Microwave Stock: ______ shares of
Corporation Newco Class A Stock
Cash: $______
[OTHER AFFILIATED TRANSFERORS] Stock: ______ shares of
Newco Class A Stock
Cash: $______
EXECUTION COPY
VII-1
<PAGE>
Attachment VIII
<PAGE>
See Amendment No. 2 to the Transaction Agreement
<PAGE>
Attachment IX
<PAGE>
See Amendment No. 2 to the Transaction Agreement
<PAGE>
Attachment X
<PAGE>
See Amendment No. 2 to the Transaction Agreement
<PAGE>
Attachment XI
<PAGE>
Attachment XI
EXCEPTIONS TO NON-SOLICITATION OF EMPLOYEES
Exceptions to Non-Solicitation by Newco
Name Division Department
- ---- -------- ----------
David Butler Fairchild Defense Systems Finance
John Mega TDS - East Finance
Robert Leskow TDS - East Finance
Richard Nortstrom TDS - East Finance
Ken Goldstein Corporate Tax
Michael Sanator TDS - East Procurement
Robert Hagendorf Corporate Risk Management
[ILLEGIBLE] Corporate ES&H
[ILLEGIBLE] TDS - Akron President
Lois Bailey Washington Office Export Controls
Exceptions to Non-Solicitation by Lockheed Martin
Name Division
- ---- --------
Richard Gribble Wideband Systems
Boyd Titwell
EXECUTION COPY
XI-1
<PAGE>
Attachment XII
<PAGE>
Attachment XII
LOCKHEED MARTIN LEGAL OPINIONS
1. Each of Lockheed Martin and each Affiliated Transferor is a corporation
duly incorporated, validly existing and in good standing under the laws of the
state of its incorporation and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on the
Business as now conducted, except where the failure to have such licenses,
authorizations, consents and approvals has not had, and could not reasonably be
expected to have, a Material Adverse Effect on the Business. Each of Lockheed
Martin and each Affiliated Transferor, as the case may be, is duly qualified to
do business as a foreign corporation in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities make such
qualification necessary to carry on the Business as now conducted, except where
the failure to be so qualified has not had, and could not reasonably be expected
to have, a Material Adverse Effect on the Business.
2. The execution, delivery and performance by Lockheed Martin and each
Affiliated Transferor of each of the Transaction Documents to which it is a
party and the consummation by Lockheed Martin and each Affiliated Transferor of
the Contemplated Transactions are within its corporate powers and have been duly
authorized by all necessary corporate action on its part. Each of the
Transaction Documents to which it is a party constitutes a legal, valid and
binding obligation of Lockheed Martin and each Affiliated Transferor enforceable
against it in accordance with its terms (i) except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, including the effect of statutory and other laws
regarding fraudulent conveyances and preferential transfers, (ii) subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity, and (iii)
except to the extent that indemnification and contribution for securities law
liabilities may be unenforceable as against public policy.
3. To such counsel's knowledge, the execution, delivery and performance by
Lockheed Martin and each Affiliated Transferor of the Transaction Documents to
which it is a party require no action by or in respect of, or consent or
approval of, or filing with, any Governmental Authority other than as may have
been obtained and other than as may be referenced in Section B.03 of the
Transaction Agreement or set forth in Section B.03 of the Disclosure Schedules.
4. The execution, delivery and performance by Lockheed Martin of the
Transaction Documents do not and will not contravene
EXECUTION COPY
XII-1
<PAGE>
or conflict with the charter or bylaws of Lockheed Martin or any Affiliated
Transferor.
XII-2
<PAGE>
Attachment XIII
<PAGE>
Attachment XIII
NEWCO LEGAL OPINIONS
1. Newco is a corporation duly incorporated, validly existing and in good
standing under the laws of the Stare of Delaware.
2. The execution, delivery and performance by Newco of each of the
Transaction Documents to which it is a party and the consummation by Newco of
the Contemplated Transactions are within its corporate powers and have been duly
authorized by all necessary corporate action on its part. Each of the
Transaction Documents to which it is a party constitutes a legal, valid and
binding obligation of Newco enforceable against it in accordance with its terms
(i) except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally, including the
effect of statutory and other laws regarding fraudulent conveyances and
preferential transfers, (ii) subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding at law or in equity, and (iii) except to the extent that
indemnification and contribution for securities law liabilities may be
unenforceable as against public policy.
3. To such counsel's knowledge, the execution, delivery and performance by
Newco of the Transaction Documents to which it is a party require no action by
or in respect of, or consent or approval of, or filing with, any Governmental
Authority other than as may have been obtained and other than as may be
referenced in Section B.03 of the Transaction Agreement or set forth in Section
B.03 of the Disclosure Schedules.
4. The execution, delivery and performance by Newco of the Transaction
Documents do not and will not contravene or conflict with the charter or bylaws
of Newco.
EXECUTION COPY
XIII-1
<PAGE>
Attachment XIV
<PAGE>
See Amendment No. 2 to the Transaction Agreement
<PAGE>
Attachment XV
<PAGE>
Attachment XV
PATENTS AND PATENT APPLICATIONS
CONSTITUTING TRANSFERRED ASSETS
1. COMMUNICATIONS SYSTEMS
194 Patents (See Attached Listing)
2. WIDEBAND SYSTEMS
34 Patents, 18 Patent Applications (See Attached Listing)
3. DISPLAY SYSTEMS
1 Patent, 2 Patent Applications (See Attached Listing)
4. MICROWAVE NARDA WEST
2 Patent Applications (See Attached Listing)
5. RANDTRON
1 Patent (See Attached Listing)
6. ADVANCED RECORDERS
1 Patent, 2 Patent Applications (See Attached Listing)
7. MICROWAVE NARDA EAST
25 Patents, 5 Patent Applications (See Attached Listing)
8. HYCOR
No Patents or Patent Applications
9. MICROCOM
No Patents or Patent Applications
10. CONIC
No Patents or Patent Applications
11. TELEMETRY & INSTRUMENTATION
No Patents or Patent Applications
12. AIRPORT EXPLOSIVE DETECTION BUSINESS
4 Patent Applications (See Attached Listing)
EXECUTION COPY
XV-1
<PAGE>
EXHIBIT 10.2
L-3 COMMUNICATIONS CORPORATION
As Issuer
$225,000,000
10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
INDENTURE
Dated as of April 30, 1997
The Bank of New York,
As Trustee
<PAGE>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE . . . . . . . . . . . . . 1
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . 17
Section 1.03. Incorporation by Reference of Trust Indenture Act . 17
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . 17
ARTICLE 2
THE NOTES . . . . . . . . . . . . . . 18
Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . 18
Section 2.02. Execution and Authentication . . . . . . . . . . . 19
Section 2.03. Registrar and Paying Agent . . . . . . . . . . . . 20
Section 2.04. Paying Agent to Hold Money in Trust . . . . . . . . 20
Section 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . 20
Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . 20
Section 2.07. Replacement Notes . . . . . . . . . . . . . . . . . 33
Section 2.08. Outstanding Notes . . . . . . . . . . . . . . . . . 33
Section 2.09. Treasury Notes . . . . . . . . . . . . . . . . . . 34
Section 2.10. Temporary Notes . . . . . . . . . . . . . . . . . . 34
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . 34
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . 34
Section 2.13. CUSIP Numbers . . . . . . . . . . . . . . . . . . . 35
ARTICLE 3
REDEMPTION AND PREPAYMENT . . . . . . . . . . 35
Section 3.01. Notices to Trustee . . . . . . . . . . . . . . . . 35
Section 3.02. Selection of Notes to Be Redeemed . . . . . . . . . 35
Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . 36
Section 3.04. Effect of Notice of Redemption . . . . . . . . . . 36
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . 37
Section 3.06. Notes Redeemed in Part . . . . . . . . . . . . . . 37
Section 3.07. Optional Redemption . . . . . . . . . . . . . . . . 37
Section 3.08. Mandatory Redemption . . . . . . . . . . . . . . . 38
Section 3.09. Offer to Purchase by Application of Excess Proceeds 38
ARTICLE 4
COVENANTS . . . . . . . . . . . . . . 40
Section 4.01. Payment of Notes . . . . . . . . . . . . . . . . . 40
Section 4.02. Maintenance of Office or Agency . . . . . . . . . . 40
Section 4.03. Reports . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.04. Compliance Certificate . . . . . . . . . . . . . . 41
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.06. [Intentionally Omitted] . . . . . . . . . . . . . . 42
Section 4.07. Restricted Payments . . . . . . . . . . . . . . . . 42
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries . . . . . . . . . . . . . . . . . . 45
Section 4.09. Incurrence of Indebtedness and Issuance of
Preferred Stock . . . . . . . . . . . . . . . . . 45
Section 4.10. Asset Sales . . . . . . . . . . . . . . . . . . . . 48
Section 4.11. Transactions with Affiliates . . . . . . . . . . . 49
Section 4.12. Liens . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.13. Future Subsidiary Guarantees . . . . . . . . . . . 50
Section 4.14. Corporate Existence . . . . . . . . . . . . . . . . 51
Section 4.15. Offer to Repurchase Upon Change of Control . . . . 51
2
<PAGE>
Section 4.16. No Senior Subordinated Debt . . . . . . . . . . . . 52
Section 4.17. Payments for Consent . . . . . . . . . . . . . . . 53
ARTICLE 5
SUCCESSORS . . . . . . . . . . . . . . 53
Section 5.01. Merger, Consolidation, or Sale of Assets . . . . . 53
Section 5.02. Successor Corporation Substituted . . . . . . . . . 54
ARTICLE 6
DEFAULTS AND REMEDIES . . . . . . . . . . . 54
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . 54
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . 56
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . 56
Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . 57
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . 57
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . 57
Section 6.07. Rights of Holders of Notes to Receive Payment . . . 58
Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . 58
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . 58
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . 58
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . 59
ARTICLE 7
TRUSTEE . . . . . . . . . . . . . . 59
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . 59
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . 60
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . 61
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . 61
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . 61
Section 7.06. Reports by Trustee to Holders of the Notes . . . . 62
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . 62
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . 63
Section 7.09. Successor Trustee by Merger, etc. . . . . . . . . 64
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . 64
Section 7.11. Preferential Collection of Claims Against Company . 64
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . 64
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . 64
Section 8.02. Legal Defeasance and Discharge . . . . . . . . . . 65
Section 8.03. Covenant Defeasance . . . . . . . . . . . . . . . . 65
Section 8.04. Conditions to Legal or Covenant Defeasance . . . . 66
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions . . 67
Section 8.06. Repayment to Company . . . . . . . . . . . . . . . 67
Section 8.07. Reinstatement . . . . . . . . . . . . . . . . . . . 68
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . 68
Section 9.01. Without Consent of Holders of Notes . . . . . . . . 68
Section 9.02. With Consent of Holders of Notes . . . . . . . . . 69
Section 9.03. Compliance with Trust Indenture Act . . . . . . . . 70
Section 9.04. Revocation and Effect of Consents . . . . . . . . . 70
Section 9.05. Notation on or Exchange of Notes . . . . . . . . . 70
Section 9.06. Trustee to Sign Amendments, etc. . . . . . . . . . 71
3
<PAGE>
ARTICLE 10
SUBORDINATION . . . . . . . . . . . . . 71
Section 10.01. Agreement to Subordinate . . . . . . . . . . . . . 71
Section 10.02. Liquidation; Dissolution; Bankruptcy . . . . . . . 71
Section 10.03. Default on Designated Senior Debt . . . . . . . . . 71
Section 10.04. Acceleration of Securities . . . . . . . . . . . . 72
Section 10.05. When Distribution Must Be Paid Over . . . . . . . . 72
Section 10.06. Notice by Company . . . . . . . . . . . . . . . . . 73
Section 10.07. Subrogation . . . . . . . . . . . . . . . . . . . . 73
Section 10.08. Relative Rights . . . . . . . . . . . . . . . . . . 73
Section 10.09. Subordination May Not Be Impaired by Company . . . 74
Section 10.10. Distribution or Notice to Representative . . . . . 74
Section 10.11. Rights of Trustee and Paying Agent . . . . . . . . 74
Section 10.12. Authorization to Effect Subordination . . . . . . . 75
Section 10.13. Amendments . . . . . . . . . . . . . . . . . . . . 75
ARTICLE 11
MISCELLANEOUS . . . . . . . . . . . . . 75
Section 11.01. Trust Indenture Act Controls . . . . . . . . . . . 75
Section 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . 75
Section 11.03. Communication by Holders of Notes with Other
Holders of Notes . . . . . . . . . . . . . . . . 76
Section 11.04. Certificate and Opinion as to Conditions Precedent 76
Section 11.05. Statements Required in Certificate or Opinion . . . 77
Section 11.06. Rules by Trustee and Agents . . . . . . . . . . . . 77
Section 11.07. No Personal Liability of Directors, Officers,
Employees and Stockholders . . . . . . . . . . . 77
Section 11.08. Governing Law . . . . . . . . . . . . . . . . . . . 77
Section 11.09. No Adverse Interpretation of Other Agreements . . . 77
Section 11.10. Successors . . . . . . . . . . . . . . . . . . . . 78
Section 11.11. Severability . . . . . . . . . . . . . . . . . . . 78
Section 11.12. Counterpart Originals . . . . . . . . . . . . . . . 78
Section 11.13. Table of Contents, Headings, etc. . . . . . . . . 78
4
<PAGE>
EXHIBITS
--------
EXHIBIT A-1 FORM OF NOTE (NON-REGULATION-S)
EXHIBIT A-2 FORM OF NOTE (REGULATION S)
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL
ACCREDITED INVESTORS
EXHIBIT E FORM OF SUPPLEMENTAL INDENTURE
EXHIBIT F FORM OF NOTATION ON SENIOR SUBORDINATED NOTE RELATING
TO SUBSIDIARY GUARANTEE
5
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 7.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06;11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03;11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.02
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03, 10.04,
10.05
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05,11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
N.A. means not applicable.
- --------------------
This Cross-Reference Table is not part of the Indenture.
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This INDENTURE dated as of April 30, 1997, between L-3 Communications
Corporation, a Delaware corporation (the "Company"), and The
Bank of New York, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 10 3/8% Notes
due 2007 (the "Initial Notes") and the 10 3/8% Senior Notes due 2007 (the
"Exchange Notes" and, together with the Initial Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions
"144A Global Note" means the global note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer
or exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business consistent with past practices (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of
the Company and its Restricted Subsidiaries taken as a whole shall be
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governed by the covenant contained in Section 4.15 and/or the covenant
contained in Section 5.01 and not by the covenant contained in Section 4.10),
and (ii) the issue or sale by the Company or any of its Subsidiaries of Equity
Interests of any of the Company's Restricted Subsidiaries, in the case of
either clause (i) or (ii), whether in a single transaction or a series of
related transactions (A) that have a fair market value in excess of $1.0
million or (B) for net proceeds in excess of $1.0 million. Notwithstanding the
foregoing: (i) a transfer of assets by the Company to a Restricted Subsidiary
or by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary, (iii) a Restricted Payment
that is permitted by the covenant contained in Section 4.07 and (iv) a
disposition of Cash Equivalents in the ordinary course of business shall not be
deemed to be an Asset Sale.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP)
of the obligation of the lessee for net rental payments during the remaining
term of the lease included in such sale and leaseback transaction (including
any period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance sheet
in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than one year from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the
date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any domestic financial
institution to the Senior Credit Facilities or with any domestic commercial
bank having capital and surplus in excess of $500.0 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in
clauses (ii) and (iii) above entered into with any
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financial institution meeting the qualifications specified in clause (iii)
above, (v) commercial paper having the highest rating obtainable from Moody's
or S&P's and in each case maturing within six months after the date of
acquisition, (vi) investment funds investing 95% of their assets in securities
of the types described in clauses (i)-(v) above, and (vii) readily marketable
direct obligations issued by any State of the United States of America or any
political subdivision thereof having maturities of not more than one year from
the date of acquisition and having one of the two highest rating categories
obtainable from either Moody's or S&P.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Principals or their Related
Parties (as defined below), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the
Principals and their Related Parties, becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the Voting Stock of the Company (measured by
voting power rather than number of shares) or (iv) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was included in computing such
Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
and whether or not capitalized (including, without limitation, original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus (iv) depreciation, amortization
(including amortization of goodwill, debt issuance costs and other intangibles
but excluding amortization of other prepaid cash expenses that were paid in a
prior period) and other non-cash expenses (excluding any such non-cash expense
to the extent that it represents an accrual of or reserve for cash expenses in
any future period or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Restricted Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses
were deducted in computing such Consolidated Net Income, minus (v) non-cash
items increasing such Consolidated Net Income for such period, in each case, on
a consolidated basis and determined in accordance with GAAP.
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<PAGE>
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Restricted Subsidiary
thereof that is a Guarantor, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in
a pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, (v) the Net Income of any Unrestricted
Subsidiary shall be excluded, whether or not distributed to the Company or one
of its Restricted Subsidiaries, and (vi) the Net Income of any Restricted
Subsidiary shall be calculated after deducting preferred stock dividends
payable by such Restricted Subsidiary to Persons other than the Company and its
other Restricted Subsidiaries.
"Consolidated Net Tangible Assets" means, as of any date of
determination, shareholders' equity of the Company and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP, less
goodwill and other intangibles (other than patents, trademarks, licenses,
copyrights and other intellectual property and prepaid assets).
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Issue Date or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 11.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Credit Facilities" means, with respect to the Company, one or more
debt facilities (including, without limitation, the Senior Credit Facilities)
or commercial paper facilities with banks or other institutional lenders
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special
purpose entities formed to borrow from such lenders against such receivables)
or letters of credit, in each case, as amended, restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Article 2 hereof,
substantially in the form of Exhibit A-1 hereto, except that such Note shall
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not bear the Global Note Legend and shall not have the "Schedule of Exchanges
of Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Debt" means (i) any Indebtedness outstanding under
the Senior Credit Facilities and (ii) any other Senior Debt permitted under
this Indenture the principal amount of which is $25.0 million or more and that
has been designated by the Company as "Designated Senior Debt".
"Disqualified Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that if such Capital Stock is issued
to any plan for the benefit of employees of the Company or its Subsidiaries or
by any such plan to such employees, such Capital Stock shall not constitute
Disqualified Stock solely because it may be required to be repurchased by the
Company in order to satisfy applicable statutory or regulatory obligations.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any public or private sale of equity
securities (excluding Disqualified Stock) of the Company or Holdings, other
than any private sales to an Affiliate of the Company or Holdings.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f).
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement has the meaning set forth in the Registration Rights Agreement.
"Existing Indebtedness" means any Indebtedness of the Company (other
than Indebtedness under the Senior Credit Facilities and the Notes) in
existence on the Issue Date, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, original issue discount, non-cash
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interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to Hedging
Obligations, but excluding amortization of debt issuance costs) and (ii) the
consolidated interest of such Person and its Restricted Subsidiaries that was
capitalized during such period, and (iii) any interest expense on Indebtedness
of another Person that is guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of its
Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon)
and (iv) the product of (A) all dividend payments, whether or not in cash, on
any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable solely
in Equity Interests of the Company, times (B) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance with
GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees
or redeems any Indebtedness (other than revolving credit borrowings) or issues
preferred stock subsequent to the commencement of the period for which the
Fixed Charge Coverage Ratio is being calculated but on or prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of the
four-quarter reference period and Consolidated Cash Flow for such reference
period shall be calculated without giving effect to clause (iii) of the proviso
set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable
to discontinued operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such Fixed
Charges shall not be obligations of the referent Person or any of its
Restricted Subsidiaries following the Calculation Date.
"Foreign Subsidiary" means a Restricted Subsidiary of the Company
that was not organized or existing under the laws of the United States, any
state thereof, the District of Columbia or any territory thereof.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
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American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the Issue Date.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A-1 or A-2 hereto issued in accordance with Article 2
hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii) to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantors" means each Subsidiary of the Company that executes a
Subsidiary Guarantee in accordance with the provisions of this Indenture, and
their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate swap
agreements, interest rate cap agreements and currency exchange or interest rate
collar agreements and (ii) other agreements or arrangements designed to protect
such Person against fluctuations in currency exchange rates or interest rates.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means L-3 Communications Holdings, Inc.
"IAI Global Note" means the global Note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person) and, to the
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extent not otherwise included, the Guarantee by such Person of any indebtedness
of any other Person. The amount of any Indebtedness outstanding as of any date
shall be (i) the accreted value thereof, in the case of any Indebtedness that
does not require current payments of interest, and (ii) the principal amount
thereof, together with any interest thereon that is more than 30 days past due,
in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel, moving and
similar loans or advances to officers and employees made in the ordinary course
of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any Subsidiary of the Company sells or
otherwise disposes of any Equity Interests of any direct or indirect Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Subsidiary not
sold or disposed of in an amount determined as provided in the last paragraph
of the covenant contained in Section 4.07.
"Issue Date" means the closing date for the sale and original
issuance of the Notes under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lehman Investor" means Lehman Brothers Holdings Inc. and any of
its Affiliates.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Initial Notes for use by
such Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give
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<PAGE>
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Marketable Securities" means, with respect to any Asset Sale, any
readily marketable equity securities that are (i) traded on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market; and (ii)
issued by a corporation having a total equity market capitalization of not less
than $250.0 million; provided that the excess of (A) the aggregate amount of
securities of any one such corporation held by the Company and any Restricted
Subsidiary over (B) ten times the average daily trading volume of such
securities during the 20 immediately preceding trading days shall be deemed not
to be Marketable Securities; as determined on the date of the contract relating
to such Asset Sale.
"Moody's" means Moody's Investors Services, Inc.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain or loss,
together with any related provision for taxes thereon, realized in connection
with (A) any Asset Sale (including, without limitation, dispositions pursuant
to sale and leaseback transactions) or (B) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any
extraordinary gain or loss, together with any related provision for taxes on
such extraordinary gain or loss and (iii) the cumulative effect of a change in
accounting principles.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and any reserve for adjustment in respect of the sale price of such asset
or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (A) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (B) is directly or indirectly liable (as a guarantor
or otherwise), or (C) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
Indebtedness incurred under Credit Facilities) of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity; and (iii) as to which the lenders have been notified
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in writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Obligations" means any principal, premium (if any), interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization, whether or not a claim for post-filing
interest is allowed in such proceeding), penalties, fees, charges, expenses,
indemnifications, reimbursement obligations, damages (including Liquidated
Damages), guarantees and other liabilities or amounts payable under the
documentation governing any Indebtedness or in respect thereto.
"Offering" means the Offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary, any Assistant Secretary or any Vice-President
of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"Permitted Investments" means (i) any Investment in the Company or in
a Restricted Subsidiary of the Company that is a Guarantor (ii) any Investment
in cash or Cash Equivalents; (iii) any Investment by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (A) such Person becomes a Restricted Subsidiary of the Company and a
Guarantor or (B) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company that is
a Guarantor; (iv) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant contained in Section 4.10 or any disposition of
assets not constituting an Asset sale; (v) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock)
of the Company; (vi) advances to employees not to exceed $2.5 million at any
one time outstanding; (vii) any Investment acquired in connection with or as a
result of a workout or bankruptcy of a customer or supplier; (viii) Hedging
Obligations permitted to be incurred under the covenant contained in Section
4.09; (ix) any Investment in a
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Similar Business that is not a Restricted Subsidiary; provided that the
aggregate fair market value of all Investments made pursuant to this clause
(ix) (valued on the date each such Investment was made and without giving
effect to subsequent changes in value) may not exceed 5% of the Consolidated
Net Tangible Assets of the Company; and (x) other Investments in any Person
having an aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause (x)
that are at the time outstanding, not to exceed $15.0 million.
"Permitted Junior Securities" means Equity Interests in the Company
or debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes and the Subsidiary Guarantees are
subordinated to Senior Debt pursuant to Article 10 of this Indenture.
"Permitted Liens" means (i) Liens securing Senior Debt of the Company
or any Guarantor that was permitted by the terms of this Indenture to be
incurred; (ii) Liens in favor of the Company or any Guarantor; (iii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Restricted Subsidiary of the Company;
provided that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company; (iv) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary of
the Company, provided that such Liens were in existence prior to the
contemplation of such acquisition and do not extend to any other assets of the
Company or any of its Restricted Subsidiaries; (v) Liens to secure the
performance of statutory obligations, surety or appeal bonds, performance bonds
or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (v) of the second paragraph of Section 4.09
covering only the assets acquired with such Indebtedness; (vii) Liens existing
on the Issue Date; (viii) Liens for taxes, assessments or governmental charges
or claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be required
in conformity with GAAP shall have been made therefor; (ix) Liens incurred in
the ordinary course of business of the Company or any Restricted Subsidiary of
the Company with respect to obligations that do not exceed $5.0 million at any
one time outstanding; (x) Liens on assets of Guarantors to secure Senior Debt
of such Guarantors that was permitted by this Indenture to be incurred; (xi)
Liens securing Permitted Refinancing Indebtedness, provided that any such Lien
does not extend to or cover any property, shares or debt other than the
property, shares or debt securing the Indebtedness so refunded, refinanced or
extended; (xii) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return of money bonds and other
obligations of a like nature, in each case incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money); (xiii)
Liens upon specific items of inventory or other goods and proceeds of any
Person securing such Person's obligations in respect of bankers' acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods in the ordinary course of
business; (xiv) Liens encumbering customary initial deposits and margin
deposits, and other Liens
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incurred in the ordinary course of business that are within the general
parameters customary in the industry, in each case securing Indebtedness under
Hedging Obligations; and (xv) Liens encumbering deposits made in the ordinary
course of business to secure nondelinquent obligations arising from statutory
or regulatory, contractual or warranty requirements of the Company or its
Subsidiaries for which a reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Restricted Subsidiaries; provided
that: (i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses and prepayment premiums incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity
date no earlier than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Notes, such Permitted Refinancing Indebtedness is subordinated in right of
payment to the Notes on terms at least as favorable to the Holders of Notes as
those contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Permitted Securities" means, with respect to any Asset Sale, Voting
Stock of a Person primarily engaged in one or more Similar Businesses; provided
that after giving effect to the Asset Sale such Person shall become a
Restricted Subsidiary and a Guarantor.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).
"Principals" means any Lehman Investor, Lockheed Martin
Corporation, Frank C. Lanza and Robert V. LaPenta
"Private Placement Legend" means the legend set forth in Section
2.07(g)(i) to be placed on all Notes issued under this Indenture except as
otherwise permitted by the provisions of this Indenture.
"Purchase Agreement" means the Purchase Agreement, dated April 25,
1997, among the Company, Lehman Brothers Inc. and BancAmerica Securities,
Inc.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
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"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April, 30 1997, by and among the Company, Lehman
Brothers Inc. and BancAmerica Securities, Inc., as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Regulation S, or
a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as
appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a single temporary global
Note in the form of Note attached hereto as Exhibit A-2 bearing the Private
Placement Legend and deposited with and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Regulation S.
"Related Party" with respect to any Principal means (i) any
controlling stockholder, 50% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (ii) any
trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding a more than 50%
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (i).
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Notes" means the 144A Global Note, the IAI Global
Note and the Regulation S Global Notes, each of which shall bear the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
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"Restricted Period" means the 40-day restricted period as defined
in Regulation S.
"Restricted Subsidiary" means, with respect to any Person, each
Subsidiary of such Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 903" means Rule 903 under the Securities Act.
"Rule 904" means Rule 904 under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facilities" means the credit agreement, dated as of
the Issue Date among the Company and a syndicate of banks and other financial
institutions led by Lehman Commercial Paper Inc., as syndication agent, and any
related notes, collateral documents, letters of credit and guarantees,
including any appendices, exhibits or schedules to any of the foregoing (as the
same may be in effect from time to time), in each case, as such agreements may
be amended, modified, supplemented or restated from time to time, or refunded,
refinanced, restructured, replaced, renewed, repaid or extended from time to
time (whether with the original agents and lenders or other agents and lenders
or otherwise, and whether provided under the original credit agreement or other
credit agreements or otherwise).
"Senior Debt" means (i) all Indebtedness of the Company or any of its
Restricted Subsidiaries outstanding under Credit Facilities and all Hedging
Obligations with respect thereto, (ii) any other Indebtedness permitted to be
incurred by the Company or any of its Restricted Subsidiaries under the terms
of this Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Notes and (iii) all Obligations with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Debt shall not include (i) any liability for federal, state, local or other
taxes owed or owing by the Company, (ii) any Indebtedness of the Company to any
of its Subsidiaries or other Affiliates, (iii) any trade payables or (iv) any
Indebtedness that is incurred in violation of this Indenture.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Similar Business" means a business, a majority of whose revenues in
the most recently ended calendar year were derived from (i) the sale of defense
products, electronics, communications systems, aerospace products, avionics
products and/or communications products, (ii) any services related thereto,
(iii) any business or activity that is reasonably similar thereto or
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a reasonable extension, development or expansion thereof or ancillary thereto,
and (iv) any combination of any of the foregoing.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (A) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (B) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"S&P" means Standard and Poor's Corporation.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Transaction Documents" means this Indenture, the Notes, the
Purchase Agreement and the Registration Rights Agreement.
"Transfer Restricted Securities" means securities that bear or are
required to bear the Private Placement Legend set forth in Section 2.06(g)(i)
hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means one or more global Notes, in the
form of Exhibit A-1 attached hereto, that do not and are not required to bear
the Private Placement Legend and are deposited with and registered in the name
of the Depositary or its nominee.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiaries" means any Subsidiary that is designated
by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that such Subsidiary: (i) has no
Indebtedness other than Non-Recourse Debt; (ii) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (iii) is a Person with respect
to which neither the Company nor any of its Restricted Subsidiaries
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has any direct or indirect obligation (A) to subscribe for additional Equity
Interests or (B) to maintain or preserve such Person's financial condition or
to cause such Person to achieve any specified levels of operating results; (iv)
has not guaranteed or otherwise directly or indirectly provided credit support
for any Indebtedness of the Company or any of its Restricted Subsidiaries; and
(v) has at least one director on its board of directors that is not a director
or executive officer of the Company or any of its Restricted Subsidiaries and
has at least one executive officer that is not a director or executive officer
of the Company or any of its Restricted Subsidiaries. Any such designation by
the Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.07. If,
at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
the Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09, the Company shall be in default of
such covenant). The Board of Directors of the Company may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.09, calculated on a pro forma basis
as if such designation had occurred at the beginning of the four-quarter
reference period, and (ii) no Default or Event of Default would be in existence
following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under
the Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock
of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (A) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (B) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned" means, when used with respect to any Subsidiary or
Restricted Subsidiary of a Person, a Subsidiary (or Restricted Subsidiary, as
appropriate) of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Subsidiaries
(or Wholly Owned Restricted Subsidiaries, as appropriate) of such Person and
one or more Wholly Owned Subsidiaries (or Wholly Owned Restricted Subsidiaries,
as appropriate) of such Person.
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Section 1.02. Other Definitions.
Defined in
Term Section
"Affiliate Transaction" . . . . . . . . . . . . . 4.11
"Asset Sale Offer" . . . . . . . . . . . . . . . 3.09
"Bankruptcy Law" . . . . . . . . . . . . . . . . 4.01
"Change of Control Offer" . . . . . . . . . . . . 4.15
"Change of Control Payment" . . . . . . . . . . . 4.15
"Change of Control Payment Date" . . . . . . . . 4.15
"Covenant Defeasance" . . . . . . . . . . . . . . 8.03
"Event of Default" . . . . . . . . . . . . . . . 6.01
"Excess Proceeds" . . . . . . . . . . . . . . . . 4.10
"incur" . . . . . . . . . . . . . . . . . . . . . 4.09
"Legal Defeasance" . . . . . . . . . . . . . . . 8.02
"Offer Amount" . . . . . . . . . . . . . . . . . 3.09
"Offer Period" . . . . . . . . . . . . . . . . . 3.09
"Paying Agent" . . . . . . . . . . . . . . . . . 2.03
"Purchase Date" . . . . . . . . . . . . . . . . . 3.09
"Registrar" . . . . . . . . . . . . . . . . . . . 2.03
"Restricted Payments" . . . . . . . . . . . . . . 4.07
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
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(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A-1 or A-2 hereto. The Notes may be issued
in the form of Definitive Notes or Global Notes, as specified by the Company.
The Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
Notes issued in global form shall be substantially in the form of
Exhibit A-1 or A-2 attached hereto (including the Global Note Legend and the
"Schedule of Exchanges in the Global Note" attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A-1 or A-2
attached hereto (but without the Global Note Legend and without the "Schedule
of Exchanges of Interests in the Global Note" attached thereto). Each Global
Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note (attached
hereto as Exhibit A-2 and bearing the legend set forth in Section
2.06(g)(iii) hereof), which shall be deposited on behalf of the purchasers of
the Notes represented thereby with the Trustee, at its New York office, as
custodian for the Depositary, and registered in the name of the Depositary or
the nominee of the Depositary for the accounts of designated agents holding
on behalf of Euroclear or Cedel Bank, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The Restricted Period
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shall be terminated upon the receipt by the Trustee of (i) a written
certificate from the Depositary, together with copies of certificates from
Euroclear and Cedel Bank certifying that they have received certification of
non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the
Restricted Period pursuant to another exemption from registration under the
Securities Act and who will take delivery of a beneficial ownership interest in
a 144A Global Note or an IAI Global Note, all as contemplated by Section
2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial interests
in Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms
and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by the Agent Members through
Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and
may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
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Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not
be transferred as a whole except by the Depositary to a nominee of the
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Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Notes will be exchanged by the Company for Definitive Notes if (i) the Company
delivers to the Trustee notice from the Depositary that it is unwilling or
unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Company within 120 days after the date of
such notice from the Depositary or (ii) the Company in its sole discretion
determines that the Global Notes (in whole but not in part) should be exchanged
for Definitive Notes and delivers a written notice to such effect to the
Trustee; provided that in no event shall the Regulation S Temporary Global Note
be exchanged by the Company for Definitive Notes prior to (x) the expiration of
the Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903 under the Securities Act. Upon the occurrence of
either of the preceding events in (i) or (ii) above, Definitive Notes shall be
issued in such names as the Depositary shall instruct the Trustee. Global Notes
also may be exchanged or replaced, in whole or in part, as provided in Sections
2.07 and 2.11 hereof. Every Note authenticated and made available for delivery
in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant
to Section 2.07 or 2.11 hereof, shall be authenticated and made available for
delivery in the form of, and shall be, a Global Note. A Global Note may not be
exchanged for another Note other than as provided in this Section 2.06(a),
however beneficial interests in a Global Note may be transferred and exchanged
as provided in Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the procedures of the Depositary therefor. Beneficial
interests in the Restricted Global Notes shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. The Trustee shall have no obligation to ascertain the
Depositary's compliance with any such restrictions on transfer. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period transfers of
beneficial interests in the Temporary Regulation S Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred only to Persons who take
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this
Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of
beneficial interests (other than transfers of beneficial interests in a
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Global Note to Persons who take delivery thereof in the form of a
beneficial interest in the same Global Note), the transferor of such
beneficial interest must deliver to the Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in the
specified Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from
a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
ore exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903 under the Securities
Act. Upon an Exchange Offer by the Company in accordance with Section
2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be
deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the
Holder of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture, the
Notes and otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the Registrar
receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver (x) a certificate in the form of Exhibit B hereto, including
the certifications in item (3) thereof, (y) to the extent required by
item 3(d) of Exhibit B hereto, an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such transfer
is in compliance with the Securities Act and such beneficial interest
is being transferred in compliance with any
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applicable blue sky securities laws of any State of the United States
and (z) if the transfer is being made to an Institutional Accredited
Investor and effected pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A under the
Securities Act, Rule 144 under the Securities Act or Rule 904 under
the Securities Act, a certificate from the transferee in the form of
Exhibit D hereto.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note.
Beneficial interests in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in the Unrestricted Global Note
or transferred to Persons who take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder, in the case of an exchange, or the transferee, in the
case of a transfer, is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a beneficial interest in the Unrestricted Global Note, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(a) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest
to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note, a certificate
from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance with
the Securities Act, that the restrictions on transfer contained
herein and in the Private Placement Legend are not required in order
to maintain compliance with the Securities Act, and such beneficial
interest is being exchanged or transferred in compliance with any
applicable blue sky securities laws of any State of the United
States.
If any such transfer is effected pursuant to subparagraph (B) or
(D) above at a time when an Unrestricted Global Note has not yet been
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issued, the Company shall issue and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in any Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive Note
or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Definitive Note, then, upon receipt by the
Registrar of the following documentation (all of which may be submitted by
facsimile):
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
904 under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (3)(d) thereof, a certificate from the transferee to the effect
set forth in Exhibit D hereof and, to the extent required by item
3(d) of Exhibit B, an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company to the effect that
such transfer is in compliance with the Securities Act and such
beneficial interest is being transferred in compliance with any
applicable blue sky securities laws of any State of the United
States;
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(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Definitive Notes issued in exchange for
beneficial interests in a Restricted Global Note pursuant to this Section
2.06(c) shall be registered in such names and in such authorized
denominations as the holder shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Definitive Notes
issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(i) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer contained
therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
(A) exchanged for a Definitive Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903 under the Securities Act or (B) transferred
to a Person who takes delivery thereof in the form of a Definitive Note
prior to the conditions set forth in clause (A) above or unless the
transfer is pursuant to an exemption from the registration requirements of
the Securities Act other than Rule 903 or Rule 904.
(ii) Notwithstanding 2.06(c)(i), a holder of a beneficial interest in
a Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder, in the case of an exchange, or the transferee, in the
case of a transfer, is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
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(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(b) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest
to a Person who shall take delivery thereof in the form of a
Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Company,
to the effect that such exchange or transfer is in compliance with
the Securities Act, that the restrictions on transfer contained
herein and in the Private Placement Legend are not required in order
to maintain compliance with the Securities Act, and such beneficial
interest in a Restricted Global Note is being exchanged or
transferred in compliance with any applicable blue sky securities
laws of any State of the United States.
(iii) If any holder of a beneficial interest in an Unrestricted Global
Note proposes to exchange such beneficial interest for a Definitive Note
or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Definitive Note, then, upon satisfaction of the
conditions set forth in Section 2.06(b)(ii), the Trustee shall cause the
aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Company shall
execute and the Trustee shall authenticate and deliver to the Person
designated in the instructions a Definitive Note in the appropriate
principal amount. Definitive Notes issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be registered in such
names and in such authorized denominations as the holder shall instruct
the Registrar through instructions from the Depositary and the Participant
or Indirect Participant. The Trustee shall deliver such Definitive Notes
to the Persons in whose names such Notes are so registered. Definitive
Notes issued in exchange for a beneficial interest pursuant to this
section 2.06(c)(iii) shall not bear the Private Placement Legend.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for a Definitive Note bearing the Private Placement Legend or transferred
to a Person who takes delivery thereof in the form of a Definitive Note
bearing the Private Placement Legend.
(d) Transfer or Exchange of Definitive Notes for Beneficial
Interests.
(i) If any Holder of Restricted Definitive Notes proposes to exchange
such Notes for a beneficial interest in a Restricted Global Note or to
transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in a Restricted Global
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Note, then, upon receipt by the Registrar of the following documentation
(all of which may be submitted by facsimile):
(A) if the Holder of such Restricted Definitive Notes proposes
to exchange such Notes for a beneficial interest in a Restricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (2)(b) thereof;
(B) if such Definitive Notes are being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Definitive Notes are being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 904
under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Definitive Notes are being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Definitive Notes are being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (3)(d) thereof, a certificate from the transferee to the effect
set forth in Exhibit D hereof and, to the extent required by item
3(d) of Exhibit B, an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company to the effect that
such transfer is in compliance with the Securities Act and such
Definitive Notes are being transferred in compliance with any
applicable blue sky securities laws of any State of the United
States;
(F) if such Definitive Notes are being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Definitive Notes are being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cancel the Definitive Notes, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Note, in the case of clause (B)
above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) A Holder of Restricted Definitive Notes may exchange such Notes
for a beneficial interest in the Unrestricted Global Note or
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transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in the Unrestricted Global
Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof;
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in
the form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Company to
the effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein
and in the Private Placement Legend are not required in order to
maintain compliance with the Securities Act, and such Definitive
Notes are being exchanged or transferred in compliance with any
applicable blue sky securities laws of any State of the United
States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) A Holder of Unrestricted Definitive Notes may exchange such Notes
for a beneficial interest in the Unrestricted Global Note or transfer such
Definitive Notes to a Person who takes delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note. Upon receipt of a
request for such an exchange or transfer, the Trustee shall cancel the
Unrestricted Definitive Notes and increase or cause to be increased the
aggregate principal amount of the Unrestricted Global Note.
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If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to subparagraphs
(ii)(B), (ii)(D) or (iii) above.
(e) Transfer and Exchange of Definitive Notes. Upon request by a
Holder of Definitive Notes and such Holder's compliance with the provisions of
this Section 2.06(e), the Registrar shall register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or exchange, the
requesting Holder shall present or surrender to the Registrar the Definitive
Notes duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar duly executed by such Holder or by his attorney,
duly authorized in writing. In addition, the requesting Holder shall provide
any additional certifications, documents and information, as applicable,
pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes may be transferred to and registered
in the name of Persons who take delivery thereof if the Registrar receives
the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 904, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver (x) a certificate in the form of Exhibit B
hereto, including the certifications in item (3) thereof, (y) to the
extent required by item 3(d) of Exhibit B hereto, an Opinion of
Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act and such
beneficial interest is being transferred in compliance with any
applicable blue sky securities laws of any State of the United States
and (z) if the transfer is being made to an Institutional Accredited
Investor and effected pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A under the
Securities Act, Rule 144 under the Securities Act or Rule 904 under
the Securities Act, a certificate from the transferee in the form of
Exhibit D hereto.
(ii) Restricted Definitive Notes may be exchanged by any Holder
thereof for an Unrestricted Definitive Note or transferred to Persons who
take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
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and the holder, in the case of an exchange, or the transferee, in the
case of a transfer, is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating Broker-
Dealer pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(a) thereof;
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D),
an Opinion of Counsel in form reasonably acceptable to the Company to
the effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein
and in the Private Placement Legend are not required in order to
maintain compliance with the Securities Act, and such Restricted
Definitive Note is being exchanged or transferred in compliance with
any applicable blue sky securities laws of any State of the United
States.
(iii) A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request for such a transfer, the
Registrar shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof. Unrestricted Definitive Notes cannot
be exchanged for or transferred to Persons who take delivery thereof in
the form of a Restricted Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by persons
that are not (x) broker-dealers, (y) Persons participating in the distribution
of the Exchange Notes or (z) Persons who are affiliates (as defined in Rule
144) of the Company and accepted for exchange in the exchange Offer and (ii)
Definitive Notes in an aggregate principal amount equal to the principal amount
of the Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrent with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted
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Global Notes to be reduced accordingly, and the Company shall execute and the
Trustee shall authenticate and make available for delivery to the Persons
designated by the Holders of Definitive Notes so accepted Definitive Notes in
the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (b) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISION OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and
all Notes issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
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MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF
THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN
PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11
OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11
hereof. At any time prior to such cancellation, if any beneficial interest in a
Global Note is exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Note or for
Definitive Notes, the principal amount of Notes represented by such Global Note
shall be reduced accordingly and an endorsement shall be made on such Global
Note, by the Trustee or by the Depositary at the direction of the Trustee, to
reflect such reduction; and if the beneficial interest is being exchanged for
or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note, by
the Trustee or by the Depositary at the direction of the Trustee, to reflect
such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
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(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (C) to register
the transfer of or to exchange a Note between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes
in accordance with the provisions of Section 2.02 hereof.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Company
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate
a replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that
is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
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If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Trustee knows are so owned
shall be so disregarded.
Section 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon a written order
of the Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive Notes in exchange for
temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be
delivered to the Company. The Company may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
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Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be
fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment
date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
Section 2.13. CUSIP Numbers.
The Company in issuing the Notes may use CUSIP numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption
and that reliance may be placed only on the other identification numbers
printed on the Notes, and any such redemption shall not be affected by any
defect in or omission of such numbers. The Company will promptly notify the
Trustee of any change in the CUSIP numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the
principal amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption shall be made by the Trustee in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed, or, if the Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its
registered address. Notices of redemption may not be conditional. If any Note
is to be redeemed in part only, the notice of redemption that relates to such
Note shall state the portion of the principal amount thereof to be redeemed. A
new Note in principal amount equal to the unredeemed portion thereof shall be
issued in the name of the Holder thereof upon cancellation of the original
Note. Notes called for redemption become due on the date fixed for redemption.
On and after the redemption date, interest ceases to accrue on Notes or
portions of them called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for
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partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed (including CUSIP
Numbers, if any) and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
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redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
Prior to 11:00 a.m. on the Business Day prior to the redemption date,
the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date. The Trustee or the Paying Agent shall promptly return
to the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption price of, and
accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.7, the Notes
shall not be redeemable at the Company's option prior to May 1, 2002.
Thereafter, the Notes shall be subject to redemption at any time at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the applicable redemption date, if redeemed during the
twelve-month period beginning on May 1 of the years indicated below:
Year Percentage
---- ----------
2002 . . . . . . . . . . . . . . . . . 105.188%
2003 . . . . . . . . . . . . . . . . . 103.458%
2004 . . . . . . . . . . . . . . . . 101.729%
2005 and thereafter . . . . . . . . . 100.000%
(b) Notwithstanding the foregoing clause (a), during the first 36
months after the Issue Date, the Company may on any one or more occasions
redeem up to an aggregate of 35% of the Notes originally issued at a redemption
price of 109.375% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the redemption
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date, with the net cash proceeds of one or more Equity Offerings by the Company
or the net cash proceeds of one or more Equity Offerings by Holdings that are
contributed to the Company as common equity capital; provided that at least 65%
of the Notes originally issued remain outstanding immediately after the
occurrence of each such redemption; and provided, further, that any such
redemption must occur within 120 days of the date of the closing of such Equity
Offering.
Section 3.08. Mandatory Redemption.
Except as set forth under Sections 4.10 and 4.15, the Company is not
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale
Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall cease
to accrete or accrue interest after the Purchase Date;
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(e) that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer may only elect to have all of such Note purchased and
may not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if
the Company, the depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered
by Holders exceeds the Offer Amount, the Company shall select the Notes to
be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Notes tendered by such
Holder and accepted by the Company for purchase, and the Company shall promptly
issue a new Note, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not
so accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale
Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
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ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in
the Notes. Principal, premium, if any, and interest shall be considered paid on
the date due if the Paying Agent, if other than the Company or a Subsidiary
thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by
the Company in immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due. The Company shall
pay all Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the applicable
interest rate on the Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest and Liquidated Damages (without regard to
any applicable grace period) at the same rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 4.03. Reports.
Whether or not required by the rules and regulations of the
Securities and Exchange Commission (the "Commission"), so long as any Notes are
outstanding, the Company shall furnish to the Holders of Notes:
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(a) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" that describes the financial condition and results of
operations of the Company and its consolidated Subsidiaries (showing in
reasonable detail, either on the face of the financial statements or in
the footnotes thereto and in Management's Discussion and Analysis of
Financial Condition and Results of Operations, the financial condition and
results of operations of the Company and its Restricted Subsidiaries
separately from the financial condition and results of operations of the
Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants, and
(b) all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports,
in each case within the time periods specified in the Commission's rules
and regulations.
In addition, whether or not required by the rules and regulations of
the Commission, following the consummation of the Exchange Offer contemplated
by the Registration Rights Agreement, the Company shall file a copy of all such
information and reports with the Commission for public availability within the
time periods set forth in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available
to securities analysts and prospective investors upon request. In addition, the
Company and the Subsidiary Guarantors have agreed that, for so long as any
Notes remain outstanding and are required to bear the Private Placement Legend,
they shall furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.
Subject to the provisions of Article 7, delivery of such reports,
information and documents to the Trustee is for informational proposes only and
the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained
in this Indenture and is not in default in the performance or observance of any
of the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with
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respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by
a written statement of the Company's independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, as soon as possible and in any event within five
Business Days after any Officer becoming aware of any Default or Event of
Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Notes.
Section 4.06.
Intentionally omitted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's or any of
its Restricted Subsidiaries' Equity Interests (including, without limitation,
any payment in connection with any merger or consolidation involving the
Company) or to the direct or indirect holders of the Company's or any of its
Restricted Subsidiaries' Equity Interests in their capacity as such (other than
(A) dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or (B) dividends or distributions by a
Restricted Subsidiary so long as, in the case of any dividend or distribution
payable on or in respect of any class or series of securities issued by a
Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, the
Company or a Restricted Subsidiary receives at least its pro rata share of such
dividend or distribution in accordance with its Equity Interests in such class
or series of securities); (ii) purchase, redeem or otherwise acquire or retire
for value (including without limitation, in connection with any merger or
consolidation involving the Company) any Equity Interests of the Company
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or any direct or indirect parent of the Company; (iii) make any payment on or
with respect to, or purchase, redeem, defease or otherwise acquire or retire
for value any Indebtedness that is subordinated to the Notes except a payment
of interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i)
through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first paragraph
of Section 4.09; and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issue Date (excluding Restricted Payments permitted
by clauses (ii) through (vii) of the next succeeding paragraph), is less
than the sum of (i) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing after the Issue Date to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, less 100% of
such deficit), plus (ii) 100% of the aggregate net cash proceeds received
by the Company from a contribution to its common equity capital or the
issue or sale since the Issue Date of Equity Interests of the Company
(other than Disqualified Stock) or of Disqualified Stock or debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after the Issue Date is sold for cash
or otherwise liquidated or repaid for cash, the amount of cash received in
connection therewith (or from the sale of Marketable Securities received
in connection therewith), plus (iv) to the extent not already included in
such Consolidated Net Income of the Company for such period and without
duplication, (A) 100% of the aggregate amount of cash received as a
dividend from an Unrestricted Subsidiary, (B) 100% of the cash received
upon the sale of Marketable Securities received as a dividend from an
Unrestricted Subsidiary, and (C) 100% of the net assets of any
Unrestricted Subsidiary on the date that it becomes a Restricted
Subsidiary.
The foregoing provisions shall not prohibit: (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of, other Equity
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Interests of the Company (other than any Disqualified Stock); provided that the
amount of any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded from
clause (c) (ii) of the preceding paragraph; (iii) the defeasance, redemption,
repurchase or other acquisition of subordinated Indebtedness (other than
intercompany Indebtedness) in exchange for, or with the net cash proceeds from
an incurrence of, Permitted Refinancing Indebtedness; (iv) the repurchase,
retirement or other acquisition or retirement for value of common Equity
Interests of the Company or Holdings held by any future, present or former
employee, director or consultant of the Company or any Subsidiary or Holdings
issued pursuant to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement; provided, however, that the
aggregate amount of Restricted Payments made under this clause (iv) does not
exceed $1.5 million in any calendar year and provided further that cancellation
of Indebtedness owing to the Company from members of management of the Company
or any of its Restricted Subsidiaries in connection with a repurchase of Equity
Interests of the Company shall not be deemed to constitute a Restricted Payment
for purposes of this covenant or any other provision of this Indenture; (v)
repurchases of Equity Interests deemed to occur upon exercise of stock options
upon surrender of Equity Interests to pay the exercise price of such options;
(vi) payments to Holdings (A) in amounts equal to the amounts required for
Holdings to pay franchise taxes and other fees required to maintain its legal
existence and provide for other operating costs of up to $500,000 per fiscal
year and (B) in amounts equal to amounts required for Holdings to pay federal,
state and local income taxes to the extent such income taxes are actually due
and owing; provided that the aggregate amount paid under this clause (B) does
not exceed the amount that the Company would be required to pay in respect of
the income of the Company and its Subsidiaries if the Company were a stand
alone entity that was not owned by Holdings; and (vii) other Restricted
Payments in an aggregate amount since the Issue Date not to exceed $20.0
million.
The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the
extent repaid in cash) in the Subsidiary so designated shall be deemed to be
Restricted Payments at the time of such designation and shall reduce the amount
available for Restricted Payments under the first paragraph of this covenant.
All such outstanding Investments shall be deemed to constitute Investments in
an amount equal to the fair market value of such Investments at the time of
such designation. Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the
Board of Directors whose resolution with respect thereto shall be delivered to
the Trustee. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by Section 4.07 were computed.
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Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(A) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock
or (2) with respect to any other interest or participation in, or measured by,
its profits, or (B) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries, or (iii) transfer any of its properties or assets
to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (A) the provisions
of security agreements that restrict the transfer of assets that are subject to
a Lien created by such security agreements, (B) the provisions of agreements
governing Indebtedness incurred pursuant to clause (v) of the second paragraph
of Section 4.09, (C) this Indenture and the Notes, (D) applicable law, (E) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was permitted by
the terms of this Indenture to be incurred, (F) by reason of customary
non-assignment provisions in leases entered into in the ordinary course of
business and consistent with past practices, (G) purchase money obligations for
property acquired in the ordinary course of business that impose restrictions
of the nature described in this clause (iii) on the property so acquired, (H)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, (I) contracts for the sale of assets, including, without
limitation, customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary, (J)
agreements relating to secured Indebtedness otherwise permitted to be incurred
pursuant to 4.09 and 4.12 that limit the right of the debtor to dispose of the
assets securing such Indebtedness, (K) restrictions on cash or other deposits
or net worth imposed by customers under contracts entered into in the ordinary
course of business, or (L) customary provisions in joint venture agreements and
other similar agreements entered into in the ordinary course of business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt) and that
the Company shall not issue any Disqualified Stock and shall not permit any of
its Subsidiaries to issue any shares of preferred stock; provided, however,
that the Company and any Restricted Subsidiary may incur Indebtedness
(including Acquired Debt) or issue shares of preferred stock if the Fixed
Charge Coverage Ratio for the Company's most recently ended four
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full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred or such preferred stock is issued would have been at least 2.0 to 1.0,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or
the preferred stock had been issued, as the case may be, at the beginning of
such four-quarter period.
The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company of term Indebtedness under Credit
Facilities (and the guarantee thereof by the Guarantors); provided that
the aggregate principal amount of all term Indebtedness outstanding under
all Credit Facilities after giving effect to such incurrence, including
all Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any other Indebtedness incurred pursuant to this clause (i), does
not exceed an amount equal to $175.0 million less the aggregate amount of
all repayments, optional or mandatory, of the principal of any
Indebtedness under a Credit Facility (or any such Permitted Refinancing
Indebtedness) that have been made since the Issue Date;
(ii) the incurrence by the Company of revolving credit Indebtedness
and letters of credit (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company
and its Restricted Subsidiaries thereunder) under Credit Facilities (and
the guarantee thereof by the Guarantors); provided that the aggregate
principal amount of all revolving credit Indebtedness outstanding under
all Credit Facilities after giving effect to such incurrence, including
all Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any other Indebtedness incurred pursuant to this clause (ii), does
not exceed an amount equal to $100.0 million less the aggregate amount of
all Net Proceeds of Asset Sales applied to repay any such Indebtedness
(including any such Permitted Refinancing Indebtedness) pursuant to
Section 4.10;
(iii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iv) the incurrence by the Company and the Guarantors of the Notes
and the Subsidiary Guarantees;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount, including all Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any other Indebtedness incurred
pursuant to this clause (v), not to exceed $30.0 million at any time
outstanding;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition of
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assets or a new Restricted Subsidiary; provided that such Indebtedness was
incurred by the prior owner of such assets or such Restricted Subsidiary
prior to such acquisition by the Company or one of its Restricted
Subsidiaries and was not incurred in connection with, or in contemplation
of, such acquisition by the Company or one of its Restricted Subsidiaries;
and provided further that the principal amount (or accreted value, as
applicable) of such Indebtedness, together with any other outstanding
Indebtedness incurred pursuant to this clause (vi), does not exceed $10.0
million;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace,
Indebtedness that was permitted by this Indenture to be incurred;
(viii) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business in respect of
workers' compensation claims or self-insurance, or other Indebtedness with
respect to reimbursement type obligations regarding workers' compensation
claims; provided, however, that upon the drawing of such letters of credit
or the incurrence of such Indebtedness, such obligations are reimbursed
within 30 days following such drawing or incurrence;
(ix) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred or assumed
in connection with the disposition of any business, assets or a
Subsidiary, other than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or a Subsidiary for
the purpose of financing such acquisition; provided, however, that (A)
such Indebtedness is not reflected on the balance sheet of the Company or
any Restricted Subsidiary (contingent obligations referred to in a
footnote to financial statements and not otherwise reflected on the
balance sheet shall not be deemed to be reflected on such balance sheet
for purposes of this clause (A)) and (B) the maximum assumable liability
in respect of all such Indebtedness shall at no time exceed the gross
proceeds including noncash proceeds (the fair market value of such noncash
proceeds being measured at the time received and without giving effect to
any subsequent changes in value) actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;
(x) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries; provided, however, that (A) if the
Company is the obligor on such Indebtedness, such Indebtedness is
expressly subordinated to the prior payment in full in cash of all
Obligations with respect to the Notes and (B)(1) any subsequent issuance
or transfer of Equity Interests that results in any such Indebtedness
being held by a Person other than the Company or one of its Restricted
Subsidiaries and (2) any sale or other transfer of any such Indebtedness
to a Person that is not either the Company or one of its Restricted
Subsidiaries shall be deemed, in each case, to constitute an incurrence of
such Indebtedness by the Company or such Restricted Subsidiary, as the
case may be;
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(xi) the incurrence by the Company or any of the Guarantors of Hedging
Obligations that are incurred for the purpose of (A) fixing, hedging or
capping interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of this Indenture to be outstanding or (B)
protecting the Company and its Restricted Subsidiaries against changes in
currency exchange rates;
(xii) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company that
was permitted to be incurred by another provision of this Section
4.09;
(xiii) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (xiii),
and the issuance of preferred stock by Unrestricted Subsidiaries;
(xiv) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted
Subsidiaries in the ordinary course of business; and
(xv) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any other Indebtedness incurred pursuant to this clause (xv), not
to exceed $50.0 million.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xv) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness
in any manner that complies with this covenant. Accrual of interest, the
accretion of accreted value and the payment of interest in the form of
additional Indebtedness shall not be deemed to be an incurrence of Indebtedness
for purposes of this Section 4.09.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time
of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 80% of the consideration therefor
received by the Company or such Restricted Subsidiary, as the case may be,
consists of cash, Cash Equivalents and/or Marketable Securities; provided,
however, that (A) the amount of any Senior Debt of the Company or such
Restricted Subsidiary that is assumed by the transferee in any such transaction
and (B) any consideration received by the Company or such Restricted
Subsidiary, as the case may be, that consists of (1) all or substantially all
of the assets of one or more Similar Businesses, (2) other
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long-term assets that are used or useful in one or more Similar Businesses and
(3) Permitted Securities shall be deemed to be cash for purposes of this
provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (i) to repay
Indebtedness under a Credit Facility, or (ii) to the acquisition of Permitted
Securities, all or substantially all of the assets of one or more Similar
Businesses, or the making of a capital expenditure or the acquisition of other
long-term assets in a Similar Business. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce Indebtedness under a
Credit Facility or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph shall
be deemed to constitute "Excess Proceeds". When the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall be required to make an offer
to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date of purchase, in accordance with the procedures set forth in
this Indenture. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased
on a pro rata basis. Upon completion of such offer to purchase, the amount of
Excess Proceeds shall be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustee (A) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $3.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of
the disinterested members of the Board of Directors and (B) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing.
The foregoing provisions shall not prohibit: (i) any employment
agreement entered into by the Company or any of its Restricted Subsidiaries in
the ordinary course of business; (ii) any transaction with a Lehman
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Investor; (iii) any transaction between or among the Company and/or its
Restricted Subsidiaries; (iv) transactions between the Company or any of its
Restricted Subsidiaries, on the one hand, and Lockheed Martin or any of its
Subsidiaries, on the other hand, on terms that are not materially less
favorable to the Company or the applicable Restricted Subsidiary of the Company
than those that could have been obtained from an unaffiliated third party;
provided that (A) in the case of any such transaction or series of related
transactions pursuant to this clause (iv) involving aggregate consideration in
excess of $1.0 million but less than $25.0 million, such transaction or series
of transactions (or the agreement pursuant to which the transactions were
executed) was approved by the Company's Chief Executive Officer or Chief
Financial Officer and (B) in the case of any such transaction or series of
related transactions pursuant to this clause (iv) involving aggregate
consideration equal to or in excess of $25.0 million, such transaction or
series of related transactions (or the agreement pursuant to which the
transactions were executed) was approved by a majority of the disinterested
members of the Board of Directors; (v) any transaction pursuant to and in
accordance with the provisions of the Transaction Documents as the same are in
effect on the Issue Date; and (vi) any Restricted Payment that is permitted by
the provisions of Section 4.07.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.
Section 4.13. Future Subsidiary Guarantees
If the Company or any of its Subsidiaries shall acquire or create a
Subsidiary (other than a Foreign Subsidiary or an Unrestricted Subsidiary)
after the Issue Date, then such Subsidiary shall execute a Subsidiary
Guarantee, in the form of the Supplemental Indenture attached hereto as Exhibit
E, and the Form of Notation on Senior Subordinated Note, attached hereto as
Exhibit F, and deliver an opinion of counsel as to the validity of such
Subsidiary Guarantee, in accordance with the terms of this Indenture. The
Subsidiary Guarantee of each Guarantor will be subordinated to the prior
payment in full of all Senior Debt of such Guarantor, which would include the
guarantees of amounts borrowed under the Senior Credit Facilities. The
obligations of each Guarantor under its Subsidiary Guarantee will be limited so
as not to constitute a fraudulent conveyance under applicable law.
No Guarantor may consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person) another Person (except the Company
or another Guarantor) unless (i) subject to the provisions of the following
paragraph, the Person formed by or surviving any such consolidation or merger
(if other than such Guarantor) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Notes and this
Indenture; (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists; (iii) the Company (A) would be permitted by virtue
of the Company's pro forma Fixed Charge Coverage Ratio, immediately after
giving effect to such transaction, to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test
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set forth in Section 4.09 or (B) would have a pro forma Fixed Charge Coverage
Ratio that is greater than the actual Fixed Charge Coverage Ratio for the same
four-quarter period without giving pro forma effect to such transaction.
Notwithstanding the foregoing paragraph, (i) any Guarantor may
consolidate with, merge into or transfer all or part of its properties and
assets to the Company and (ii) any Guarantor may merge with an Affiliate that
has no significant assets or liabilities and was incorporated solely for the
purpose of reincorporating such Guarantor in another State of the United States
so long as the amount of Indebtedness of the Company and its Restricted
Subsidiaries is not increased thereby.
In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of such Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all of the assets of such Guarantor) will be released and
relieved of any obligations under its Subsidiary Guarantee; provided that the
Net Proceeds of such sale or other disposition are applied in accordance with
the applicable provisions of Section 4.10.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Restricted Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Restricted Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Restricted Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of Notes
shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase (the "Change of Control Payment"). Within ten days following
any Change of Control, the Company shall mail a notice to each Holder
describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"). Such notice,
which shall govern the terms of the Change of Control offer, shall state: (i)
that the Change of Control Offer is being made pursuant to
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this Section 4.15 and that all Notes tendered will be accepted for payment;
(ii) the purchase price and the purchase date; (iii) that any Note not tendered
will continue to accrue interest; (iv) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest after
the Change of Control Payment Date; (v) that Holders electing to have any Notes
purchased pursuant to a Change of Control Offer will be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date; (vi) that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have the Notes
purchased; and (vii) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Notes in connection with a
Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to each Holder
of Notes so tendered the Change of Control Payment for such Notes, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each such
new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. Prior to mailing a Change of Control Offer, but in any event within 90
days following a Change of Control, the Company shall either repay all
outstanding Senior Debt or offer to repay all Senior Debt and terminate all
commitments thereunder of each lender who has accepted such offer or obtain the
requisite consents, if any, under all agreements governing outstanding Senior
Debt to permit the repurchase of Notes required by this Section 4.15. The
Company shall publicly announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
Section 4.16. No Senior Subordinated Debt.
The Company shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt and senior in any respect in right of
payment to the Notes. No Guarantor shall incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate
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or junior in right of payment to any Senior Debt of a Guarantor and senior in
any respect in right of payment to any of the Subsidiary Guarantees.
Section 4.17. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Notes
and this Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no
Default or Event of Default exists; and (iv) except in the case of a merger of
the Company with or into a Wholly Owned Restricted Subsidiary of the Company,
the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made, after giving pro forma effect to such transaction as if such transaction
had occurred at the beginning of the most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding such transaction either (A) would be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.09 or (B) would have a pro
forma Fixed Charge Coverage Ratio that is greater than the actual Fixed Charge
Coverage Ratio for the same four-quarter period without giving pro forma effect
to such transaction.
Notwithstanding clause (iv) in the immediately foregoing paragraph,
(i) any Restricted Subsidiary may consolidate with, merge into or transfer all
or part of its properties and assets to the Company and (ii) the Company may
merge with an Affiliate that has no significant assets or liabilities and was
incorporated solely for the purpose of reincorporating the Company in
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another State of the United States so long as the amount of Indebtedness of the
Company and its Restricted Subsidiaries is not increased thereby.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on , or
Liquidated Damages, if any, with respect to, the Notes and such default
continues for a period of 30 days (whether or not prohibited by the
subordination provisions of this Indenture);
(b) the Company defaults in the payment when due of the principal of
or premium, if any, on the Notes (whether or not prohibited by the
subordination provisions of this Indenture);
(c) the Company fails to comply with any of the provisions of
Section 4.10, 4.15, or 5.01 hereof;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes for
60 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes then outstanding;
(e) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists, or is created after the date of this Indenture, which default results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness, together with the principal
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amount of any other such Indebtedness, the maturity of which has been so
accelerated, aggregates $10.0 million or more;
(f) the Company or any of its Restricted Subsidiaries is subject to a
final judgments aggregating in excess of $10.0 million, which judgments are not
paid, discharged or stayed for a period of 60 days;
(g) the Company or any of its Significant Subsidiaries or any group
of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is not paying its debts as they become due;
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially all of the
property of the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days; or
(i) Except as permitted herein, any Subsidiary Guarantee shall be
held in any judicial proceeding to be unenforceable or invalid.
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all
of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Notes.
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Section 6.02. Acceleration.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; provided, however,
that so long as any Designated Senior Debt is outstanding, such declaration
shall not become effective until the earlier of (i) the day which is five
Business Days after receipt by the Representatives of Designated Senior Debt of
such notice of acceleration or (ii) the date of acceleration of any Designated
Senior Debt. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company or any Restricted Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
this Indenture or the Notes except as provided in this Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to the optional redemption provisions of this Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs prior to May 1, 2002 by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding
the prohibition on redemption of the Notes prior to May 1, 2002, then the
premium specified below shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes during the
twelve-month period ending on May 1 of the years indicated below:
Year Percentage
---- ----------
1997 . . . . . . . . . . . . . . . . . 115.562%
1998 . . . . . . . . . . . . . . . . . 113.833%
1999 . . . . . . . . . . . . . . . . . 112.104%
2000 . . . . . . . . . . . . . . . . . 110.375%
2001 . . . . . . . . . . . . . . . . . 108.646%
2002 . . . . . . . . . . . . . . . . . 106.917%
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision
of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
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Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal
amount at maturity of the then outstanding Notes may rescind an acceleration
and its consequences, including any related payment default that resulted from
such acceleration). Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
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Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Notes), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium and Liquidated Damages,
if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith or negligence on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
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this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability
or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in such document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
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(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(h) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Notes and this Indenture.
(i) Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in
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the case of a Default or Event of Default in payment of principal of, premium,
if any, or interest on any Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports
as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as the Company and the Trustee shall from time to time agree in
writing for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee or any predecessor Trustee
against any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Company (including this Section 7.07) and defending itself against
any claim (whether asserted by the Company or any Holder or any other person)
or liability in connection with the exercise or performance of any of its
powers or duties hereunder, except to the extent any such loss, liability or
expense may be attributable to its negligence or bad faith. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company
of its obligations hereunder. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The Trustee shall have a lien prior to the Notes as to all property
and funds held by it hereunder for any amount owing it or any predecessor
Trustee pursuant to this Section 7.07, except with respect to funds held in
trust for the benefit of the Holders of particular Notes.
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The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent
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jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
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Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive solely from the trust fund described in
Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due, (b) the Company's obligations with respect to such Notes
under Sections 2.06, 2.07, 2.10 and 4.02 hereof, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15
and 4.16 and Article 5 hereof with respect to the outstanding Notes on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting purposes). For this purpose, Covenant Defeasance means that,
with respect to the outstanding Notes, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference
in any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of
this Indenture and such Notes shall be unaffected thereby. In addition, upon
the Company's exercise under Section 8.01 hereof of the option applicable to
this Section 8.03 hereof, subject to the satisfaction of the conditions set
forth in Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not
constitute Events of Default.
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Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium and Liquidated Damages, if
any, and interest on the outstanding Notes on the stated date for payment
thereof or on the applicable redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of the
proceeds of which will be used to defease the Notes pursuant to this Article 8
concurrently with such incurrence) or insofar as Sections 6.01(g) or 6.01(h)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that on the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
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insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof,
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shall thereupon cease; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, may at the expense of
the Company cause to be published once, in the New York Times and The Wall
Street Journal (national edition), notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the
Company makes any payment of principal of, premium, if any, or interest on any
Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(c) to provide for the assumption of the Company's obligations to
the Holders of the Notes in the case of a merger or consolidation pursuant to
Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
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obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10
and 4.15 hereof) and the Notes may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental Indenture unless such amended or supplemental
Indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record
date, or their duly designated proxies, and only such Persons, shall be
entitled to consent to such supplemental indenture, whether or not such Holders
remain Holders after such record date; provided, that unless such consent shall
have become effective by virtue of the requisite percentage having been
obtained prior to the date which is 180 days after such record date, any such
consent previously given shall automatically and without further action by any
Holder be cancelled and of no further effect.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent
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of each Holder affected, an amendment or waiver may not (with respect to any
Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of the
Notes except as provided above with respect to Sections 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or interest on the Notes; or
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 and 4.15 hereof).
(h) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment
becomes effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
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exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officer's Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for
the benefit of the holders of Senior Debt.
Section 10.02. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Debt shall be entitled to receive
payment in full in cash of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt, whether or not an allowable claim in
any such proceeding) before the Holders of Notes will be entitled to receive
any payment with respect to the Notes, and until all Obligations with respect
to Senior Debt are paid in full, any distribution to which the Holders of Notes
would be entitled shall be made to the holders of Senior Debt (except, in each
case, that Holders of Notes may receive Permitted Junior Securities and
payments made from the trust described under Article 8).
Section 10.03. Default on Designated Senior Debt.
The Company may not make any payment or distribution to the Trustee
or any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (i) securities that are subordinated to at least the same extent as the
Notes to (a) Senior Indebtedness and (b) any securities issued in exchange
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for Senior Indebtedness and (ii) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof) until all principal
and other Obligations with respect to the Senior Indebtedness have been paid in
full if:
(i) a default in the payment of any principal or other Obligations
with respect to Designated Senior Indebtedness occurs and is continuing
beyond any applicable grace period in the agreement, indenture or other
document governing such Designated Senior Indebtedness; or
(ii) a default, other than a payment default, on Designated Senior
Indebtedness occurs and is continuing that then permits holders of the
Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a
Representative with respect to such Designated Senior Debt. If the Trustee
receives any such Payment Blockage Notice, no subsequent Payment Blockage
Notice shall be effective for purposes of this Section unless and until
(i) at least 365 days shall have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice and (ii) all scheduled payments
of principal, premium, if any, and interest on the Notes that have come
due have been paid in full in cash. No nonpayment default that existed or
was continuing on the date of delivery of any Payment Blockage Notice to
the Trustee shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default shall have been waived or cured for a
period of not less than 180 days.
The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.03(ii) hereof,
179 days pass after notice is received if the maturity of such Designated
Senior Indebtedness has not been accelerated,
if this Article otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 10.04. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
Section 10.05. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Notes at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment is prohibited by
Article 10 hereof, such payment shall be held by the Trustee or such Holder, in
trust for the benefit of, and shall be paid forthwith over and delivered, upon
written request, to, the holders of Senior Debt as their interests may appear
or their Representative under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent
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necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10, and no implied covenants or obligations with
respect to the holders of Senior Debt shall be read into this Indenture against
the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall
be entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or negligence of the Trustee.
Section 10.06. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 10.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior
Indebtedness (or a trustee or agent on behalf of such holder) to establish that
such notice has been given by a holder of Senior Indebtedness (or a trustee or
agent on behalf of any such holder). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of
any person as holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 10, the Trustee may request such person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such person, the extent to which such
person is entitled to participate in such evidence is not furnish, the Trustee
may defer any payment which it may be required to make for the benefit of such
person pursuant to the terms of this Indenture pending judicial determination
as to the rights of such person to receive such payment.
Section 10.07. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to
the payment of Senior Debt. A distribution made under this Article 10 to
holders of Senior Debt that otherwise would have been made to Holders of Notes
is not, as between the Company and Holders, a payment by the Company on the
Notes.
Section 10.08. Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
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(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior Debt;
or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of
or interest on a Note on the due date, the failure is still a Default or Event
of Default.
Section 10.09. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
10.
Section 10.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least three Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof.
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The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
Section 10.12. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the credit agents are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
Section 10.13. Amendments.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of at least 75% in aggregate
principal amount of the Notes then outstanding if such amendment would
adversely affect the rights of Holders of Notes.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA Section 318(c), the imposed duties shall
control.
Section 11.02. Notices.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
L-3 Communications Corporation
600 Third Avenue, 34th Floor,
New York, New York 10016
Attention: Vice President-Finance (Fax: 212-805-5470)
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Andrew R. Keller (Fax: 212-455-2502)
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If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration (Fax: 212-815-5915)
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection
of TIA Section 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
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Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Notes and this Indenture or for any claim based on, in respect of, or
by reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the Commission that such a waiver is against public policy.
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
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Section 11.10. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 11.11. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following pages]
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SIGNATURES
Dated as of April 30, 1997
L-3 Communications Corporation
By:____________________________
Name:
Title:
The Bank of New York
By: /s/ Marie E. Trimboli
Name: Marie E. Trimboli
Title: Assistant Treasurer
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Dated as of April 30, 1997
L-3 Communications Corporation
By: /s/ M.T. Strianese
Name: Michael T. Strianese
Title: Vice President and Controller
The Bank of New York
By:______________________________
Name:
Title:
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EXHIBIT A-1
(Face of Note)
CUSIP/CINS ____________
10 3/8% Senior Subordinated Notes due 2007
No. ___ $__________
L-3 COMMUNICATIONS CORPORATION
promises to pay to __________________________________________________
or registered assigns,
the principal sum of ________________________________________________
Dollars on May 1, 2007.
Interest Payment Dates: May 1, and November 1
Record Dates: April 15, and October 15
Dated: _______________, 199__
L-3 Communications Corporation
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the [Global]
Notes referred to in the (SEAL)
within-mentioned Indenture:
Dated:
The Bank of New York,
as Trustee
By:__________________________________
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(Back of Note)
10 3/8% Senior Subordinated Notes due 2007
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.]
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
- --------------------
This paragraph should be included only if the Note is issued in global form.
This paragraph should be included only if applicable pursuant to the terms of
the Indenture.
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1. Interest. L-3 Communications Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 10
3/8% per annum from April 30, 1997 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages, if
any, semi-annually on May 1 and November 1 of each year, or if any such day is
not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"), with the same force and effect as if made on the date for such
payment. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be November 1, 1997. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time
to time on demand at the rate then in effect to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the April 15 or October 15 next
(whether or not a Business Day) preceding the Interest Payment Date, even if
such Notes are cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. The Notes will be payable as to principal, premium and
Liquidated Damages, if any, and interest at the office or agency of the Company
maintained for such purpose within The City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made
by check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent if such Holders shall be registered Holders of at least $250,000
in principal amount of the Notes. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as
of April 30, 1997 ("Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended
(15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such
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terms, and Holders are referred to the Indenture and such Act for a statement
of such terms. To the extent any provision of this Note conflicts with the
express provisions of the Indenture, the provisions of the Indenture shall
govern and be controlling. The Notes are obligations of the Company limited to
$225.0 million in aggregate principal amount, plus amounts, if any, issued to
pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. Optional Redemption.
(a) Except as set forth in clause (b) of this paragraph 5, the Notes
shall not be redeemable at the Company's option prior to May 1, 2002.
Thereafter, the Notes shall be subject to redemption at any time at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the applicable redemption date, if redeemed during the
twelve-month period beginning on May 1 of the years indicated below:
Year Percentage
---- ----------
2002 . . . . . . . . . . . . . . . . . 105.188%
2003 . . . . . . . . . . . . . . . . . 103.458%
2004 . . . . . . . . . . . . . . . . 101.729%
2005 and thereafter . . . . . . . . . 100.000%
(b) Notwithstanding the foregoing, during the first 36 months after
the date of the Indenture, the Company may on any one or more occasions redeem
up to an aggregate of 35% of the Notes originally issued at a redemption price
of 109.375% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the redemption date, with the net
cash proceeds of one or more Equity Offerings by the Company or the net cash
proceeds of one or more Equity Offerings by Holdings that are contributed to
the Company as common equity capital; provided that at least 65% of the Notes
originally issued remain outstanding immediately after the occurrence of each
such redemption; and provided, further, that any such redemption must occur
within 120 days of the date of the closing of such Equity Offering.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of aggregate principle amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (in either case, the "Change
of Control Payment"). Within 10 days following any Change of Control, the
Company shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
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(b) If the Company or a Subsidiary consummates any Asset Sales, within
five Business Days of each date on which the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall commence an offer to all
Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% thereof on the date fixed for the closing of such offer or 100%
of the principal amount thereof plus accrued and unpaid interest, if any, to
the date fixed for the closing of such offer, in accordance with the procedures
set forth in the Indenture. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company (or such Subsidiary) may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions
thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and
the Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date
and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such
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Holder, or to comply with the requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture Act.
12. Defaults and Remedies. An "Event of Default" occurs if: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (ii) default in payment when due of the principal
of or premium, if any, on the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (iii) failure by the Company to
comply with the covenants contained in sections 4.10, 4.15 or 5.10 of the
Indenture; (iv) failure by the Company for 60 days after notice to comply with
any of its other agreements in the Indenture or the Notes; (v) default under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the Issue Date, which
default results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness the maturity
of which has been so accelerated, aggregates $10.0 million or more; (vi)
failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; and (viii) except as permitted by the Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; provided, however,
that so long as any Designated Senior Debt is outstanding, such declaration
shall not become effective until the earlier of (i) the day which is five
Business Days after receipt by the Representatives of Designated Senior Debt of
such notice of acceleration or (ii) the date of acceleration of any Designated
Senior Debt. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company or any Restricted Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs
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prior to May 1, 2002 by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to May 1, 2002, then the premium
specified in the Indenture shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
13. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided to Holders of Notes under the Indenture,
Holders of Transferred Restricted Securities shall have all the rights set
forth in the A/B Exchange Registration Rights Agreement dated as of April 30,
1997, between the Company and the parties named on the signature pages thereof
(the "Registration Rights Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. The internal law of the State of New York shall govern and be used to
construe this Note, without regard to the principles of conflicts of laws.
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The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
L-3 Communications Corporation
600 Third Avenue, 34th Floor,
New York, New York 10016
Attention: Vice President-Finance (Fax: 212-805-5470)
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Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- ----------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________________________ to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- ----------------------------------------------------------------------------
Date: _____________________________
Your Signature:____________________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
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<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
/_/ Section 4.10 /_/ Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date:____________________ Your Signature:________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.: _______________________
Signature Guarantee.
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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note,
have been made:
Principal
Amount of Amount of Amount of this Signature of
decrease in increase in Global Note authorized
Principal Principal following such officer of
Date of Amount of this Amount of this decrease (or Trustee or Note
Exchange Global Note Global Note increase) Custodian
- -------- --------------- --------------- --------------- --------------
- --------------------
This should be included only if the Note is issued in global form.
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EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
CUSIP/CINS __________
10 3/8% Senior Subordinated Notes due 2007
No. ___ $__________
L-3 Communications Corporation
promises to pay to ____________________________________________________
or registered assigns,
the principal sum of ___________________________________________________
Dollars on ___________, 2007.
Interest Payment Dates: May 1, and November 1
Record Dates: April 15, and October 15
Dated: _______________, 199__
L-3 Communications Corporation
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the [Global]
Notes referred to in the (SEAL)
within-mentioned Indenture:
Dated:
The Bank of New York,
as Trustee
By:__________________________________
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(Back of Regulation S Temporary Global Note)
10 3/8% Senior Subordinated Notes due 2007
[THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.]
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.]
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.]
- --------------------
This paragraph should be included only if applicable pursuant to the terms of
the Indenture.
This paragraph should be included only if the Note is issued in global form.
This paragraph should be included only if applicable pursuant to the terms of
the Indenture.
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Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. L-3 Communications Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 10
3/8% per annum from April 30, 1997 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages, if
any, semi-annually on May 1 and November 1 of each year, or if any such day is
not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"), with the same force and effect as if made on the date for such
payment. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be November 1, 1997. The
Company shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time
to time on demand at the rate then in effect to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Subordinated Notes under the Indenture.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the April 15 or October 15
(whether or not a Business Day) next preceding the Interest Payment Date, even
if such Notes are cancelled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The Notes will be payable as to principal,
premium, interest and Liquidated Damages at the office or agency of the Company
maintained for such purpose within The City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made
by check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent if such Holders shall be registered Holders of at least $25,000 in
principal amount of the Notes. Such payment shall be in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts.
100
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3. Paying Agent and Registrar. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as of
April 30, 1997 ("Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and
be controlling. The Notes are obligations of the Company limited to $225.0
million in aggregate principal amount, plus amounts, if any, issued to pay
Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. Optional Redemption.
The Notes shall not be redeemable at the Company's option prior to
May 1, 2002. Thereafter, the Notes shall be subject to redemption at any time
at the option of the Company, in whole or in part, upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages
of principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the applicable redemption date, if
redeemed during the twelve-month period beginning on May 1 of the years
indicated below:
Year Percentage
---- ----------
2002 . . . . . . . . . . . . . . . . . 105.188%
2003 . . . . . . . . . . . . . . . . . 103.458%
2004 . . . . . . . . . . . . . . . . 101.729%
2005 and thereafter . . . . . . . . . 100.000%
Notwithstanding the foregoing, during the first 36 months after the
date of the Indenture, the Company may on any one or more occasions redeem up
to an aggregate of 35% of the Notes originally issued at a redemption price of
109.375% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the redemption date, with the net cash
proceeds of one or more Equity Offerings by the Company or the net cash
proceeds of one or more Equity Offerings by Holdings that are contributed to
the Company as common equity capital; provided that at least 65% of the Notes
originally issued remain outstanding immediately after the occurrence of each
such redemption; and provided, further, that any such redemption must occur
within 120 days of the date of the closing of such Equity Offering.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part
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(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at a
purchase price equal to 101% thereof on the date of purchase or 101% of the
aggregate principal amount at maturity thereof plus accrued and unpaid
interest, if any, to the date of purchase (in either case, the "Change of
Control Payment"). Within 10 days following any Change of Control, the Company
shall mail a notice to each Holder setting forth the procedures governing the
Change of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within
five Business Days of each date on which the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall commence an offer to all
Holders of Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% thereof on the date fixed for the closing of such offer or 100%
of the principal amount thereof plus accrued and unpaid interest, if any, to
the date fixed for the closing of such offer, in accordance with the procedures
set forth in the Indenture. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company (or such Subsidiary) may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions
thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and
the Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date
and the corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or
in part for one or more Global Notes only (i) on or after the termination of
the 40-day restricted period (as defined in Regulation S) and (ii) upon
presentation of certificates (accompanied by an Opinion of Counsel, if
applicable) required by Article 2 of the Indenture. Upon exchange of this
Regulation S Temporary Global Note for one or more Global Notes, the Trustee
shall cancel this Regulation S Temporary Global Note.
102
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10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. Defaults and Remedies. An "Event of Default" occurs if: (i) default
for 30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (ii) default in payment when due of the principal
of or premium, if any, on the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (iii) failure by the Company to
comply with the covenants contained in sections 4.10, 4.15 or 5.10 of the
Indenture; (iv) failure by the Company for 60 days after notice to comply with
any of its other agreements in the Indenture or the Notes; (v) default under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the Issue Date, which
default results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness the maturity
of which has been so accelerated, aggregates $10.0 million or more; (vi)
failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; and (viii) except as permitted by the Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; provided, however,
that so long as any Designated Senior Debt is outstanding, such declaration
shall not become effective until the earlier of (i) the day which is five
Business Days after receipt by the Representatives of Designated Senior Debt of
such notice of acceleration or (ii) the date of acceleration of any Designated
Senior Debt. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company or any Restricted Subsidiary, all outstanding
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Notes will become due and payable without further action or notice. Holders of
the Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice
of any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to May
1, 2002 by reason of any willful action (or inaction) taken (or not taken) by
or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to May 1, 2002, then the premium specified in the
Indenture shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
13. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided to Holders of Notes under the Indenture,
Holders of Transferred Restricted Securities shall have all the rights set
forth in the A/B Exchange Registration Rights Agreement dated as of April 30,
1997, between the Company and the parties named on the signature pages thereof
(the "Registration Rights Agreement").
104
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18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. The internal law of the State of New York shall govern and be used to
construe this Note, without regard to the principles of conflicts of laws.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
L-3 Communications Corporation
600 Third Avenue, 34th Floor,
New York, New York 10016
Attention: Vice President-Finance (Fax: 212-805-5470)
105
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Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- ----------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________ to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- ----------------------------------------------------------------------------
Your Signature:____________________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
106
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Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
/_/ Section 4.10 /_/ Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date:____________________ Your Signature:________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.: _______________________
Signature Guarantee.
107
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SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:
Principal
Amount of Amount of Amount of this Signature of
decrease in increase in Global Note authorized
Principal Principal following such officer of
Date of Amount of this Amount of this decrease (or Trustee or Note
Exchange Global Note Global Note increase) Custodian
- -------- --------------- --------------- --------------- --------------
- --------------------
This should be included only if the Note is issued in global form.
108
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EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
L-3 Communications Corporation
600 Third Avenue, 34th Floor,
New York, New York 10016
[Registrar address block]
Re: 10 3/8% Senior Subordinated Notes, Due 2007.
Reference is hereby made to the Indenture, dated as of April 30, 1997
(the "Indenture"), between L-3 Communications Corporation, as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. /_/ Check if Transferee will take delivery of Book-Entry Interests in the
144A Global Note or Definitive Notes Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the Book-Entry
Interests or Definitive Notes are being transferred to a Person that the
Transferor reasonably believes is purchasing the Book-Entry Interests or
Definitive Notes for its own account, or for one or more accounts with respect
to which such Person exercises sole investment discretion, and such Person and
each such account is a "qualified institutional buyer" within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A and such
Transfer is in compliance with any applicable blue sky securities laws of any
state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred Book-Entry
Interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Note
and/or the Definitive Note and in the Indenture and the Securities Act.
2. /_/ Check if Transferee will take delivery of Book-Entry Interests in the
Temporary Regulation S Global Note, the Regulation S Global Note or Definitive
Notes pursuant to Regulation S. The Transfer is being effected pursuant to and
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any
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Person acting on its behalf knows that the transaction was prearranged with a
buyer in the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act and (iii) the transaction is not part of a plan or
scheme to evade the registration requirements of the Securities Act and (iv) if
the proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation
of the proposed transfer in accordance with the terms of the Indenture, the
transferred Book-Entry Interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Global Note and/or the Definitive Note and in the Indenture
and the Securities Act.
3. /_/ Check and complete if Transferee will take delivery of Book-Entry
Interests in the IAI Global Note or Definitive Notes pursuant to any provision
of the Securities Act other than Rule 144A or Regulation S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
Book-Entry Interests in Restricted Global Notes and Definitive Notes bearing
the Private Placement Legend and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any State of the
United States, and accordingly the Transferor hereby further certifies that
(check one):
(a) /_/ such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) /_/ such Transfer is being effected to the Company or a subsidiary
thereof,
or
(c) /_/ such Transfer is being effected pursuant to an effective
registration statement under the Securities Act;
or
(d) /_/ such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that the Transfer complies with the transfer
restrictions applicable to Book-Entry Interests in a Restricted Global Note or
Definitive Notes bearing the Private Placement Legend and the requirements of
the exemption claimed, which certification is supported by (x) if such Transfer
is in respect of a principal amount of Notes at the time of Transfer of
$250,000 or more, a certificate executed by the Transferee in the form of
Exhibit D to the Indenture, or (y) if such Transfer is in respect of a
principal amount of Notes at the time of transfer of less than $250,000, (1) a
certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) an Opinion of Counsel provided by the Transferor or the
Transferee (a copy of which the Transferor has attached to this certification),
to the effect that (1) such Transfer is in compliance with the Securities Act
and (2) such Transfer complies with any applicable blue sky securities laws of
any state of the United States. Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the
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transferred Book-Entry Interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the IAI Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.
4. /_/ Check if Transferee will take delivery of Book-Entry Interests in
the Unrestricted Global Note or in Definitive Notes that do not bear the
Private Placement Legend.
(a) /_/ Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred Book-Entry Interests or
Definitive Notes will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Definitive Notes bearing the Private Placement Legend and in the
Indenture.
(b) /_/ Check if Transfer is Pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state of
the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
Book-Entry Interests or Definitive Notes will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Definitive Notes bearing the Private Placement
Legend and in the Indenture.
(c) /_/ Check if Transfer is Pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903
or Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred Book-Entry
Interests or Definitive Notes will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes or Definitive Notes bearing the Private Placement Legend and in
the Indenture.
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This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
------------------------------------
[Insert Name of Transferor]
By: _________________________
Name:
Title:
Dated: ______________, ____
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ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) /_/ Book-Entry Interests in the:
(i) /_/ 144A Global Note (CUSIP ________), or
(ii) /_/ Regulation S Global Note (CUSIP ________), or
(iii) /_/ IAI Global Note (CUSIP ________); or
(b) /_/ Restricted Definitive Notes.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) /_/ Book-Entry Interests in the:
(i) /_/ 144A Global Note (CUSIP ________), or
(ii) /_/ Regulation S Global Note (CUSIP ________), or
(iii) /_/ IAI Global Note (CUSIP ________); or
(iv) /_/ Unrestricted Global Note (CUSIP ________); or
(b) /_/ Restricted Definitive Notes; or
(c) /_/ Definitive Notes that do not bear the Private Placement
Legend,
in accordance with the terms of the Indenture.
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EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
L-3 Communications Corporation
600 Third Avenue, 34th Floor,
New York, New York 10016
Attention: Vice President-Finance (Fax: 212-805-5470)
Re:10 3/8% Senior Subordinated Notes, Due 2007
(CUSIP ________)
Reference is hereby made to the Indenture, dated as of April __, 1997
(the "Indenture"), between L-3 Communications Corporation, as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
______________, (the "Holder") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount
of $____________ in such Note[s] or interests (the "Exchange"). In connection
with the Exchange, the Holder hereby certifies that:
1. Exchange of Restricted Definitive Notes or Restricted Book-Entry
Interests for Definitive Notes that do not bear the Private Placement Legend
or Unrestricted Book-Entry Interests
(a) /_/ Check if Exchange is from Restricted Book-Entry Interest to
Unrestricted Book-Entry Interest. In connection with the Exchange of the
Holder's Restricted Book-Entry Interest for Unrestricted Book-Entry Interests
in an equal principal amount, the Holder hereby certifies (i) the Unrestricted
Book-Entry Interests are being acquired for the Holder's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Global Notes and pursuant to and in accordance
with the United States Securities Act of 1933, as amended (the "Securities
Act"), (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Unrestricted Book-Entry Interests are being
acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
(b) /_/ Check if Exchange is from Restricted Book-Entry Interest to
Definitive Notes that do not bear the Private Placement Legend. In connection
with the Exchange of the Holder's Restricted Book-Entry Interests for
Definitive Notes that do not bear the Private Placement Legend, the Holder
hereby certifies (i) the Definitive Notes are being acquired for the Holder's
own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Definitive Notes are being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
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(c) /_/ Check if Exchange is from Restricted Definitive Notes to
Unrestricted Book-Entry Interests. In connection with the Holder's Exchange of
Restricted Definitive Notes for Unrestricted Book-Entry Interests, (i) the
Unrestricted Book-Entry Interests are being acquired for the Holder's own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions
on transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Book-Entry Interests are being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(d) /_/ Check if Exchange is from Restricted Definitive Notes to
Definitive Notes that do not bear the Private Placement Legend. In connection
with the Holder's Exchange of a Restricted Definitive Note for Definitive Notes
that do not bear the Private Placement Legend, the Holder hereby certifies (i)
the Definitive Notes that do not bear the Private Placement Legend are being
acquired for the Holder's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Notes are being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
2. Exchange of Restricted Definitive Notes or Restricted Book-Entry
Interests for Restricted Definitive Notes or Restricted Book-Entry Interests
(a) /_/ Check if Exchange is from Restricted Book-Entry Interests to
Restricted Definitive Note. In connection with the Exchange of the Holder's
Restricted Book-Entry Interest for Restricted Definitive Notes with an equal
principal amount, (i) the Restricted Definitive Notes are being acquired for
the Holder's own account without transfer and (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, and in compliance with any applicable blue sky securities laws of any
state of the United States. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Notes
issued will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Definitive Notes and in the
Indenture and the Securities Act.
(b) /_/ Check if Exchange is from Restricted Definitive Notes to
Restricted Book-Entry Interests. In connection with the Exchange of the
Holder's Restricted Definitive Note for Restricted Book-Entry Interests in the
[CHECK ONE] /_/ 144A Global Note, /_/ Regulation S Global Note, /_/ IAI Global
Note with an equal principal amount, (i) the Definitive Notes are being
acquired for the Holder's own account without transfer and (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to
the Restricted Definitive Note and pursuant to and in accordance with the
Securities Act, and in compliance with any applicable blue sky securities laws
of any state of the United States. Upon consummation of the proposed Exchange
in accordance with the terms of the Indenture, the Book-Entry Interests issued
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed
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on the relevant Restricted Global Note and in the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
------------------------------------
[Insert Name of Holder]
By: _________________________
Name:
Title:
Dated: _____________, ______
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EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
L-3 Communications Corporation
600 Third Avenue, 34th Floor,
New York, New York 10016
Attention: Vice President-Finance (Fax: 212-805-5470)
Re: 10 3/8% Senior Subordinated Notes, Due 2007
Reference is hereby made to the Indenture, dated as of April 30, 1997
(the "Indenture"), between L-3 Communications Corporation, as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount at maturity of:
(a) /_/ Book-Entry Interests, or
(b) /_/ Definitive Notes,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which
we are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and
to the Company a signed letter substantially in the form of this letter and, if
such transfer is in respect of a principal amount of Notes, at the time of
transfer of less than $250,000, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such transfer is in compliance
with the Securities Act, (D) outside the United States in accordance with Rule
904 of Regulation S under the Securities Act, (E) pursuant to the provisions of
Rule 144 under the Securities Act or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Notes or Book-Entry Interests from us in a
transaction meeting the requirements of clauses (A) through (E) of this
paragraph a notice advising such purchaser that resales thereof are restricted
as stated herein.
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3. We understand that, on any proposed resale of the Notes or
Book-Entry Interests, we will be required to furnish to you and the Company
such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or Book-Entry Interests therein acquired
by us must be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes or Book-Entry Interests purchased by us
for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
------------------------------------
[Insert Name of Accredited Investor]
By: _________________________
Name:
Title:
Dated: _____________, ______
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EXHIBIT E
Form of Supplemental Indenture to Be Delivered by Guaranteeing Subsidiary
Supplemental Indenture (this "Supplemental Indenture"), dated as of
________________, between __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of L-3 Communications Corporation (or its permitted successor), a
Delaware corporation (the "Company"), and The Bank of New York, as trustee
under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of April 30, 1997 providing
for the issuance of an aggregate principal amount of up to $225,000,000 of
10 3/8% Senior Notes due 2007 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 4.13 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) The Guaranteeing Subsidiary, jointly and severally with all
other Guaranteeing Subsidiaries, if any, unconditionally
guarantees to each Holder of a Senior Note authenticated and
delivered by the Trustee and to the Trustee and its successors
and assigns, regardless of the validity and enforceability of
the Indenture, the Notes or the Obligations of the Company under
the Indenture or the Notes, that:
(i) the principal of, premium and interest on the Notes will be
promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the
overdue principal of, premium and interest on the Notes, to
the extent lawful, and all other Obligations of the Company to
the Holders or the Trustee thereunder or under the Indenture
will be promptly paid in full, all in accordance with the
terms thereof; and
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(ii) in case of any extension of time for payment or renewal of any
Notes or any of such other Obligations, that the same will be
promptly paid in full when due in accordance with the terms of
the extension or renewal, whether at stated maturity, by
acceleration or otherwise.
(b) Notwithstanding the foregoing, in the event that this Subsidiary
Guarantee would constitute or result in a violation of any
applicable fraudulent conveyance or similar law of any relevant
jurisdiction, the liability of the Guaranteeing Subsidiary under
this Supplemental Indenture and its Subsidiary Guarantee shall
be reduced to the maximum amount permissible under such
fraudulent conveyance or similar law.
3. Execution and Delivery of Subsidiary Guarantees.
(a) To evidence its Subsidiary Guarantee set forth in this
Supplemental Indenture, the Guaranteeing Subsidiary hereby
agrees that a notation of such Subsidiary Guarantee
substantially in the form of Exhibit F to the Indenture shall be
endorsed by an officer of such Guaranteeing Subsidiary on each
Senior Note authenticated and delivered by the Trustee after the
date hereof.
(b) Notwithstanding the foregoing, the Guaranteeing Subsidiary
hereby agrees that its Subsidiary Guarantee set forth herein
shall remain in full force and effect notwithstanding any
failure to endorse on each Senior Note a notation of such
Subsidiary Guarantee.
(c) If an Officer whose signature is on this Supplemental Indenture
or on the Subsidiary Guarantee no longer holds that office at
the time the Trustee authenticates the Senior Note on which a
Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
(d) The delivery of any Senior Note by the Trustee, after the
authentication thereof under the Indenture, shall constitute due
delivery of the Subsidiary Guarantee set forth in this
Supplemental Indenture on behalf of the Guaranteeing
Subsidiary.
(e) The Guaranteeing Subsidiary hereby agrees that its obligations
hereunder shall be unconditional, regardless of the validity,
regularity or enforceability of the Notes or the Indenture,
the absence of any action to enforce the same, any waiver or
consent by any Holder of the Notes with respect to any
provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any
other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(f) The Guaranteeing Subsidiary hereby waives diligence,
presentment, demand of payment, filing of claims with a court in
the event of insolvency or bankruptcy of the Company, any right
to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that
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its Subsidiary Guarantee made pursuant to this Supplemental
Indenture will not be discharged except by complete performance
of the obligations contained in the Notes and the Indenture.
(g) If any Holder or the Trustee is required by any court or
otherwise to return to the Company or the Guaranteeing
Subsidiary, or any Custodian, Trustee, liquidator or other
similar official acting in relation to either the Company or
the Guaranteeing Subsidiary, any amount paid by either to the
Trustee or such Holder, the Subsidiary Guarantee made pursuant
to this Supplemental Indenture, to the extent theretofore
discharged, shall be reinstated in full force and effect.
(h) The Guaranteeing Subsidiary agrees that it shall not be entitled
to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in
full of all obligations guaranteed hereby. The Guaranteeing
Subsidiary further agrees that, as between the Guaranteeing
Subsidiary, on the one hand, and the Holders and the Trustee, on
the other hand:
(i) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 of the Indenture for
the purposes of the Subsidiary Guarantee made pursuant to
this Supplemental Indenture, notwithstanding any stay,
injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed
hereby; and
(ii) in the event of any declaration of acceleration of such
obligations as provided in Article 6 of the Indenture, such
obligations (whether or not due and payable) shall
forthwith become due and payable by the Guaranteeing
Subsidiary for the purpose of the Subsidiary Guarantee made
pursuant to this Supplemental Indenture.
(i) The Guaranteeing Subsidiary shall have the right to seek
contribution from any other non-paying Guaranteeing Subsidiary
so long as the exercise of such right does not impair the rights
of the Holders or the Trustee under the Subsidiary Guarantee
made pursuant to this Supplemental Indenture.
4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms.
(a) Except as set forth in Articles 4 and 5 of the Indenture,
nothing contained in the Indenture, this Supplemental
Indenture or in the Notes shall prevent any consolidation or
merger of the Guaranteeing Subsidiary with or into the Company
or any other Guaranteeing Subsidiary or shall prevent any
transfer, sale or conveyance of the property of the
Guaranteeing Subsidiary as an entirety or substantially as an
entirety, to the Company or any other Guaranteeing Subsidiary.
(b) Except as set forth in Article 4 of the Indenture, nothing
contained in the Indenture, this Supplemental Indenture or in
the Notes shall prevent any consolidation or merger of the
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Guaranteeing Subsidiary with or into a corporation or
corporations other than the Company or any other Guaranteeing
Subsidiary (in each case, whether or not affiliated with the
Guaranteeing Subsidiary), or successive consolidations or
mergers in which a Guaranteeing Subsidiary or its successor or
successors shall be a party or parties, or shall prevent any
sale or conveyance of the property of a Guaranteeing Subsidiary
as an entirety or substantially as an entirety, to a corporation
other than the Company or any other Guaranteeing Subsidiary (in
each case, whether or not affiliated with the Guaranteeing
Subsidiary) authorized to acquire and operate the same;
provided, however, that the Guaranteeing Subsidiary hereby
covenants and agrees that (i) subject to the Indenture, upon any
such consolidation, merger, sale or conveyance, the due and
punctual performance and observance of all of the covenants and
conditions of the Indenture and this Supplemental Indenture to
be performed by such Guaranteeing Subsidiary, shall be expressly
assumed (in the event that the Guaranteeing Subsidiary is not
the surviving corporation in the merger), by supplemental
indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee, by the corporation formed by such
consolidation, or into which the Guaranteeing Subsidiary shall
have been merged, or by the corporation which shall have
acquired such property and (ii) immediately after giving effect
to such consolidation, merger, sale or conveyance no Default or
Event of Default exists.
(c) In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the Subsidiary
Guarantee made pursuant to this Supplemental Indenture and the
due and punctual performance of all of the covenants and
conditions of the Indenture and this Supplemental Indenture to
be performed by the Guaranteeing Subsidiary, such successor
corporation shall succeed to and be substituted for the
Guaranteeing Subsidiary with the same effect as if it had been
named herein as the Guaranteeing Subsidiary; provided that,
solely for purposes of computing Consolidated Net Income for
purposes of clause (b) of the first paragraph of Section 4.07
in the Indenture, the Consolidated Net Income of any Person
other than Central Tractor Farm & Country, Inc. and its
Restricted Subsidiaries shall only be included for periods
subsequent to the effective time of such merger,
consolidation, combination or transfer of assets. Such
successor corporation thereupon may cause to be signed any or
all of the Subsidiary Guarantees to be endorsed upon the Notes
issuable under the Indenture which theretofore shall not have
been signed by the Company and delivered to the Trustee. All
the Subsidiary Guarantees so issued shall in all respects have
the same legal rank and benefit under the Indenture and this
Supplemental Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms
of the Indenture and this Supplemental Indenture as though all
of such Subsidiary Guarantees had been issued at the date of
the execution hereof.
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5. Releases.
(a) Concurrently with any sale of assets (including, if
applicable, all of the Capital Stock of the Guaranteeing
Subsidiary), all Liens, if any, in favor of the Trustee in the
assets sold thereby shall be released; provided that in the
event of an Asset Sale, the Net Proceeds from such sale or other
disposition are treated in accordance with the provisions of
Section 4.10 of the Indenture. If the assets sold in such sale
or other disposition include all or substantially all of the
assets of the Guaranteeing Subsidiary or all of the Capital
Stock of the Guaranteeing Subsidiary, then the Guaranteeing
Subsidiary (in the event of a sale or other disposition of all
of the Capital Stock of such Guaranteeing Subsidiary) or the
Person acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such
Guaranteeing Subsidiary) shall be released from and relieved of
its obligations under this Supplemental Indenture and its
Subsidiary Guarantee made pursuant hereto; provided that in the
event of an Asset Sale, the Net Proceeds from such sale or other
disposition are treated in accordance with the provisions of
Section 4.10 of the Indenture. Upon delivery by the Company to
the Trustee of an Officers' Certificate to the effect that such
sale or other disposition was made by the Company or the
Guaranteeing Subsidiary, as the case may be, in accordance with
the provisions of the Indenture and this Supplemental Indenture,
including without limitation, Section 4.10 of the Indenture, the
Trustee shall execute any documents reasonably required in order
to evidence the release of the Guaranteeing Subsidiary from its
obligations under this Supplemental Indenture and its Subsidiary
Guarantee made pursuant hereto. If the Guaranteeing Subsidiary
is not released from its obligations under its Subsidiary
Guarantee, it shall remain liable for the full amount of
principal of and interest on the Notes and for the other
obligations of such Guaranteeing Subsidiary under the Indenture
as provided in this Supplemental Indenture.
(b) Upon the designation of a Guaranteeing Subsidiary as an
Unrestricted Subsidiary in accordance with the terms of the
Supplemental Indenture, such Guaranteeing Subsidiary shall be
released and relieved of its obligations under its Subsidiary
Guarantee and this Supplemental Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such designation of such
Guaranteeing Subsidiary as an Unrestricted Subsidiary was made
by the Company in accordance with the provisions of this
Supplemental Indenture, also including without limitation
Section 4.07 of the Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release
of such Guaranteeing Subsidiary from its obligations under its
Subsidiary Guarantee. Any Guaranteeing Subsidiary not released
from its obligations under its Subsidiary Guarantee shall remain
liable for the full amount of principal of and interest on the
Notes and for the other obligations of any
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Guaranteeing Subsidiary under the Indenture as provided in
Article 10.
6. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the
Company or any Guaranteeing Subsidiary under the Notes, any Subsidiary
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Senior Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
8. Counterparts The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ____________ ___, ____ [GUARANTEEING SUBSIDIARY]
By: _______________________________
Name:
Title:
Dated: ____________ ___, ____ The Bank of New York
as Trustee
By: _______________________________
Name:
Title:
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EXHIBIT F
Form of Notation on Senior Subordinated Note Relating to Subsidiary Guarantee
Each Guaranteeing Subsidiary (as defined in the Supplemental
Indenture (the "Supplemental Indenture") among _______________ and
_________________, (i) has jointly and severally unconditionally guaranteed (a)
the due and punctual payment of the principal of, premium and interest on the
Notes, whether at maturity or an interest payment date, by acceleration, call
for redemption or otherwise, (b) the due and punctual payment of interest on
the overdue principal and premium of, and interest on the Notes, and (c) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same will be promptly paid in full when due in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise and (ii) has agreed to pay any and all
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Subsidiary Guarantee.
Notwithstanding the foregoing, in the event that the Subsidiary
Guarantee of any Guaranteeing Subsidiary would constitute or result in a
violation of any applicable fraudulent conveyance or similar law of any
relevant jurisdiction, the liability of such Guaranteeing Subsidiary under its
Subsidiary Guarantee shall be reduced to the maximum amount permissible under
such fraudulent conveyance or similar law.
No past, present or future director, officer, employee, agent,
incorporator, stockholder or agent of any Guaranteeing Subsidiary, as such,
shall have any liability for any obligations of the Company or any Guaranteeing
Subsidiary under the Notes, any Subsidiary Guarantee, Indenture, any
supplemental indenture delivered pursuant to the Indenture by such Guaranteeing
Subsidiary or any Subsidiary Guarantees, or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Holder by accepting
a Senior Note waives and releases all such liability.
This Subsidiary Guarantee shall be binding upon each Guaranteeing
Subsidiary and its successors and assigns and shall inure to the benefit of the
successors and assigns of the Trustee and the Holders and, in the event of any
transfer or assignment of rights by any Holder or the Trustee, the rights and
privileges herein conferred upon that party shall automatically extend to and
be vested in such transferee or assignee, all subject to the terms and
conditions hereof.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Senior Note upon which
this Subsidiary Guarantee is noted have been executed by the Trustee under
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the Indenture by the manual signature of one of its authorized officers.
Capitalized terms used herein have the meaning assigned to them in the
Indenture.
[GUARANTEEING SUBSIDIARY]
By:_______________________
Name:
Title:
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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
AGREEMENT, made April 30, 1997 by and between L-3 Communications
Holdings, Inc., a Delaware corporation (the "Company") and Frank C. Lanza (the
"Executive").
RECITALS
In order to induce Executive to serve as the Chairman and Chief
Executive Officer of the Company, the Company desires to provide Executive with
compensation and other benefits on the terms and conditions set forth in this
Agreement.
Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the Term hereof as its Chairman and Chief
Executive Officer. In his capacity as the Chairman and Chief Executive Officer
of the Company, Executive shall report to the Board of Directors of the Company
(the "Board") and shall have the customary powers, responsibilities and
authorities of chairmen and chief executive officers of corporations of the
size, type and nature of the Company, as it exists from time to time, and as
are assigned by the Board.
1.2 Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment as the Chairman and Chief Executive Officer of the
Company commencing as of the date hereof (the "Commencement Date") and agrees
to devote his full business time and efforts to the
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performance of services, duties and responsibilities in connection therewith,
subject at all times to review and control of the Board. In addition, during
the Initial Term and any Renewal Term, (i) the Company agrees to nominate
Executive for election to the Board and use its best efforts to cause his
election to the Board and Executive agrees to serve on the Board of the Company
and (ii) during the Term of Employment, Executive also agrees to serve, if
elected, as an officer and/or director of any Subsidiary of the Company,
without the payment of any additional compensation therefor. Upon the
termination of Executive's employment for any reason, Executive shall resign as
a member of the Board of the Company or any Subsidiary of the Company.
1.3 Nothing in this Agreement shall preclude Executive from engaging
in charitable work and community affairs, from managing any investment made by
him with respect to which Executive is not substantially involved with the
management or operation of the entity in which Executive has invested (provided
that no such investment in publicly traded equity securities or other property
may exceed 5% of the equity of any entity, without the prior approval of the
Board) or from serving, subject to the prior approval of the Board, as a member
of boards of directors or as a trustee of any other corporation, association or
entity, to the extent that any of the above activities do not materially
interfere with the performance of his duties hereunder. For purposes of the
preceding sentence, any approval by the Board required therein shall not be
unreasonably withheld.
2. Term of Employment. Executive's term of employment under this
Agreement (the "Term of Employment") shall commence on the Commencement Date
and, subject to the terms hereof, shall terminate on the earlier of (i) the
fifth anniversary of the Commencement Date (the "Initial Term") or (ii)
termination of Executive's employment pursuant to this Agreement.
Notwithstanding the foregoing, subsequent to the Initial Term, Executive's
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Term of Employment under this Agreement shall automatically renew annually for
one year renewal terms (the "Renewal Term") unless either party shall deliver
to the other written notice, at least 90 days prior to the expiration of the
Initial Term or any Renewal Term, that the Term of Employment shall not be
extended. In such event, the Term of Employment will end at its then scheduled
expiration date and shall not be further extended except by written agreement
of the Company and Executive.
3. Compensation.
3.1 Salary. During the Initial Term of Executive's employment under
the terms of this Agreement, the Company shall pay Executive a base salary
("Base Salary") at an initial rate of $750,000 per annum. Base Salary shall be
payable in accordance with the ordinary payroll practices of the Company.
During the Term of Employment, the Board shall, in good faith, review, at least
annually, the Executive's Base Salary in accordance with the Company's
customary procedures and practices regarding the salaries of senior executives
and may, if determined by the Board to be appropriate, increase Executive's
Base Salary following such review. Increases in the rate of salary, once
granted, shall not be subject to revocation or decrease thereafter, and "Base
Salary" for all purposes herein shall be deemed to be a reference to such
higher amount.
4. Employee Benefits.
4.1 Equity and Stock Options. Simultaneously with the execution of
this Agreement, the Company and Executive are entering into the Subscription
Agreement, the Option Agreement and the Stockholders' Agreement in the forms
attached hereto as Exhibits A, B and C, respectively (the "Ancillary
Documents"). Executive shall not be eligible to receive any stock option or
other equity incentive other than as set forth in the Ancillary Documents.
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4.2 Employee Benefit Programs, Plans and Practices. The Company shall
provide Executive while employed hereunder with coverage under such employee
benefits (commensurate with his position in the Company and to the extent
permitted under any employee benefit plan) in accordance with the terms
thereof, which the Company makes available to its senior executives.
4.3 Vacation. Executive shall be entitled to twenty (20) business days
paid vacation each calendar year, which shall be taken at such times as are
consistent with Executive's responsibilities hereunder. Any vacation days not
taken during the calendar year in which they are accrued may be carried over
into the next subsequent year.
5. Expenses. Subject to prevailing Company policy or such guidelines
as may be established by the Board, the Company will reimburse Executive for
all reasonable expenses incurred by Executive in carrying out his duties.
6. Termination of Employment.
6.1 Termination Not for Cause or for Good Reason. (a) The Company or
Executive may terminate Executive's Term of Employment at any time for any
reason by written notice at least thirty (30) days in advance. If Executive's
employment is terminated (i) by the Company other than for Cause (as defined in
Section 6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death
or (ii) by Executive for Good Reason (as defined in Section 6.1(b) hereof)
prior to the end of the Initial Term or any Renewal Term, the Company shall
continue to pay Executive's Base Salary through the end of the Initial Term or
the Renewal Term (the "Continuation Period"), as the case may be, with such
payments to be made in accordance with the terms of Section 3.1. (the
"Severance Payments"). In addition, the Company shall continue to provide
Executive during the Continuation Period with life insurance, medical and
hospitalization benefits (collectively, the "Continuation Benefits") comparable
to those provided to other senior executives; provided, however,
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that any such coverage shall terminate to the extent that Executive is offered
or obtains comparable life insurance, medical or hospitalization benefits
coverage from any other employer during the Continuation Period.
Notwithstanding the foregoing, if Executive breaches any provision of Section
11 hereof, the remaining balance of the Severance Payments and any Continuation
Benefits shall be forfeited. Executive shall be entitled to receive the
benefits, if any, provided under the employee benefit programs, plans and
practices referred to in Section 4.2, in accordance with their terms.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) A reduction by the Company in Executive's Base Salary (in which
event Severance Payments shall be made based upon Executive's Base Salary
in effect prior to any such reduction); or
(ii) Any material diminution or material adverse change in Executive's
titles, duties or responsibilities, unless due to a promotion or increased
responsibility of Executive.
(c) Termination by Executive for Good Reason shall be made by delivery
to the Company by Executive of written notice, given at least 45 days prior to
such termination, which sets forth the conduct believed to constitute Good
Reason; provided, however, that the Company shall have the opportunity to cure
the Good Reason during the first 30 days of such notice period and if the Good
Reason is cured within such 30-day period, Executive's notice of termination
shall be deemed withdrawn. If no notice is given within 90 days of the event
giving rise to Good Reason, the Good Reason shall be deemed waived.
6.2 Voluntary Termination by Executive; Discharge for Cause. (a) In
the event that Executive's employment is terminated (i) by the Company for
Cause, as hereinafter defined or (ii) by Executive other than for Good Reason,
Disability or death, Executive shall only be entitled to receive (A) any Base
Salary accrued but unpaid prior to such termination and (B) any
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benefits provided under the employee benefit programs, plans and practices
referred to in Section 4.2 hereof, in accordance with their terms. After the
termination of Executive's employment under this Section 6.2, the obligations
of the Company under this Agreement to make any further payments, or provide
any benefits specified herein, to Executive shall thereupon cease and
terminate.
(b) As used herein, the term "Cause" shall be limited to (i) gross
neglect of or willful and continuing refusal by Executive to substantially
perform Executive's duties hereunder (other than due to death or Disability, as
such term is defined in Section 6.3 hereof), (ii) any breach of the provisions
of Section 11 of this Agreement by Executive, (iii) willfully engaging in
conduct that is demonstrably injurious to the Company or the Company's
subsidiaries or affiliates by Executive or (iv) conviction of, or plea of nolo
contendere, by Executive to (a) any felony or (b) a misdemeanor involving moral
turpitude. Termination of Executive pursuant to this Section 6.2 shall be made
by delivery to Executive of written notice, given at least 30 days prior to
such Termination, from the Board specifying the particulars of the conduct by
Executive set forth in any of clauses (i) through (iv) above. Termination shall
be effected by a majority vote of the Board at a meeting at which Executive
shall have had the opportunity (along with counsel) to be heard unless within
30 days after receiving such notice, Executive shall have cured Cause to the
reasonable satisfaction of the Board; provided, however, that no cure shall be
possible if termination for Cause is made pursuant to this Section 6.2(b)(ii)
or (iv). As long as Executive is on the Board, he shall reasonably cooperate to
cause a valid Board meeting to occur.
6.3 Disability. In the event of the Disability (as defined below) of
Executive during the Term of Employment, the Company may terminate Executive's
Term of Employment upon written notice to Executive (or
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Executive's personal representative, if applicable) effective upon the date of
receipt thereof (the "Disability Commencement Date"). The obligation of the
Company to make any further payments under this Agreement shall, except for
earned but unpaid Base Salary, cease as of the Disability Commencement Date;
provided, however, that Executive shall continue to receive payments equal to
Executive's Base Salary otherwise payable under this Agreement for a period
equal to the lesser of (i) six months after the date of the occurrence of the
incapacity causing Executive's Disability and (ii) the number of months
otherwise remaining in the Term of Employment, in either case, reduced by the
amount of any disability payments otherwise payable to Executive under any
insurance program of the Company. The term "Disability," for purposes of this
Agreement, shall mean Executive's absence from the full-time performance of
Executive's duties pursuant to a reasonable determination made in accordance
with the Company's disability plan that Executive is disabled as a result of
incapacity due to physical or mental illness that lasts, or is reasonably
expected to last, for at least six months.
6.4 Death. In the event of Executive's death during his Term of
Employment hereunder or at any time thereafter while payments are still owing
to Executive under the terms of this Agreement, all obligations of the Company
to make any further payments, other than the obligation to pay any accrued but
unpaid Base Salary or remaining payments that were payable to Executive by
reason of his termination of employment under Section 6.1 to which Executive
was entitled at the time of his death, shall terminate upon Executive's death,
and benefits shall become payable under the Company's life and accidental death
insurance program in accordance with its terms. Benefits under all other
employee benefit programs, plans and practices shall be paid in accordance with
their terms.
6.5 No Further Notice or Compensation. Executive understands and
agrees that he shall not be entitled to any further notice or compensation
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upon Termination of Employment under this Agreement, other than amounts
specified in this Section 6 and the Ancillary Documents. Executive shall not
have any obligation to seek comparable employment following such termination or
resignation, nor shall any compensation received from any subsequent employment
reduce the Company's obligations hereunder.
6.6 Executive's Duty to Provide Materials. Upon the termination of the
Term of Employment for any reason, Executive or his estate shall surrender to
the Company all correspondence, letters, files, contracts, mailing lists,
customer lists, advertising materials, ledgers, supplies, equipment, checks,
and all other materials and records of any kind that are the property of the
Company or any of its subsidiaries or affiliates, that may be in Executive's
possession or under his control, including all copies of any of the foregoing;
provided, however, Executive shall not be required to surrender his personal
rolodex, telephone book, appointment book and personal materials acquired by
Executive prior to the date hereof.
7. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
with a copy to:
Alvin H. Brown, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
To Executive:
Frank C. Lanza
37 Murray Hill Road
Scarsdale, NY 10583
with a copy to:
Robert C. Schwenkel
Fried, Frank, Harris, Shriver & Jacobson
1 New York Plaza
New York, New York 10004
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Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of sending shall constitute the time at which notice was given.
8. Separability. If any provision of this Agreement shall be declared
to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
9. Assignment. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or, in the case of the Options, by trust for the
benefit of Executive's spouse and/or children or by operation of the laws of
intestate succession) or by the Company, except that the Company may assign
this Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or businesses of the Company, if
such successor expressly agrees to assume the obligations of the Company
hereunder.
10. Amendment. This Agreement may only be amended by written agreement
of the parties hereto.
11. Nondisclosure of Confidential Information: Non-Competition. (a)
While employed by the Company, and at any time thereafter, the Executive shall
not, without the prior written consent of the Company, use, divulge, disclose
or make accessible to any other person, firm, partnership, corporation or other
entity any Confidential Information pertaining to the business of the Company
or any of its affiliates, except (i) while employed
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by the Company, in the business of and for the benefit of the Company or (ii)
when required to do so by applicable law, by a court, by any governmental
agency, or by any administrative body or legislative body (including a
committee thereof); provided, however, that Executive shall give reasonable
notice under the circumstances to the Company that he has been notified that he
will be required to so disclose as soon as possible after receipt of such
notice in order to permit the Company to take whatever action it reasonably
deems necessary to prevent such disclosure and Executive shall cooperate with
the Company to the extent that it reasonably requests him to do so. For
purposes of this Section 11(a), "Confidential Information" shall mean
non-public information concerning the financial data, strategic business plans,
product development (or other proprietary product data), customer lists,
marketing plans and other non-public, proprietary and confidential information
of the Company, its subsidiaries, its affiliates or customers, that, in any
case, is not otherwise available to the public (other than by Executive's
breach of the terms hereof).
(b) In consideration of the Company's obligations under this
Agreement, Executive agrees that during the period of his employment hereunder
and for a period of twelve (12) months thereafter, without the prior written
consent of the Board, (A) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have
any financial interest in, any entity which is in competition with the business
of the Company or its subsidiaries and (B) he shall not, on his own behalf or
on behalf of any person, firm or company, directly or indirectly, solicit or
offer employment to any person who is or has been employed by the Company or
its subsidiaries at any time during the twelve (12) months immediately
preceding such solicitation; provided, however, that if the Executive's
employment terminates following the
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expiration of the Initial Term, this subsection 11(b) shall only be effective
during the period, if any, that the Company pays the Executive the Severance
Payments.
(c) For purposes of this Section 11, an entity shall be deemed to be
in competition with the Company if it is principally involved in the purchase,
sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company as a part of the business
of the Company within the same geographic area in which the Company effects
such sales or dealings or renders such services. Notwithstanding this
subsection 11(c) or subsection 11(b), nothing herein shall (i) prohibit
Executive from serving as an officer, employee or independent consultant of any
business unit or subsidiary which would not otherwise be in competition with
the Company or its subsidiaries, but which business unit is a part of, or which
subsidiary is controlled by, or under common control with, an entity that would
be in competition with the Company or its subsidiaries, so long as Executive
does not engage in any activity which is in competition with any business of
the Company or its subsidiaries or (ii) be construed so as to preclude
Executive from investing in any publicly or privately held company, provided
Executive's beneficial ownership of any class of such company's securities does
not exceed 5% of the outstanding securities of such class.
(d) Executive agrees that this covenant not to compete is reasonable
under the circumstances and will not interfere with his ability to earn a
living or to otherwise meet his financial obligations. Executive and the
Company agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. Executive agrees that any breach of
the covenants contained in this Section 11 would
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irreparably injure the Company. Accordingly, Executive agrees that, in the
event the Company determines that Executive has breached the covenants
contained in this Section 11, the Company may, in addition to pursuing any
other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against Executive
from any court having jurisdiction over the matter restraining any further
violation of this Agreement by Executive.
12. Beneficiaries; References. Executive shall be entitled to select
(and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder
following Executive's death, and may change such election, in either case by
giving the Company written notice thereof. In the event of Executive's death or
a judicial determination of his incompetence, reference in this Agreement to
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative. Any reference to the masculine gender in
this Agreement shall include, where appropriate, the feminine.
13. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the survivorship provisions of
any other section of this Agreement.
14. Dispute Resolution; Legal Fees. Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by the court with
the appropriate jurisdiction in the State of New York. The prevailing party
shall be entitled to be reimbursed for any reasonable legal fees and other fees
and expenses which may be incurred in respect of enforcing its respective
rights under this Agreement.
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15. Governing Law. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of New York, without
reference to rules relating to conflicts of law.
16. Effect on Prior Agreements. This Agreement and the Ancillary
Documents contain the entire understanding between the parties hereto and
supersedes in all respects any prior or other agreement or understanding, both
written and oral, between the Company, any affiliate of the Company or any
predecessor of the Company or affiliate of the Company and Executive.
17. Withholding. The Company shall be entitled to withhold from
payment any amount of withholding required by law.
18. Survival. Notwithstanding the expiration of the term of this
Agreement, the provisions of Section 11 hereunder shall remain in effect as
long as is reasonably necessary to give effect thereto in accordance with the
terms hereof.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
L-3 Communications Holdings, Inc.
By /s/ Michael T. Strianese
Name: Michael T. Strianese
Title: Vice President, Finance and Controller
/s/ Frank C. Lanza
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EXHIBIT A
COMMON STOCK SUBSCRIPTION AGREEMENT
COMMON STOCK SUBSCRIPTION AGREEMENT, dated as of April 30, 1997
between L-3 Communications Holdings, Inc., a Delaware corporation (the
"Company"), and Frank C. Lanza (the "Purchaser").
WHEREAS, the Company was recently incorporated for the purpose of
consummating the transactions (the "Transactions") contemplated by the
Transaction Agreement (as defined below); and
WHEREAS, the Purchaser desires to subscribe for and acquire from the
Company, and the Company desires to issue and sell to the Purchaser, the number
of shares of Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"), of the Company set forth on Schedule I, as hereinafter set forth.
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
1. Definitions
"Active Trading Market" shall mean, as to the Company's common
stock, that the Company's common stock is listed or quoted on a national
exchange or the NASDAQ National Market.
"Affiliate", as applied to any Person, shall mean any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract or otherwise.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Cause" shall have the meaning given such term in the Employment
Agreement.
"Change of Control" shall mean an acquisition of all or
substantially all of the direct and indirect assets of the Company and its
subsidiaries (by merger, consolidation, stock or asset sale or otherwise),
unless immediately following any such transaction Lehman and LBHI and Lockheed
Martin and their Affiliates own 50% or more of the combined voting power of the
then outstanding voting securities entitled to vote generally of the Company or
the acquiror of such assets, as the case may be.
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2
"Class A Common Stock" shall mean the Class A Common Stock, par
value $.01 per share, of the Company.
"Class B Common Stock" shall have the meaning set forth in the
recitals of this Agreement.
"Class C Common Stock" shall mean the Class C Common Stock, par
value $.01 per share, of the Company.
"Common Stock" shall mean the Class A Common Stock, Class B Common
Stock and Class C Common Stock.
"Cost of the Common Stock" shall mean as at any date $5.00 per
share, as appropriately adjusted for stock splits, subdivisions, combinations
and similar transactions; provided that in the event any of the Shares Subject
to Forfeiture are forfeited, the Cost of the Common Stock shall be an amount per
share equal to $15,000,000 divided by the total number of shares of Class B
Common Stock purchased hereunder minus the number of Shares Subject to
Forfeiture that have been forfeited.
"Disability" shall have the meaning given such term in the
Employment Agreement.
"Employment Agreement" shall mean the Employment Agreement dated the
date hereof between the Purchaser and the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall have the meaning given such term in the
Option Agreement.
"Forfeiture Event" shall have the meaning set forth in Section 5.1.
"FMV per Share" shall mean (i) if determined upon a Public Offering,
the offering price per share of common stock; (ii) if determined upon a Change
of Control, the value of the equity of the Company divided by the total number
of outstanding shares of common stock of the Company; and (iii) otherwise, the
fair market value of the equity of the Company, as determined by the Board of
Directors in good faith (based on the opinion of an independent
nationally-recognized investment banking firm), divided by the total number of
outstanding shares of common stock of the Company; provided, however, that in
the case of clause (iii) above if there is an Active Trading Market for the
shares of any class of the Common Stock at the time of the determination of the
FMV per Share, FMV per Share shall be the average of the closing prices of such
Shares for the 20 trading days immediately preceding such determination date.
<PAGE>
3
"Initial Public Offering" shall mean the initial Public Offering
(other than pursuant to a registration statement on Form S-8 or otherwise
relating to equity securities issuable under any employee benefit plan of the
Company).
"Good Reason" shall have the meaning given such term in the
Employment Agreement.
"Initial Holders of Class B Common Stock" shall mean the Purchaser
and LaPenta.
"LaPenta" shall mean Robert V. LaPenta.
"LBHI" shall mean Lehman Brothers Holdings Inc., a Delaware
corporation and the general partner of Lehman.
"Lehman" shall mean Lehman Brothers Capital Partners III, L.P., a
Delaware limited partnership.
"Lockheed Martin" shall mean Lockheed Martin Corporation, a Maryland
corporation.
"Options" shall mean the options to purchase Class A Common Stock
granted to the Purchaser pursuant to the Nonqualified Stock Option Agreement
dated as of the date hereof.
"Option Shares" shall mean the shares of Class A Common Stock
received by the Purchaser upon the exercise of any Options.
"Permitted Transferee" shall mean as to the Purchaser and his
Permitted Transferees, his or her spouse or any of his or her lineal descendants
or legatees or a testamentary trust for such legatees, or a trust or individual
retirement account, the beneficiaries of which or a corporation or partnership
the stockholders or partners of which include only the Purchaser, his or her
spouse and his or her lineal descendants or a corporation or partnership wholly
owned by them.
"Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, limited liability company, unincorporated
association, joint venture or other entity of whatever nature.
"Public Offering" shall mean the sale of shares of any class of the
Company's common stock to the public pursuant to an effective registration
statement (other than a registration statement on Form S-4 or S-8 or any similar
or successor form) filed under the Securities Act which results in an Active
Trading Market of 25% or more of the outstanding shares of the Company's common
stock.
"Purchaser's Group" shall have the meaning given such term in
Section 4.1.
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4
"Put/Call Percentage" shall mean, initially, 75%, and such Put/Call
Percentage shall be reduced by 15 percentage points on each anniversary
(including the first) of the Closing Date.
"Restriction Lapse" shall have the meaning set forth in Section 5.2.
"Retirement" shall mean normal retirement under the terms of any
tax-qualified retirement plan of the Company, which retirement occurs more than
three years after the Closing Date. Any purported retirement by the Purchaser
prior to the third anniversary of the Closing Date shall be treated, for
purposes of this Agreement, the same as a termination without Good Reason.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SEC" shall mean the Securities and Exchange Commission.
"Shares Subject to Forfeiture" shall mean 300,000 (as such number
may be subsequently adjusted pursuant to Section 6.1) shares of the Class B
Common Stock purchased pursuant hereto.
"Stockholder" shall mean each of Lockheed Martin, Lehman, LBHI, the
Purchaser and Lanza and any other person who becomes party to the Stockholders
Agreement pursuant to the terms thereof.
"Stockholders Agreement" shall mean the Stockholders Agreement dated
as of the date hereof among the Company, Lehman, LBHI, Lockheed Martin, the
Purchaser and LaPenta.
"Termination of Employment" shall mean a termination of the
Purchaser's employment with the Company (regardless of the reason therefor).
"Transaction Agreement" shall mean the Transaction Agreement dated
as of March 28, 1997, as amended, by and among the Company, Lehman, Lockheed
Martin, the Purchaser and LaPenta.
"Transactions" shall have the meaning set forth in the recitals of
this Agreement.
2. Subscription for and Purchase of Common Stock.
2.1 Purchase of Common Stock. Pursuant to the terms and subject to
the conditions set forth in this Agreement, the Purchaser hereby subscribes for
and agrees to purchase, and the Company hereby agrees to issue and sell to the
Purchaser, on the Closing Date (as defined in Section 2.2), the number of shares
of Class B Common Stock at a price per share as set forth on Schedule I, for the
aggregate amount (the "Purchase Price") set forth on Schedule I.
<PAGE>
5
2.2 The Closing. The closing (the "Closing") of the purchase of the
Common Stock shall take place simultaneously with and at the same location as
the consummation of the Transactions (the "Closing Date"). The Closing shall
occur at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York 10017, or at such other place as the parties may mutually agree.
At the Closing, the Company will deliver to the Purchaser one or more duly
executed stock certificates, registered in the Purchaser's name and representing
the shares of Class B Common Stock purchased pursuant to Section 2.1, against
payment of the Purchase Price therefor by delivery to the Company of immediately
available funds in the amount of the Purchase Price representing payment in full
for such Class B Common Stock.
2.3 Conditions to the Obligations of the Parties Hereunder. The
obligations of the parties hereto shall be subject to the condition that,
substantially simultaneously with the sale to the Purchaser of the Class B
Common Stock, the Company shall have received the proceeds of the additional
equity and debt financing contemplated by, and necessary to consummate, the
Transactions and the Transactions shall have been consummated concurrently
therewith.
2.4 Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser as follows:
(a) The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and this Agreement has been duly
authorized, executed and delivered by the Company and is valid, binding
and enforceable against the Company in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(b) The Class B Common Stock to be issued to the Purchaser pursuant
to this Agreement has been duly authorized, and when issued and delivered
in accordance with the terms hereof, will be duly and validly issued and,
upon receipt by the Company of the funds equal to the Purchase Price, will
be fully paid and nonassessable; and
(c) None of the execution, delivery or performance of this Agreement
by the Company will conflict with the Company's certificate of
incorporation or by-laws or result in any breach of any terms or
provisions of, or constitute a default under, any contract, agreement or
instrument to which the Company is a party or by which the Company is
bound.
<PAGE>
6
3. Investment Representations and Covenants of the Purchaser.
3.1 Investment Intention; No Resales. The Purchaser hereby
represents and warrants that the Purchaser is acquiring the Class B Common Stock
and will be acquiring the Option Shares for investment solely for its own
account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof. The Purchaser agrees and acknowledges
that it will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any shares of the Class B Common Stock or
Option Shares, or solicit any offers to purchase any shares of the Class B
Common Stock or Option Shares, unless such transfer, sale, assignment, pledge,
hypothecation or other disposition (a) is pursuant to an effective registration
statement under the Securities Act and has been registered under all applicable
state securities or "blue sky" laws or is pursuant to an available exemption
from registration and (b) complies with the provisions of this Agreement and the
Stockholders Agreement.
3.2 Transfers. The foregoing notwithstanding, the Company
acknowledges and agrees that the Purchaser may make any transfer to any
transferee in accordance with the provisions of the Stockholders Agreement and
Section 6.2 hereof, and that such transfers to a transferee shall be deemed to
be in compliance with this Agreement; provided that except as otherwise provided
in the Stockholders Agreement, none of the shares of Class B Common Stock or
Option Shares may be transferred prior to the fifth anniversary of the Closing
Date.
3.3 Accredited Investor. The Purchaser hereby represents and
warrants to the Company that it is an "accredited investor" as that term is
defined in Rule 501 of Regulation D under the Securities Act.
3.4 Legend. (a) Each certificate representing shares of Common Stock
and Option Shares shall bear substantially the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY
IF SO REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCKHOLDERS AGREEMENT AND
COMMON STOCK SUBSCRIPTION AGREEMENT, EACH DATED AS OF APRIL 30, 1997,
COPIES OF WHICH MAY BE OBTAINED FROM L-3 COMMUNICATIONS HOLDINGS, INC.
(THE "COMPANY"). NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE BOOKS OF
THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF
SUCH AGREEMENTS.
<PAGE>
7
3.5 Common Stock Unregistered. The Purchaser acknowledges and
represents that he has been advised by the Company that (a) the offer and sale
of the Class B Common Stock and the Option Shares have not been registered under
the Securities Act; (b) the Class B Common Stock and the Option Shares must be
held indefinitely and the Purchaser must continue to bear the economic risk of
the investment in the Class B Common Stock unless the offer and sale of such
Class B Common Stock or Option Shares is subsequently registered under the
Securities Act and all applicable state securities laws or an exemption from
such registration is available; (c) there is no established market for the Class
B Common Stock or Option Shares and it is not anticipated that there will be any
public market for the Class B Common Stock or Option Shares in the foreseeable
future; (d) Rule 144 promulgated under the Securities Act is not presently
available with respect to the sale of any securities of the Company, and, except
as set forth in Section 3.6, the Company has made no covenant to make such Rule
available; (e) when and if shares of the Class B Common Stock or Option Shares
may be disposed of without registration under the Securities Act in reliance on
Rule 144, such disposition can be made only in limited amounts in accordance
with the terms and conditions of such Rule; (f) if the Rule 144 exemption is not
available, public offer or sale without registration will require compliance
with Regulation A or the availability of an exemption under the Securities Act;
(g) a restrictive legend in the form heretofore set forth shall be placed on the
certificates representing the Class B Common Stock or Option Shares; and (h) a
notation shall be made in the appropriate records of the Company indicating that
the Class B Common Stock and the Option Shares are subject to restrictions on
transfer and, if the Company should at some time in the future engage the
services of a securities transfer agent, appropriate stop-transfer instructions
will be issued to such transfer agent with respect to the Class B Common Stock
and the Option Shares.
3.6 Rule 144. If the Company shall have filed a registration
statement with respect to the Class B Common Stock or the Option Shares pursuant
to the requirements of Section 12 of the Exchange Act or a registration
statement with respect to the Class B Common Stock or the Option Shares pursuant
to the requirements of the Securities Act (or a registration statement shall
have been filed, in either case, with respect to the Class A Common Stock or
Class C Common Stock if any shares of the Class B Common Stock have been
converted into such other class of Common Stock), the Company will file the
reports required to be filed by it under the Securities Act and the Exchange Act
to the extent required from time to time to enable the Purchaser to sell shares
of Class B Common Stock or the Option Shares, as the case may be (or Class C
Common Stock or Class A Common Stock if any shares of the Class B Common Stock
have been converted into such other class of Common Stock), without registration
under the Securities Act within the limitation of the exemptions provided
<PAGE>
8
by (a) Rule 144 under the Securities Act, as such Rule may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the SEC. If
any shares of Class B Common Stock or Option Shares (or Class A Common Stock or
Class C Common Stock if any shares of the Class B Common Stock have been
converted into such other class of Common Stock) are to be disposed of in
accordance with Rule 144 under the Securities Act or otherwise, the Purchaser
shall promptly notify the Company of such intended disposition and deliver to
the Company at or prior to the time of such disposition such documentation as
the Company may reasonably request in connection with such sale and, in the case
of a disposition in accordance with Rule 144, an executed copy of Form 144
required to be filed with the SEC (if required by Rule 144). Anything to the
contrary contained in this Section 3.6 notwithstanding, the Company may
deregister any of its securities under the Exchange Act if it is then permitted
to do so pursuant to the Exchange Act.
3.7 Additional Investment Representations. The Purchaser further
represents and warrants that (a) in making his decision to purchase the Common
Stock hereby subscribed for or exercise his options to purchase the Option
Shares, the Purchaser has relied upon independent investigations made by him
and, to the extent believed by the Purchaser to be appropriate, his
representatives, including his own professional, financial, tax and other
advisors; and (b) the Purchaser has been given the opportunity to examine all
documents and to ask questions of, and to receive answers from, the Company and
its representatives concerning the terms and conditions of the purchase of the
Class B Common Stock and to obtain any additional information which the
Purchaser deems necessary.
3.8 Other Agreements. On the date hereof, the Stockholders
Agreement, in the form previously delivered to the Purchaser, will be entered
into by the Company, the Purchaser and other parties thereto.
4. Puts and Calls
4.1 Company's Right to Purchase. (a) In the event of any Termination
of Employment (i) by the Company without Cause, (ii) due to resignation by the
Purchaser with Good Reason or (iii) due to the Purchaser's Retirement, the
Company shall have the right to purchase, and the Purchaser and his Transferees
(hereinafter referred to as the "Purchaser's Group") shall be required upon
exercise of such right to sell to the Company (or its designee), a number of
shares of the Class B Common Stock or Class C Common Stock, as the case may be,
and the Option Shares equal to the total number of shares of the Class B Common
Stock and the Option Shares held by the Purchaser's Group times the Put/Call
Percentage in effect as of the date of Termination of Employment at a per share
price equal to the FMV per Share as of the date of such Termination of
Employment.
<PAGE>
9
(b) In the event of any Termination of Employment due to death of
the Purchaser or Disability of the Purchaser, the Company shall have the right
to purchase, and the Purchaser's Group shall be required upon exercise by the
Company of such right to sell to the Company (or its designee) all of the Class
B Common Stock or Class C Common Stock, as the case may be, and Option Shares
held by the Purchaser Group at a per share price equal to the FMV per Share as
of the date of such Termination of Employment; provided that in the event of the
death of the Purchaser, the Purchaser's executors, administrators, testamentary
trustees, legatees or beneficiaries may elect to retain 20% of the Class B
Common Stock.
(c) In the event of any Termination of Employment for Cause or
resignation by the Purchaser without Good Reason, the Company shall have the
right and option to purchase, and the Purchaser's Group shall be required upon
exercise by the Company of such right to sell to the Company, all of the Class B
Common Stock or Class C Common Stock, as the case may be, and the Option Shares
held by the Purchaser's Group at a per share price equal to the lesser of (i) in
the case of the Class B Common Stock, the Cost of the Common Stock plus interest
thereon accrued from the Closing Date at a rate equal to the appropriate
applicable federal rate as determined under Section 1274(d) of the Internal
Revenue Code of 1986, as amended, or, in the case of Option Shares, the price
paid upon exercise of the Option with respect to such Option Shares and (ii) the
FMV per Share as of the date of such Termination of Employment.
(d) If the Company desires to exercise its right to purchase all of
the Class B Common Stock or Class C Common Stock, as the case may be, and Option
Shares following any Termination of Employment, the Company shall not later than
75 days after the date of such Termination of Employment send written notice to
the Purchaser and each member of the Purchaser's Group of its intention to
purchase such Class B Common Stock or Class C Common Stock, as the case may be,
and Option Shares. If the Company decides not to exercise such right, the
Company shall not later than 75 days after the date of such Termination of
Employment send written notice to the Purchaser and each member of the
Purchaser's Group of its intention not to exercise such right. The closing of
such purchase shall take place at the principal office of the Company within 30
days after the giving of such written notice by the Company. The Company's
rights to purchase under this Section 4.1 may not be exercised in part.
4.2 Purchaser's Right to Put. (a) In the event of any Termination of
Employment (i) by the Company without Cause, (ii) due to resignation by the
Purchaser with Good Reason or (iii) the Purchaser's Retirement, the Purchaser's
Group shall have the right to put to the Company, and the Company shall be
required upon exercise of such right to purchase (or cause its designee to
purchase) a number of shares of Class B Common Stock or Class C Common Stock, as
the case may be, and the shares equal to the
<PAGE>
10
total number of shares of Class B Common Stock or Class C Common Stock, as the
case may be, and the Option Shares held by the Purchaser's Group times the
Put/Call Percentage in effect as of the date of Termination of Employment at a
per share price equal to the FMV per Share as of the date of such Termination of
Employment.
(b) In the event of any Termination of Employment due to Disability
of the Purchaser or death of the Purchaser, the Purchaser's Group shall have the
right to put to the Company, and the Company shall be required upon exercise of
such right to purchase (or cause its designee to purchase) all of the Class B
Common Stock or Class C Common Stock, as the case may be, and Option Shares held
by the Purchaser's Group at a per share price equal to the FMV per Share as of
the date of such Termination of Employment.
(c) The rights of the Purchaser's Group under Section 4.2(a) and (b)
may only be exercised by holders of not less than a majority of the total shares
of Class B Common Stock or Class C Common Stock, as the case may be, and Option
Shares held by the Purchaser's Group and the decision to exercise such rights
will be binding upon each member of the Purchaser's Group. If the Purchaser's
Group desires to exercise its rights pursuant to this Section 4.2 following any
Termination of Employment, the Purchaser's Group shall give written notice of
such intent to the Company no later than the earlier of (i) 90 days after the
Company gives notice that it will not exercise its rights under Section 4.1 and
(ii) 15 days after the expiration of the Company's rights under Section 4.1. The
closing of such purchase shall take place at the principal office of the Company
within 30 days after the giving of such written notice to the Company. The
Purchaser's Group's rights to put under this Section 4.2 may not be exercised in
part.
4.3 Payment of Purchase Price by the Company. Notwithstanding the
foregoing, the Company shall not be required to purchase for cash any shares of
Common Stock pursuant to Section 4.1 or 4.2 if (a) such purchase would be or
would result in a violation by the Company or any of its subsidiaries of (i) the
terms of any debt agreements or other documents related thereto to which the
Company or any of its subsidiaries is a party or (ii) applicable law or (b) the
Board of Directors (excluding Messrs. Lanza and LaPenta or their respective
nominees) unanimously determines that such purchase would be reasonably likely
to materially impact the Company's available cash, require unsuitable additional
debt to be incurred or otherwise have a material adverse effect on the financial
condition of the Company. If the Company is precluded from paying for all or any
portion of the shares of Common Stock in cash pursuant to the preceding
sentence, the Company shall issue a subordinated note to the Purchaser in
respect of the shares not purchased for cash or a member of the Purchaser's
Group which note shall be repaid in cash (i) from the proceeds obtained by
<PAGE>
11
the Company from the sale of Common Stock in an Initial Public Offering and (ii)
at such time that the Board of Directors determines that the conditions
described in the preceding sentence no longer exist; provided, that such note
shall (A) bear pay-in-kind interest at a rate per annum which, in the opinion of
an independent, mutually acceptable nationally-recognized investment banking
firm, will result in such note having a fair market value on the date of
issuance equal to the aggregate principal amount thereof, (B) be payable in full
on April 30, 2007 except as otherwise provided herein, (C) be subordinated to
the Company's obligations under any guarantee of any bank credit obligations of
its subsidiaries and (D) contain such other covenants, events of default and
other terms and conditions customary for notes of that kind. If in connection
with the exercise of rights pursuant to Section 4.1 or 4.2, the Company is
required to issue a subordinated note, at the request of the Purchaser (or the
holders of not less than a majority of the total number of shares of Class B
Common Stock, Class C Common Stock and Option Shares held by the Purchaser's
Group), the Company (by action of the Board of Directors) will in good faith
endeavor to cause L-3 Communications Corporation ("L-3") to purchase the shares
to be purchased pursuant to Section 4.1 or 4.2 in exchange for the issuance of a
subordinated note so long as such purchase is permitted by the terms of any debt
agreements or other documents related thereto to which L-3 or any of its
subsidiaries is a party; provided that in no event shall the Company (or the
Board) be required to cause L-3 to purchase such shares unless in its judgment
such purchase on the terms set forth herein would not have a material adverse
impact on L-3's ability to raise debt financing on commercially reasonable
terms. Any subordinated note issued by L-3 pursuant to the foregoing shall
contain such covenants, events of default and other terms and conditions
customary for notes of that kind, including terms described in (A)-(C) above,
except that (i) interest on such note shall be payable in cash and (ii) such
note shall be payable in full on August 15, 2007 except as otherwise provided
herein and shall be subordinated to L-3's obligations under any bank credit
obligations or senior subordinated debt. In the event that the Company is
precluded from paying for all or any portion of the shares of Common Stock in
cash because such purchase would be or would result in a violation by the
Company or any of its subsidiaries of the terms of any debt agreements or other
documents related thereto to which the Company or any of the subsidiaries is a
party, the Company shall use its reasonable best efforts to obtain, or cause any
such subsidiary to obtain, a waiver under such debt agreements or other
agreements of such term or terms to allow the Company to pay for all or any
portion of the shares of Common Stock in cash.
4.4 Termination of Put/Call Rights. The rights and obligations set
forth in this Section 4 shall lapse upon a Public Offering.
<PAGE>
12
5. Shares Subject to Forfeiture
5.1 Forfeiture Events. If prior to the third anniversary of the
Closing Date, there is a Termination of Employment of the Purchaser for Cause or
the Purchaser resigns without Good Reason or retires, then all of the Shares
Subject to Forfeiture shall be forfeited (whether or not then held by Purchaser)
(each such event, a "Forfeiture Event").
5.2 Lapse of Forfeiture Restrictions. (a) The Shares Subject to
Forfeiture shall no longer be subject to forfeiture upon the earliest to occur
of the following events (each such event, a "Restriction Lapse"): (i) the date
of death of the Purchaser; (ii) the date of Disability of the Purchaser; (iii)
the date that the Purchaser resigns for Good Reason or is terminated without
Cause; (iv) the date that the Company consummates a Public Offering at a FMV per
Share of at least $6.47; (v) the date of the closing of a transaction resulting
in a Change of Control or any other transaction involving the acquisition by a
Person other than an Affiliate of Lehman of shares of Class A Common Stock
representing 10% or more of the Class A Common Stock held by Lehman and LBHI
(and their Permitted Transferees, as such term is defined in the Stockholders
Agreement) on the Closing Date), in each case yielding a price per share in such
transaction of at least $6.47; (vi) the first date following a Public Offering
that the FMV per Share based on the average of the closing sales prices for the
20 trading days prior to such date equals or exceeds $6.47; or (vii) the date of
consummation of a transaction referred to in Section 5.1(ii)(c). Shares Subject
to Forfeiture shall be deemed no longer subject to forfeiture immediately prior
to the occurrence of the Restriction Lapse referred to in clause (iv) or (v) of
this Section 5.2.
(b) Notwithstanding the foregoing, the Shares Subject to Forfeiture
shall no longer be subject to forfeiture on the date that is nine years after
the Closing Date (but only to the extent that the Shares Subject to Forfeiture
have not previously been forfeited). Any such lapse of the restrictions on the
Shares Subject to Forfeiture pursuant to this Section 5.2(b) shall be a
"Restriction Lapse".
5.3 Conversion. (a) Upon the later to occur of (i) the consummation
of the Initial Public Offering and (ii) such time as there shall have occured a
Forfeiture Event or Restriction Lapse as to both of the Initial Holders of Class
B Common Stock, all of the Class B Common Stock held by the Purchaser's Group
shall be converted to shares of Class A Common Stock in accordance with the
terms of the Certificate of Incorporation of the Company.
(b) Upon the occurrence of a Forfeiture Event or Restriction Lapse
with respect to the Purchaser that occurs prior to both the consummation of the
Initial Public Offering and the occurrence of a Forfeiture Event or Restriction
Lapse with
<PAGE>
13
respect to the other Initial Holder of Class B Common Stock, all of the Class B
Common Stock held by the Purchaser's Group shall be converted to shares of Class
C Common Stock in accordance with the terms of the Certificate of Incorporation
of the Company.
6. Miscellaneous.
6.1 Recapitalization, Exchanges, Etc., Affecting Common Stock. The
provisions of this Agreement shall apply, to the full extent set forth herein,
to any and all shares of capital stock of the Company or any successor or assign
of the Company (whether by merger, consolidation, sale of assets or otherwise)
which may be issued in respect or upon conversion of, in exchange for, or in
substitution of the Class B Common Stock purchased pursuant hereto (or the Class
A Common Stock or Class C Common Stock to which such Class B Common Stock has
been converted, as the case may be) and the Option Shares, by reason of any
stock dividend, stock split, reverse stock split, combination, recapitalization,
reclassification, merger, consolidation or otherwise. In the event that any of
the foregoing events shall occur, then and in each such case, the number of
shares and price per share of Class B Common Stock purchased pursuant to this
Agreement (or the Class A Common Stock or Class C Common Stock to which such
Class B Common Stock has been converted, as the case may be) and any terms of
this Agreement referring to such number of shares or price per share and the
number of Option Shares received by the Purchaser upon the exercise of any
Options shall, in each such case, be equitably and appropriately adjusted.
6.2 Binding Effect. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. In the case of
a transferee permitted under Section 3.2 hereof, such transferee shall be deemed
to be the Purchaser hereunder; provided, however, that no transferee (including,
without limitation, transferees referred to in Section 3.2 hereof) shall derive
any rights under this Agreement unless and until such transferee has delivered
to the Company a valid undertaking and becomes bound by the terms of this
Agreement.
6.3 Amendment. This Agreement may be amended only by a written
instrument signed by the Company and holders of a majority of the Class B Common
Stock purchased pursuant hereto and the Option Shares, and any such amendment
shall be effective against the Company and all holders of the Class B Common
Stock and Option Shares.
6.4 Applicable Law. The laws of the State of New York shall govern
the interpretation, validity and performance of the terms of this Agreement.
<PAGE>
14
6.5 Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered by hand (whether by overnight courier or otherwise) or sent by
registered or certified mail, return receipt requested, postage prepaid, to the
party to whom it is directed:
(a) If to the Company, to it at the following address:
L-3 Communications Holdings, Inc.
600 Third Avenue
New York, New York 10016
Attn: General Counsel
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: David Chapnick
(b) if to the Purchaser, to it at the following address:
Frank C. Lanza
L-3 Communications Holdings, Inc.
600 Third Avenue
New York, New York 10016
With a copy to:
Fried, Frank, Harris, Shriver and Jacobson
One New York Plaza
New York, New York 10004
Attn: Robert C. Schwenkel
or at such other address as either party shall have specified by notice in
writing to the other.
6.6 Integration. This Agreement and the documents referred to herein
or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof. There
are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to the subject matter hereof other than
those expressly set forth herein and in the Stockholders Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to this subject matter other than such agreements and
understandings set forth in the Stockholders Agreement.
<PAGE>
15
6.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and of which together
shall constitute one and the same instrument.
6.8 Specific Performance. Each of the parties hereto acknowledges
and agrees that in the event of any breach of this Agreement, the non-breaching
party would be irreparably harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto will waive the defense
in any action for specific performance that a remedy at law would be adequate
and that the parties hereto, in addition to any other remedy to which they may
be entitled at law or in equity, shall be entitled to compel specific
performance of this Agreement.
<PAGE>
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
L-3 COMMUNICATIONS HOLDINGS, INC.
By: ___________________________
Name:
Title:
FRANK C. LANZA
_________________________________
<PAGE>
SCHEDULE I
Number of Shares
of Class B Common Purchase Price
Stock Per Share Aggregate Amount
- ----------------- -------------- ----------------
1,500,000 $5.00 $7,500,000
<PAGE>
EXHIBIT B
Option Agreement Form - Please see Exhibit 10.9 to the Registration Statement.
<PAGE>
EXHIBIT C
Stockholders' Agreement Form - Please see Exhibit 10.3 to the Registration
Statement.
<PAGE>
EXHIBIT 10.51
EMPLOYMENT AGREEMENT
AGREEMENT, made April 30, 1997 by and between L-3 Communications
Holdings, Inc., a Delaware corporation (the "Company") and Robert V. LaPenta
(the "Executive").
RECITALS
In order to induce Executive to serve as the President and Chief
Financial Officer of the Company, the Company desires to provide Executive with
compensation and other benefits on the terms and conditions set forth in this
Agreement.
Executive is willing to accept such employment and perform services
for the Company, on the terms and conditions hereinafter set forth.
It is therefore hereby agreed by and between the parties as follows:
1. Employment.
1.1 Subject to the terms and conditions of this Agreement, the Company
agrees to employ Executive during the Term hereof as its President and Chief
Financial Officer. In his capacity as the President and Chief Financial
Executive Officer of the Company, Executive shall report to the Chief Executive
Officer (the "CEO") and shall have the customary powers, responsibilities and
authorities of presidents and chief financial officers of corporations of the
size, type and nature of the Company, as it exists from time to time, and as
are assigned by the CEO.
1.2 Subject to the terms and conditions of this Agreement, Executive
hereby accepts employment as the President and Chief Financial Officer of the
Company commencing as of the date hereof (the "Commencement Date") and agrees
to devote his full business time and efforts to the
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performance of services, duties and responsibilities in connection therewith,
subject at all times to review and control of the CEO. In addition, during the
Initial Term and any Renewal Term, (i) the Company agrees to nominate Executive
for election to the Board of Directors of the Company (the "Board") and use its
best efforts to cause his election to the Board and Executive agrees to serve
on the Board of the Company and (ii) during the Term of Employment, Executive
also agrees to serve, if elected, as an officer and/or director of any
Subsidiary of the Company, without the payment of any additional compensation
therefor. Upon the termination of Executive's employment for any reason,
Executive shall resign as a member of the Board of the Company or any
Subsidiary of the Company.
1.3 Nothing in this Agreement shall preclude Executive from engaging
in charitable work and community affairs, from managing any investment made by
him with respect to which Executive is not substantially involved with the
management or operation of the entity in which Executive has invested (provided
that no such investment in publicly traded equity securities or other property
may exceed 5% of the equity of any entity, without the prior approval of the
Board) or from serving, subject to the prior approval of the Board, as a member
of boards of directors or as a trustee of any other corporation, association or
entity, to the extent that any of the above activities do not materially
interfere with the performance of his duties hereunder. For purposes of the
preceding sentence, any approval by the Board required therein shall not be
unreasonably withheld.
2. Term of Employment. Executive's term of employment under this
Agreement (the "Term of Employment") shall commence on the Commencement Date
and, subject to the terms hereof, shall terminate on the earlier of (i) the
fifth anniversary of the Commencement Date "Initial Term") or (ii) termination
of Executive's employment pursuant to this Agreement. Notwithstanding the
foregoing, subsequent to the Initial Term, Executive's
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<PAGE>
Term of Employment under this Agreement shall automatically renew annually for
one year renewal terms (the "Renewal Term") unless either party shall deliver
to the other written notice, at least 90 days prior to the expiration of the
Initial Term or any Renewal Term, that the Term of Employment shall not be
extended. In such event, the Term of Employment will end at its then scheduled
expiration date and shall not be further extended except by written agreement
of the Company and Executive.
3. Compensation.
3.1 Salary. During the Initial Term of Executive's employment under
the terms of this Agreement, the Company shall pay Executive a base salary
("Base Salary") at an initial rate of $500,000 per annum. Base Salary shall be
payable in accordance with the ordinary payroll practices of the Company.
During the Term of Employment, the Board shall, in good faith, review, at least
annually, the Executive's Base Salary in accordance with the Company's
customary procedures and practices regarding the salaries of senior executives
and may, if determined by the Board to be appropriate, increase Executive's
Base Salary following such review. Increases in the rate of salary, once
granted, shall not be subject to revocation or decrease thereafter, and "Base
Salary" for all purposes herein shall be deemed to be a reference to such
higher amount.
4. Employee Benefits.
4.1 Equity and Stock Options. Simultaneously with the execution of
this Agreement, the Company and Executive are entering into the Subscription
Agreement, the Option Agreement and the Stockholders' Agreement in the forms
attached hereto as Exhibits A, B and C, respectively (the "Ancillary
Documents"). Executive shall not be eligible to receive any stock option or
other equity incentive other than as set forth in the Ancillary Documents.
3
<PAGE>
4.2 Employee Benefit Programs, Plans and Practices. The Company shall
provide Executive while employed hereunder with coverage under such employee
benefits (commensurate with his position in the Company and to the extent
permitted under any employee benefit plan) in accordance with the terms
thereof, which the Company makes available to its senior executives.
4.3 Vacation. Executive shall be entitled to twenty (20) business days
paid vacation each calendar year, which shall be taken at such times as are
consistent with Executive's responsibilities hereunder. Any vacation days not
taken during the calendar year in which they are accrued may be carried over
into the next subsequent year.
5. Expenses. Subject to prevailing Company policy or such guidelines
as may be established by the Board, the Company will reimburse Executive for
all reasonable expenses incurred by Executive in carrying out his duties.
6. Termination of Employment.
6.1 Termination Not for Cause or for Good Reason. (a) The Company or
Executive may terminate Executive's Term of Employment at any time for any
reason by written notice at least thirty (30) days in advance. If Executive's
employment is terminated (i) by the Company other than for Cause (as defined in
Section 6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death
or (ii) by Executive for Good Reason (as defined in Section 6.1(b) hereof)
prior to the end of the Initial Term or any Renewal Term, the Company shall
continue to pay Executive's Base Salary through the end of the Initial Term or
the Renewal Term (the "Continuation Period"), as the case may be, with such
payments to be made in accordance with the terms of Section 3.1. (the
"Severance Payments"). In addition, the Company shall continue to provide
Executive during the Continuation Period with life insurance, medical and
hospitalization benefits (collectively, the "Continuation Benefits") comparable
to those provided to other senior executives; provided, however,
4
<PAGE>
that any such coverage shall terminate to the extent that Executive is offered
or obtains comparable life insurance, medical or hospitalization benefits
coverage from any other employer during the Continuation Period.
Notwithstanding the foregoing, if Executive breaches any provision of Section
11 hereof, the remaining balance of the Severance Payments and any Continuation
Benefits shall be forfeited. Executive shall be entitled to receive the
benefits, if any, provided under the employee benefit programs, plans and
practices referred to in Section 4.2, in accordance with their terms.
(b) For purposes of this Agreement, "Good Reason" shall mean any of
the following (without Executive's express prior written consent):
(i) A reduction by the Company in Executive's Base Salary (in which
event Severance Payments shall be made based upon Executive's Base Salary
in effect prior to any such reduction); or
(ii) Any material diminution or material adverse change in Executive's
titles, duties or responsibilities, unless due to a promotion or increased
responsibility of Executive.
(c) Termination by Executive for Good Reason shall be made by delivery
to the Company by Executive of written notice, given at least 45 days prior to
such termination, which sets forth the conduct believed to constitute Good
Reason; provided, however, that the Company shall have the opportunity to cure
the Good Reason during the first 30 days of such notice period and if the Good
Reason is cured within such 30-day period, Executive's notice of termination
shall be deemed withdrawn. If no notice is given within 90 days of the event
giving rise to Good Reason, the Good Reason shall be deemed waived.
6.2 Voluntary Termination by Executive; Discharge for Cause. (a) In
the event that Executive's employment is terminated (i) by the Company for
Cause, as hereinafter defined or (ii) by Executive other than for Good Reason,
Disability or death, Executive shall only be entitled to receive (A) any Base
Salary accrued but unpaid prior to such termination and (B) any
5
<PAGE>
benefits provided under the employee benefit programs, plans and practices
referred to in Section 4.2 hereof, in accordance with their terms. After the
termination of Executive's employment under this Section 6.2, the obligations
of the Company under this Agreement to make any further payments, or provide
any benefits specified herein, to Executive shall thereupon cease and
terminate.
(b) As used herein, the term "Cause" shall be limited to (i) gross
neglect of or willful and continuing refusal by Executive to substantially
perform Executive's duties hereunder (other than due to death or Disability, as
such term is defined in Section 6.3 hereof), (ii) any breach of the provisions
of Section 11 of this Agreement by Executive, (iii) willfully engaging in
conduct that is demonstrably injurious to the Company or the Company's
subsidiaries or affiliates by Executive or (iv) conviction of, or plea of nolo
contendere, by Executive to (a) any felony or (b) a misdemeanor involving moral
turpitude. Termination of Executive pursuant to this Section 6.2 shall be made
by delivery to Executive of written notice, given at least 30 days prior to
such Termination, from the Board specifying the particulars of the conduct by
Executive set forth in any of clauses (i) through (iv) above. Termination shall
be effected by a majority vote of the Board at a meeting at which Executive
shall have had the opportunity (along with counsel) to be heard unless within
30 days after receiving such notice, Executive shall have cured Cause to the
reasonable satisfaction of the Board; provided, however, that no cure shall be
possible if termination for Cause is made pursuant to this Section 6.2(b)(ii)
or (iv). As long as Executive is on the Board, he shall reasonably cooperate to
cause a valid Board meeting to occur.
6.3 Disability. In the event of the Disability (as defined below) of
Executive during the Term of Employment, the Company may terminate Executive's
Term of Employment upon written notice to Executive (or
6
<PAGE>
Executive's personal representative, if applicable) effective upon the date of
receipt thereof (the "Disability Commencement Date"). The obligation of the
Company to make any further payments under this Agreement shall, except for
earned but unpaid Base Salary, cease as of the Disability Commencement Date;
provided, however, that Executive shall continue to receive payments equal to
Executive's Base Salary otherwise payable under this Agreement for a period
equal to the lesser of (i) six months after the date of the occurrence of the
incapacity causing Executive's Disability and (ii) the number of months
otherwise remaining in the Term of Employment, in either case, reduced by the
amount of any disability payments otherwise payable to Executive under any
insurance program of the Company. The term "Disability," for purposes of this
Agreement, shall mean Executive's absence from the full-time performance of
Executive's duties pursuant to a reasonable determination made in accordance
with the Company's disability plan that Executive is disabled as a result of
incapacity due to physical or mental illness that lasts, or is reasonably
expected to last, for at least six months.
6.4 Death. In the event of Executive's death during his Term of
Employment hereunder or at any time thereafter while payments are still owing
to Executive under the terms of this Agreement, all obligations of the Company
to make any further payments, other than the obligation to pay any accrued but
unpaid Base Salary or remaining payments that were payable to Executive by
reason of his termination of employment under Section 6.1 to which Executive
was entitled at the time of his death, shall terminate upon Executive's death,
and benefits shall become payable under the Company's life and accidental death
insurance program in accordance with its terms. Benefits under all other
employee benefit programs, plans and practices shall be paid in accordance with
their terms.
6.5 No Further Notice or Compensation. Executive understands and
agrees that he shall not be entitled to any further notice or compensation
7
<PAGE>
upon Termination of Employment under this Agreement, other than amounts
specified in this Section 6 and the Ancillary Documents. Executive shall not
have any obligation to seek comparable employment following such termination or
resignation, nor shall any compensation received from any subsequent employment
reduce the Company's obligations hereunder.
6.6 Executive's Duty to Provide Materials. Upon the termination of the
Term of Employment for any reason, Executive or his estate shall surrender to
the Company all correspondence, letters, files, contracts, mailing lists,
customer lists, advertising materials, ledgers, supplies, equipment, checks,
and all other materials and records of any kind that are the property of the
Company or any of its subsidiaries or affiliates, that may be in Executive's
possession or under his control, including all copies of any of the foregoing;
provided, however, Executive shall not be required to surrender his personal
rolodex, telephone book, appointment book and personal materials acquired by
Executive prior to the date hereof.
7. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
with a copy to:
Alvin H. Brown, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
To Executive:
Robert V. LaPenta
749 Riversville Road
Greenwich, CT 06831
with a copy to:
Robert C. Schwenkel
Fried, Frank, Harris, Shriver & Jacobson
1 New York Plaza
New York, New York 10004
8
<PAGE>
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of sending shall constitute the time at which notice was given.
8. Separability. If any provision of this Agreement shall be declared
to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
9. Assignment. This contract shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights or
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or, in the case of the Options, by trust for the
benefit of Executive's spouse and/or children or by operation of the laws of
intestate succession) or by the Company, except that the Company may assign
this Agreement to any successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or businesses of the Company, if
such successor expressly agrees to assume the obligations of the Company
hereunder.
10. Amendment. This Agreement may only be amended by written agreement
of the parties hereto.
11. Nondisclosure of Confidential Information; Non-Competition. (a)
While employed by the Company, and at any time thereafter, the Executive shall
not, without the prior written consent of the Company, use, divulge, disclose
or make accessible to any other person, firm, partnership, corporation or other
entity any Confidential Information pertaining to the business of the Company
or any of its affiliates, except (i) while employed
9
<PAGE>
by the Company, in the business of and for the benefit of the Company or (ii)
when required to do so by applicable law, by a court, by any governmental
agency, or by any administrative body or legislative body (including a
committee thereof); provided, however, that Executive shall give reasonable
notice under the circumstances to the Company that he has been notified that he
will be required to so disclose as soon as possible after receipt of such
notice in order to permit the Company to take whatever action it reasonably
deems necessary to prevent such disclosure and Executive shall cooperate with
the Company to the extent that it reasonably requests him to do so. For
purposes of this Section 11(a), "Confidential Information" shall mean
non-public information concerning the financial data, strategic business plans,
product development (or other proprietary product data), customer lists,
marketing plans and other non-public, proprietary and confidential information
of the Company, its subsidiaries, its affiliates or customers, that, in any
case, is not otherwise available to the public (other than by Executive's
breach of the terms hereof).
(b) In consideration of the Company's obligations under this
Agreement, Executive agrees that during the period of his employment hereunder
and for a period of twelve (12) months thereafter, without the prior written
consent of the Board, (A) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have
any financial interest in, any entity which is in competition with the business
of the Company or its subsidiaries and (B) he shall not, on his own behalf or
on behalf of any person, firm or company, directly or indirectly, solicit or
offer employment to any person who is or has been employed by the Company or
its subsidiaries at any time during the twelve (12) months immediately
preceding such solicitation; provided, however, that if the Executive's
employment terminates following the
10
<PAGE>
expiration of the Initial Term, this subsection 11(b) shall only be effective
during the period, if any, that the Company pays the Executive the Severance
Payments.
(c) For purposes of this Section 11, an entity shall be deemed to be
in competition with the Company if it is principally involved in the purchase,
sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company as a part of the business
of the Company within the same geographic area in which the Company effects
such sales or dealings or renders such services. Notwithstanding this
subsection 11(c) or subsection 11(b), nothing herein shall (i) prohibit
Executive from serving as an officer, employee or independent consultant of any
business unit or subsidiary which would not otherwise be in competition with
the Company or its subsidiaries, but which business unit is a part of, or which
subsidiary is controlled by, or under common control with, an entity that would
be in competition with the Company or its subsidiaries, so long as Executive
does not engage in any activity which is in competition with any business of
the Company or its subsidiaries or (ii) be construed so as to preclude
Executive from investing in any publicly or privately held company, provided
Executive's beneficial ownership of any class of such company's securities does
not exceed 5% of the outstanding securities of such class.
(d) Executive agrees that this covenant not to compete is reasonable
under the circumstances and will not interfere with his ability to earn a
living or to otherwise meet his financial obligations. Executive and the
Company agree that if in the opinion of any court of competent jurisdiction
such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. Executive agrees that any breach of
the covenants contained in this Section 11 would
11
<PAGE>
irreparably injure the Company. Accordingly, Executive agrees that, in the
event the Company determines that Executive has breached the covenants
contained in this Section 11, the Company may, in addition to pursuing any
other remedies it may have in law or in equity, cease making any payments
otherwise required by this Agreement and obtain an injunction against Executive
from any court having jurisdiction over the matter restraining any further
violation of this Agreement by Executive.
12. Beneficiaries; References. Executive shall be entitled to select
(and change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder
following Executive's death, and may change such election, in either case by
giving the Company written notice thereof. In the event of Executive's death or
a judicial determination of his incompetence, reference in this Agreement to
Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative. Any reference to the masculine gender in
this Agreement shall include, where appropriate, the feminine.
13. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 13 are in addition to the survivorship provisions of
any other section of this Agreement.
14. Dispute Resolution; Legal Fees. Any dispute or controversy arising
under or in connection with this Agreement shall be resolved by the court with
the appropriate jurisdiction in the State of New York. The prevailing party
shall be entitled to be reimbursed for any reasonable legal fees and other fees
and expenses which may be incurred in respect of enforcing its respective
rights under this Agreement.
12
<PAGE>
15. Governing Law. This Agreement shall be construed, interpreted and
governed in accordance with the laws of the State of New York, without
reference to rules relating to conflicts of law.
16. Effect on Prior Agreements. This Agreement and the Ancillary
Documents contain the entire understanding between the parties hereto and
supersedes in all respects any prior or other agreement or understanding, both
written and oral, between the Company, any affiliate of the Company or any
predecessor of the Company or affiliate of the Company and Executive.
17. Withholding. The Company shall be entitled to withhold from
payment any amount of withholding required by law.
18. Survival. Notwithstanding the expiration of the term of this
Agreement, the provisions of Section 11 hereunder shall remain in effect as
long as is reasonably necessary to give effect thereto in accordance with the
terms hereof.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original.
L-3 Communications Holdings, Inc.
By /s/ Michael T. Strianese
Name: Michael T. Strianese
Title: Vice President, Finance and Controller
/s/ Robert V. LaPenta
Robert V. LaPenta
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<PAGE>
EXHIBIT A
COMMON STOCK SUBSCRIPTION AGREEMENT
COMMON STOCK SUBSCRIPTION AGREEMENT, dated as of April 30, 1997
between L-3 Communications Holdings, Inc., a Delaware corporation (the
"Company"), and Robert V. LaPenta (the "Purchaser").
WHEREAS, the Company was recently incorporated for the purpose of
consummating the transactions (the "Transactions") contemplated by the
Transaction Agreement (as defined below); and
WHEREAS, the Purchaser desires to subscribe for and acquire from the
Company, and the Company desires to issue and sell to the Purchaser, the number
of shares of Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"), of the Company set forth on Schedule I, as hereinafter set forth.
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
1. Definitions
"Active Trading Market" shall mean, as to the Company's common
stock, that the Company's common stock is listed or quoted on a national
exchange or the NASDAQ National Market.
"Affiliate", as applied to any Person, shall mean any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract or otherwise.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Cause" shall have the meaning given such term in the Employment
Agreement.
"Change of Control" shall mean an acquisition of all or
substantially all of the direct and indirect assets of the Company and its
subsidiaries (by merger, consolidation, stock or asset sale or otherwise),
unless immediately following any such transaction Lehman and LBHI and Lockheed
Martin and their Affiliates own 50% or more of the combined voting power of the
then outstanding voting securities entitled to vote generally of the Company or
the acquiror of such assets, as the case may be.
<PAGE>
2
"Class A Common Stock" shall mean the Class A Common Stock, par
value $.01 per share, of the Company.
"Class B Common Stock" shall have the meaning set forth in the
recitals of this Agreement.
"Class C Common Stock" shall mean the Class C Common Stock, par
value $.O1 per share, of the Company.
"Common Stock" shall mean the Class A Common Stock, Class B Common
Stock and Class C Common Stock.
"Cost of the Common Stock" shall mean as at any date $5.00 per
share, as appropriately adjusted for stock splits, subdivisions, combinations
and similar transactions; provided that in the event any of the Shares Subject
to Forfeiture are forfeited, the Cost of the Common Stock shall be an amount per
share equal to $15,000,000 divided by the total number of shares of Class B
Common Stock purchased hereunder minus the number of Shares Subject to
Forfeiture that have been forfeited.
"Disability" shall have the meaning given such term in the
Employment Agreement.
"Employment Agreement" shall mean the Employment Agreement dated the
date hereof between the Purchaser and the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Price" shall have the meaning given such term in the
Option Agreement.
"Forfeiture Event" shall have the meaning set forth in Section 5.1.
"FMV per Share" shall mean (i) if determined upon a Public Offering,
the offering price per share of common stock; (ii) if determined upon a Change
of Control, the value of the equity of the Company divided by the total number
of outstanding shares of common stock of the Company; and (iii) otherwise, the
fair market value of the equity of the Company, as determined by the Board of
Directors in good faith (based on the opinion of an independent
nationally-recognized investment banking firm), divided by the total number of
outstanding shares of common stock of the Company; provided, however, that in
the case of clause (iii) above if there is an Active Trading Market for the
shares of any class of the Common Stock at the time of the determination of the
FMV per Share, FMV per Share shall be the average of the closing prices of such
Shares for the 20 trading days immediately preceding such determination date.
<PAGE>
3
"Initial Public Offering" shall mean the initial Public Offering
(other than pursuant to a registration statement on Form S-8 or otherwise
relating to equity securities issuable under any employee benefit plan of the
Company).
"Good Reason" shall have the meaning given such term in the
Employment Agreement.
"Initial Holders of Class B Common Stock" shall mean the Purchaser
and Lanza.
"Lanza" shall mean Frank C. Lanza.
"LBHI" shall mean Lehman Brothers Holdings Inc., a Delaware
corporation and the general partner of Lehman.
"Lehman" shall mean Lehman Brothers Capital Partners III, L.P., a
Delaware limited partnership.
"Lockheed Martin" shall mean Lockheed Martin Corporation, a Maryland
corporation.
"Options" shall mean the options to purchase Class A Common Stock
granted to the Purchaser pursuant to the Non-qualified Stock Option Agreement
dated as of the date hereof.
"Option Shares" shall mean the shares of Class A Common Stock
received by the Purchaser upon the exercise of any Options.
"Permitted Transferee" shall mean as to the Purchaser and his
Permitted Transferees, his or her spouse or any of his or her lineal descendants
or legatees or a testamentary trust for such legatees, or a trust or individual
retirement account, the beneficiaries of which or a corporation or partnership
the stockholders or partners of which include only the Purchaser, his or her
spouse and his or her lineal descendants or a corporation or partnership wholly
owned by them.
"Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, limited liability company, unincorporated
association, joint venture or other entity of whatever nature.
"Public Offering" shall mean the sale of shares of any class of the
Company's common stock to the public pursuant to an effective registration
statement (other than a registration statement on Form S-4 or S-8 or any similar
or successor form) filed under the Securities Act which results in an Active
Trading Market of 25% or more of the outstanding shares of the Company's common
stock.
"Purchaser's Group" shall have the meaning given such term in
Section 4.1.
<PAGE>
4
"Put/Call Percentage" shall mean, initially, 75%, and such Put/Call
Percentage shall be reduced by 15 percentage points on each anniversary
(including the first) of the Closing Date.
"Restriction Lapse" shall have the meaning set forth in Section 5.2.
"Retirement" shall mean normal retirement under the terms of any
tax-qualified retirement plan of the Company, which retirement occurs more than
three years after the Closing Date. Any purported retirement by the Purchaser
prior to the third anniversary of the Closing Date shall be treated, for
purposes of this Agreement, the same as a termination without Good Reason.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SEC" shall mean the Securities and Exchange Commission.
"Shares Subject to Forfeiture" shall mean 300,000 (as such number
may be subsequently adjusted pursuant to Section 6.1) shares of the Class B
Common Stock purchased pursuant hereto.
"Stockholder" shall mean each of Lockheed Martin, Lehman, LBHI, the
Purchaser and Lanza and any other person who becomes party to the Stockholders
Agreement pursuant to the terms thereof.
"Stockholders Agreement" shall mean the Stockholders Agreement dated
as of the date hereof among the Company, Lehman, LBHI, Lockheed Martin, the
Purchaser and Lanza.
"Termination of Employment" shall mean a termination of the
Purchaser's employment with the Company (regardless of the reason therefor).
"Transaction Agreement" shall mean the Transaction Agreement dated
as of March 28, 1997, as amended, by and among the Company, Lehman, Lockheed
Martin, the Purchaser and Lanza.
"Transactions" shall have the meaning set forth in the recitals of
this Agreement.
2. Subscription for and Purchase of Common Stock.
2.1 Purchase of Common Stock. Pursuant to the terms and subject to
the conditions set forth in this Agreement, the Purchaser hereby subscribes for
and agrees to purchase, and the Company hereby agrees to issue and sell to the
Purchaser, on the Closing Date (as defined in Section 2.2), the number of shares
of Class B Common Stock at a price per share as set forth on Schedule I, for the
aggregate amount (the "Purchase Price") set forth on Schedule I.
<PAGE>
5
2.2 The Closing. The closing (the "Closing") of the purchase of the
Common Stock shall take place simultaneously with and at the same location as
the consummation of the Transactions (the "Closing Date"). The Closing shall
occur at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York 10017, or at such other place as the parties may mutually agree.
At the Closing, the Company will deliver to the Purchaser one or more duly
executed stock certificates, registered in the Purchaser's name and representing
the shares of Class B Common Stock purchased pursuant to Section 2.1, against
payment of the Purchase Price therefor by delivery to the Company of
immediately available funds in the amount of the Purchase Price representing
payment in full for such Class B Common Stock.
2.3 Conditions to the Obligations of the Parties Hereunder. The
obligations of the parties hereto shall be subject to the condition that,
substantially simultaneously with the sale to the Purchaser of the Class B
Common Stock, the Company shall have received the proceeds of the additional
equity and debt financing contemplated by, and necessary to consummate, the
Transactions and the Transactions shall have been consummated concurrently
therewith.
2.4 Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser as follows:
(a) The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and this Agreement has been duly
authorized, executed and delivered by the Company and is valid, binding
and enforceable against the Company in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(b) The Class B Common Stock to be issued to the Purchaser pursuant
to this Agreement has been duly authorized, and when issued and delivered
in accordance with the terms hereof, will be duly and validly issued and,
upon receipt by the Company of the funds equal to the Purchase Price, will
be fully paid and nonassessable; and
(c) None of the execution, delivery or performance of this Agreement
by the Company will conflict with the Company's certificate of
incorporation or by-laws or result in any breach of any terms or
provisions of, or constitute a default under, any contract, agreement or
instrument to which the Company is a party or by which the Company is
bound.
<PAGE>
6
3. Investment Representations and Covenants of the Purchaser.
3.1 Investment Intention; No Resales. The Purchaser hereby
represents and warrants that the Purchaser is acquiring the Class B Common Stock
and will be acquiring the Option Shares for investment solely for its own
account and not with a view to, or for resale in connection with, the
distribution or other disposition thereof. The Purchaser agrees and acknowledges
that it will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any shares of the Class B Common Stock or
Option Shares, or solicit any offers to purchase any shares of the Class B
Common Stock or Option Shares, unless such transfer, sale, assignment, pledge,
hypothecation or other disposition (a) is pursuant to an effective registration
statement under the Securities Act and has been registered under all applicable
state securities or "blue sky" laws or is pursuant to an available exemption
from registration and (b) complies with the provisions of this Agreement and the
Stockholders Agreement.
3.2 Transfers. The foregoing notwithstanding, the Company
acknowledges and agrees that the Purchaser may make any transfer to any
transferee in accordance with the provisions of the Stockholders Agreement and
Section 6.2 hereof, and that such transfers to a transferee shall be deemed to
be in compliance with this Agreement; provided that except as otherwise provided
in the Stockholders Agreement, none of the shares of Class B Common Stock or
Option Shares may be transferred prior to the fifth anniversary of the Closing
Date.
3.3 Accredited Investor. The Purchaser hereby represents and
warrants to the Company that it is an "accredited investor" as that term is
defined in Rule 501 of Regulation D under the Securities Act.
3.4 Legend. (a) Each certificate representing shares of Common Stock
and Option Shares shall bear substantially the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY
IF SO REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCKHOLDERS AGREEMENT AND
COMMON STOCK SUBSCRIPTION AGREEMENT, EACH DATED AS OF APRIL 30, 1997,
COPIES OF WHICH MAY BE OBTAINED FROM L-3 COMMUNICATIONS HOLDINGS, INC.
(THE "COMPANY"). NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE BOOKS OF
THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF
SUCH AGREEMENTS.
<PAGE>
7
3.5 Common Stock Unregistered. The Purchaser acknowledges and
represents that he has been advised by the Company that (a) the offer and sale
of the Class B Common Stock and the Option Shares have not been registered under
the Securities Act; (b) the Class B Common Stock and the Option Shares must be
held indefinitely and the Purchaser must continue to bear the economic risk of
the investment in the Class B Common Stock unless the offer and sale of such
Class B Common Stock or Option Shares is subsequently registered under the
Securities Act and all applicable state securities laws or an exemption from
such registration is available; (c) there is no established market for the Class
B Common Stock or Option Shares and it is not anticipated that there will be any
public market for the Class B Common Stock or Option Shares in the foreseeable
future; (d) Rule 144 promulgated under the Securities Act is not presently
available with respect to the sale of any securities of the Company, and, except
as set forth in Section 3.6, the Company has made no covenant to make such Rule
available; (e) when and if shares of the Class B Common Stock or Option Shares
may be disposed of without registration under the Securities Act in reliance on
Rule 144, such disposition can be made only in limited amounts in accordance
with the terms and conditions of such Rule; (f) if the Rule 144 exemption is not
available, public offer or sale without registration will require compliance
with Regulation A or the availability of an exemption under the Securities Act;
(g) a restrictive legend in the form heretofore set forth shall be placed on the
certificates representing the Class B Common Stock or Option Shares; and (h) a
notation shall be made in the appropriate records of the Company indicating that
the Class B Common Stock and the Option Shares are subject to restrictions on
transfer and, if the Company should at some time in the future engage the
services of a securities transfer agent, appropriate stop-transfer instructions
will be issued to such transfer agent with respect to the Class B Common Stock
and the Option Shares.
3.6 Rule 144. If the Company shall have filed a registration
statement with respect to the Class B Common Stock or the Option Shares pursuant
to the requirements of Section 12 of the Exchange Act or a registration
statement with respect to the Class B Common Stock or the Option Shares pursuant
to the requirements of the Securities Act (or a registration statement shall
have been filed, in either case, with respect to the Class A Common Stock or
Class C Common Stock if any shares of the Class B Common Stock have been
converted into such other class of Common Stock), the Company will file the
reports required to be filed by it under the Securities Act and the Exchange Act
to the extent required from time to time to enable the Purchaser to sell shares
of Class B Common Stock or the Option Shares, as the case may be (or Class C
Common Stock or Class A Common Stock if any shares of the Class B Common Stock
have been converted into such other class of Common Stock), without registration
under the Securities Act within the limitation of the exemptions provided
<PAGE>
8
by (a) Rule 144 under the Securities Act, as such Rule may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the SEC. If
any shares of Class B Common Stock or Option Shares (or Class A Common Stock or
Class C Common Stock if any shares of the Class B Common Stock have been
converted into such other class of Common Stock) are to be disposed of in
accordance with Rule 144 under the Securities Act or otherwise, the Purchaser
shall promptly notify the Company of such intended disposition and deliver to
the Company at or prior to the time of such disposition such documentation as
the Company may reasonably request in connection with such sale and, in the case
of a disposition in accordance with Rule 144, an executed copy of Form 144
required to be filed with the SEC (if required by Rule 144). Anything to the
contrary contained in this Section 3.6 notwithstanding, the Company may
deregister any of its securities under the Exchange Act if it is then permitted
to do so pursuant to the Exchange Act.
3.7 Additional Investment Representations. The Purchaser further
represents and warrants that (a) in making his decision to purchase the Common
Stock hereby subscribed for or exercise his options to purchase the Option
Shares, the Purchaser has relied upon independent investigations made by him
and, to the extent believed by the Purchaser to be appropriate, his
representatives, including his own professional, financial, tax and other
advisors; and (b) the Purchaser has been given the opportunity to examine all
documents and to ask questions of, and to receive answers from, the Company and
its representatives concerning the terms and conditions of the purchase of the
Class B Common Stock and to obtain any additional information which the
Purchaser deems necessary.
3.8 Other Agreements. On the date hereof, the Stockholders
Agreement, in the form previously delivered to the Purchaser, will be entered
into by the Company, the Purchaser and other parties thereto.
4. Puts and Calls
4.1 Company's Right to Purchase. (a) In the event of any Termination
of Employment (i) by the Company without Cause, (ii) due to resignation by the
Purchaser with Good Reason or (iii) due to the Purchaser's Retirement, the
Company shall have the right to purchase, and the Purchaser and his Transferees
(hereinafter referred to as the "Purchaser's Group") shall be required upon
exercise of such right to sell to the Company (or its designee), a number of
shares of the Class B Common Stock or Class C Common Stock, as the case may be,
and the Option Shares equal to the total number of shares of the Class B Common
Stock and the Option Shares held by the Purchaser's Group times the Put/Call
Percentage in effect as of the date of Termination of Employment at a per share
price equal to the FMV per Share as of the date of such Termination of
Employment.
<PAGE>
9
(b) In the event of any Termination of Employment due to death of
the Purchaser or Disability of the Purchaser, the Company shall have the right
to purchase, and the Purchaser's Group shall be required upon exercise by the
Company of such right to sell to the Company (or its designee) all of the Class
B Common Stock or Class C Common Stock, as the case may be, and Option Shares
held by the Purchaser Group at a per share price equal to the FMV per Share as
of the date of such Termination of Employment; provided that in the event of the
death of the Purchaser, the Purchaser's executors, administrators, testamentary
trustees, legatees or beneficiaries may elect to retain 20% of the Class B
Common Stock.
(c) In the event of any Termination of Employment for Cause or
resignation by the Purchaser without Good Reason, the Company shall have the
right and option to purchase, and the Purchaser's Group shall be required upon
exercise by the Company of such right to sell to the Company, all of the Class B
Common Stock or Class C Common Stock, as the case may be, and the Option Shares
held by the Purchaser's Group at a per share price equal to the lesser of (i) in
the case of the Class B Common Stock, the Cost of the Common Stock plus interest
thereon accrued from the Closing Date at a rate equal to the appropriate
applicable federal rate as determined under Section 1274(d) of the Internal
Revenue Code of 1986, as amended, or, in the case of Option Shares, the price
paid upon exercise of the Option with respect to such Option Shares and (ii) the
FMV per Share as of the date of such Termination of Employment.
(d) If the Company desires to exercise its right to purchase all of
the Class B Common Stock or Class C Common Stock, as the case may be, and Option
Shares following any Termination of Employment, the Company shall not later than
75 days after the date of such Termination of Employment send written notice to
the Purchaser and each member of the Purchaser's Group of its intention to
purchase such Class B Common Stock or Class C Common Stock, as the case may be,
and Option Shares. If the Company decides not to exercise such right, the
Company shall not later than 75 days after the date of such Termination of
Employment send written notice to the Purchaser and each member of the
Purchaser's Group of its intention not to exercise such right. The closing of
such purchase shall take place at the principal office of the Company within 30
days after the giving of such written notice by the Company. The Company's
rights to purchase under this Section 4.1 may not be exercised in part.
4.2 Purchaser's Right to Put. (a) In the event of any Termination of
Employment (i) by the Company without Cause, (ii) due to resignation by the
Purchaser with Good Reason or (iii) the Purchaser's Retirement, the Purchaser's
Group shall have the right to put to the Company, and the Company shall be
required upon exercise of such right to purchase (or cause its designee to
purchase) a number of shares of Class B Common Stock or Class C Common Stock, as
the case may be, and the shares equal to the
<PAGE>
10
total number of shares of Class B Common Stock or Class C Common Stock, as the
case may be, and the Option Shares held by the Purchaser's Group times the
Put/Call Percentage in effect as of the date of Termination of Employment at a
per share price equal to the FMV per Share as of the date of such Termination of
Employment.
(b) In the event of any Termination of Employment due to Disability
of the Purchaser or death of the Purchaser, the Purchaser's Group shall have the
right to put to the Company, and the Company shall be required upon exercise of
such right to purchase (or cause its designee to purchase) all of the Class B
Common Stock or Class C Common Stock, as the case may be, and Option Shares held
by the Purchaser's Group at a per share price equal to the FMV per Share as of
the date of such Termination of Employment.
(c) The rights of the Purchaser's Group under Section 4.2(a) and (b)
may only be exercised by holders of not less than a majority of the total shares
of Class B Common Stock or Class C Common Stock, as the case may be, and Option
Shares held by the Purchaser's Group and the decision to exercise such rights
will be binding upon each member of the Purchaser's Group. If the Purchaser's
Group desires to exercise its rights pursuant to this Section 4.2 following any
Termination of Employment, the Purchaser's Group shall give written notice of
such intent to the Company no later than the earlier of (i) 90 days after the
Company gives notice that it will not exercise its rights under Section 4.1 and
(ii) 15 days after the expiration of the Company's rights under Section 4.1. The
closing of such purchase shall take place at the principal office of the Company
within 30 days after the giving of such written notice to the Company. The
Purchaser's Group's rights to put under this Section 4.2 may not be exercised in
part.
4.3 Payment of Purchase Price by the Company. Notwithstanding the
foregoing, the Company shall not be required to purchase for cash any shares of
Common Stock pursuant to Section 4.1 or 4.2 if (a) such purchase would be or
would result in a violation by the Company or any of its subsidiaries of (i) the
terms of any debt agreements or other documents related thereto to which the
Company or any of its subsidiaries is a party or (ii) applicable law or (b) the
Board of Directors (excluding Messrs. Lanza and LaPenta or their respective
nominees) unanimously determines that such purchase would be reasonably likely
to materially impact the Company's available cash, require unsuitable additional
debt to be incurred or otherwise have a material adverse effect on the financial
condition of the Company. If the Company is precluded from paying for all or any
portion of the shares of Common Stock in cash pursuant to the preceding
sentence, the Company shall issue a subordinated note to the Purchaser in
respect of the shares not purchased for cash or a member of the Purchaser's
Group which note shall be repaid in cash (i) from the proceeds obtained by
<PAGE>
11
the Company from the sale of Common Stock in an Initial Public Offering and (ii)
at such time that the Board of Directors determines that the conditions
described in the preceding sentence no longer exist; provided, that such note
shall (A) bear pay-in-kind interest at a rate per annum which, in the opinion of
an independent, mutually acceptable nationally-recognized investment banking
firm, will result in such note having a fair market value on the date of
issuance equal to the aggregate principal amount thereof, (B) be payable in full
on April 30, 2007 except as otherwise provided herein, (C) be subordinated to
the Company's obligations under any guarantee of any bank credit obligations of
its subsidiaries and (D) contain such other covenants, events of default and
other terms and conditions customary for notes of that kind. If in connection
with the exercise of rights pursuant to Section 4.1 or 4.2, the Company is
required to issue a subordinated note, at the request of the Purchaser (or the
holders of not less than a majority of the total number of shares of Class B
Common Stock, Class C Common Stock and Option Shares held by the Purchaser's
Group), the Company (by action of the Board of Directors) will in good faith
endeavor to cause L-3 Communications Corporation ("L-3") to purchase the shares
to be purchased pursuant to Section 4.1 or 4.2 in exchange for the issuance of a
subordinated note so long as such purchase is permitted by the terms of any debt
agreements or other documents related thereto to which L-3 or any of its
subsidiaries is a party; provided that in no event shall the Company (or the
Board) be required to cause L-3 to purchase such shares unless in its judgment
such purchase on the terms set forth herein would not have a material adverse
impact on L-3's ability to raise debt financing on commercially reasonable
terms. Any subordinated note issued by L-3 pursuant to the foregoing shall
contain such covenants, events of default and other terms and conditions
customary for notes of that kind, including terms described in (A) - (C) above,
except that (i) interest on such note shall be payable in cash and (ii) such
note shall be payable in full on August 15, 2007 except as otherwise provided
herein and shall be subordinated to L-3's obligations under any bank credit
obligations or senior subordinated debt. In the event that the Company is
precluded from paying for all or any portion of the shares of Common Stock in
cash because such purchase would be or would result in a violation by the
Company or any of its subsidiaries of the terms of any debt agreements or other
documents related thereto to which the Company or any of the subsidiaries is a
party, the Company shall use its reasonable best efforts to obtain, or cause any
such subsidiary to obtain, a waiver under such debt agreements or other
agreements of such term or terms to allow the Company to pay for all or any
portion of the shares of Common Stock in cash.
4.4 Termination of Put/Call Rights. The rights and obligations set
forth in this Section 4 shall lapse upon a Public Offering.
<PAGE>
12
5. Shares Subject to Forfeiture
5.1 Forfeiture Events. If prior to the third anniversary of the
Closing Date, there is a Termination of Employment of the Purchaser for Cause or
the Purchaser resigns without Good Reason or retires, then all of the Shares
Subject to Forfeiture shall be forfeited (whether or not then held by Purchaser)
(each such event, a "Forfeiture Event").
5.2 Lapse of Forfeiture Restrictions. (a) The Shares Subject to
Forfeiture shall no longer be subject to forfeiture upon the earliest to occur
of the following events (each such event, a "Restriction Lapse"): (i) the date
of death of the Purchaser; (ii) the date of Disability of the Purchaser; (iii)
the date that the Purchaser resigns for Good Reason or is terminated without
Cause; (iv) the date that the Company consummates a Public Offering at a FMV per
Share of at least $6.47; (v) the date of the closing of a transaction resulting
in a Change of Control or any other transaction involving the acquisition by a
Person other than an Affiliate of Lehman of shares of Class A Common Stock
representing 10% or more of the Class A Common Stock held by Lehman and LBHI
(and their Permitted Transferees, as such term is defined in the Stockholders
Agreement) on the Closing Date), in each case yielding a price per share in such
transaction of at least $6.47; (vi) the first date following a Public Offering
that the FMV per Share based on the average of the closing sales prices for the
20 trading days prior to such date equals or exceeds $6.47; or (vii) the date of
consummation of a transaction referred to in Section 5.1(ii) (c). Shares Subject
to Forfeiture shall be deemed no longer subject to forfeiture immediately prior
to the occurrence of the Restriction Lapse referred to in clause (iv) or (v) of
this Section 5.2.
(b) Notwithstanding the foregoing, the Shares Subject to Forfeiture
shall no longer be subject to forfeiture on the date that is nine years after
the Closing Date (but only to the extent that the Shares Subject to Forfeiture
have not previously been forfeited). Any such lapse of the restrictions on the
Shares Subject to Forfeiture pursuant to this Section 5.2(b) shall be a
"Restriction Lapse".
5.3 Conversion. (a) Upon the later to occur of (i) the consummation
of the Initial Public Offering and (ii) such time as there shall have occured a
Forfeiture Event or Restriction Lapse as to both of the Initial Holders of Class
B Common Stock, all of the Class B Common Stock held by the Purchaser's Group
shall be converted to shares of Class A Common Stock in accordance with the
terms of the Certificate of Incorporation of the Company.
(b) Upon the occurrence of a Forfeiture Event or Restriction Lapse
with respect to the Purchaser that occurs prior to both the consummation of the
Initial Public Offering and the occurrence of a Forfeiture Event or Restriction
Lapse with
<PAGE>
13
respect to the other Initial Holder of Class B Common Stock, all of the Class B
Common Stock held by the Purchaser's Group shall be converted to shares of Class
C Common Stock in accordance with the terms of the Certificate of Incorporation
of the Company.
6. Miscellaneous.
6.1 Recapitalization, Exchanges, Etc., Affecting Common Stock. The
provisions of this Agreement shall apply, to the full extent set forth herein,
to any and all shares of capital stock of the Company or any successor or assign
of the Company (whether by merger, consolidation, sale of assets or otherwise)
which may be issued in respect or upon conversion of, in exchange for, or in
substitution of the Class B Common Stock purchased pursuant hereto (or the Class
A Common Stock or Class C Common Stock to which such Class B Common Stock has
been converted, as the case may be) and the Option Shares, by reason of any
stock dividend, stock split, reverse stock split, combination, recapitalization,
reclassification, merger, consolidation or otherwise. In the event that any of
the foregoing events shall occur, then and in each such case, the number of
shares and price per share of Class B Common Stock purchased pursuant to this
Agreement (or the Class A Common Stock or Class C Common Stock to which such
Class B Common Stock has been converted, as the case may be) and any terms of
this Agreement referring to such number of shares or price per share and the
number of Option Shares received by the Purchaser upon the exercise of any
Options shall, in each such case, be equitably and appropriately adjusted.
6.2 Binding Effect. The provisions of this Agreement shall be
binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns. In the case of
a transferee permitted under Section 3.2 hereof, such transferee shall be deemed
to be the Purchaser hereunder; provided, however, that no transferee (including,
without limitation, transferees referred to in Section 3.2 hereof) shall derive
any rights under this Agreement unless and until such transferee has delivered
to the Company a valid undertaking and becomes bound by the terms of this
Agreement.
6.3 Amendment. This Agreement may be amended only by a written
instrument signed by the Company and holders of a majority of the Class B Common
Stock purchased pursuant hereto and the Option Shares, and any such amendment
shall be effective against the Company and all holders of the Class B Common
Stock and Option Shares.
6.4 Applicable Law. The laws of the State of New York shall govern
the interpretation, validity and performance of the terms of this Agreement.
<PAGE>
14
6.5 Notices. All notices and other communications provided for
herein shall be in writing and shall be deemed to have been duly given if
delivered by hand (whether by overnight courier or otherwise) or sent by
registered or certified mail, return receipt requested, postage prepaid, to the
party to whom it is directed:
(a) If to the Company, to it at the following address:
L-3 Communications Holdings, Inc.
600 Third Avenue
New York, New York 10016
Attn: General Counsel
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attn: David Chapnick
(b) if to the Purchaser, to it at the following address:
Robert V. LaPenta
L-3 Communications Holdings, Inc.
600 Third Avenue
New York, New York 10016
With a copy to:
Fried, Frank, Harris, Shriver and Jacobson
One New York Plaza
New York, New York 10004
Attn: Robert C. Schwenkel
or at such other address as either party shall have specified by notice in
writing to the other.
6.6 Integration. This Agreement and the documents referred to herein
or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof. There
are no restrictions, agreements, promises, representations, warranties,
covenants or undertakings with respect to the subject matter hereof other than
those expressly set forth herein and in the Stockholders Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to this subject matter other than such agreements and
understandings set forth in the Stockholders Agreement.
<PAGE>
15
6.7 Counterparts. This Agreement may be executed in two or more of
which together shall constitute one counterparts, each of which shall be deemed
an original and and the same instrument.
6.8 Specific Performance. Each of the parties hereto acknowledges
and agrees that in the event of any breach of this Agreement, the non-breaching
party would be irreparably harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto will waive the defense
in any action for specific performance that a remedy at law would be adequate
and that the parties hereto, in addition to any other remedy to which they may
be entitled at law or in equity, shall be entitled to compel specific
performance of this Agreement.
<PAGE>
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
L-3 COMMUNICATIONS HOLDINGS, INC.
By:
-----------------------------
Name:
Title:
ROBERT V. LAPENTA
---------------------------
<PAGE>
SCHEDULE I
Number of Shares
of Class B Common Purchase Price
Stock Per Share Aggregate Amount
- ----------------- --------------- ----------------
1,500,000 $5.00 $7,500,000
<PAGE>
EXHIBIT B
Option Agreement Form - Please see Exhibit 10.9 to the Registration Statement.
<PAGE>
EXHIBIT C
Stockholders' Agreement Form - Please see Exhibit 10.3 to the Registration
Statement.
<PAGE>
EXHIBIT 10.61
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT AND ASSUMPTION OF LEASE (this "Assignment") is dated
as of April 29, 1997 among LOCKHEED MARTIN TACTICAL SYSTEMS, INC., a New York
corporation (the "Assignor"), L-3 COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Assignee"), and UNISYS CORPORATION, a Delaware corporation
(the "Landlord"), with reference to the following:
RECITALS
A. The Landlord, as landlord, and the Assignor, as tenant, executed a
Lease Agreement dated May 5, 1995 (which, together with all modifications,
amendments and supplements thereof, is hereinafter referred to collectively as
the "Lease"), a copy of which is attached hereto and incorporated by reference
as Exhibit A, pursuant to which Landlord leased to the Assignor and the
Assignor leased from Landlord property and improvements described therein
located at 322 North 2200 West, Salt Lake City, Utah (Buildings D, D Annex and
Z) (the "Premises").
B. The Assignee is acquiring certain assets and assuming certain
liabilities from the Assignor including the Assignor's rights, leasehold
interest and obligations under the Lease.
C. In connection with such acquisition, the Assignor desires to
assign the Lease to the Assignee, and the Assignee desires to accept the
assignment of the Lease from the Assignor.
D. The Landlord has agreed to enter into this Assignment to, among
other things, evidence its consent to such assignment of the Lease.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Assignor, the Assignee and the
Landlord hereby covenant and agree as follows:
1. Assignment. The Assignor grants, assigns and transfers to the
Assignee, its successors and assigns, all of the Assignor's right, title and
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interest in, to and under the Lease (including, without limitation, any options
under the Lease and any rights to extend or renew the Lease) and the Assignee
accepts from the Assignor all of the Assignor's right, title and interest in,
to and under the Lease.
2. Assumption of Lease Obligation. Assignee assumes and agrees to
perform and fulfill all terms, covenants, conditions and obligations required
to be performed and fulfilled by the Assignor under the Lease, including,
without limitation, the obligation to make all payments due or payable on
behalf of the Assignor under the Lease as they become due and payable.
3. Representations of Assignor and Landlord. The Assignor and the
Landlord represent to the Assignee as follows:
(a) The Lease attached hereto as Exhibit A is a true, correct and
complete copy of the Lease (including all modifications, amendments and
supplements thereof) and the same are the only agreements between Landlord and
the Assignor with respect to the subject matter thereof.
(b) The Lease is in full force and effect and, except for the
modifications, amendments and supplements included in Exhibit A, the Lease has
not been modified, amended or supplemented.
(c) Except as set forth on Exhibit B, no default by the Assignor or
the Landlord has occurred and is continuing under the Lease, and no event has
occurred and is continuing which with the giving of notice or the lapse of time
or both would constitute a default thereunder.
(d) No minimum or base rent or other rental has been paid in advance
(except for the current month).
(e) The monthly amount of base rent due under the Lease as of May 1,
1997, is $64,417, and the minimum or base rent and all other rentals and other
payments due, owing and accruing under the Lease have been paid through April
30, 1997.
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(f) The term of the Lease commenced on May 5, 1995, and the current
term of the Lease expires on December 31, 2001.
4. Landlord's Consent.
The Landlord hereby consents to the Assignor's assignment of the
Lease to the Assignee and the Assignee's assumption of the Lease. Landlord's
consent to the Assignor's assignment of the Lease to the Assignee shall not be
deemed to release the Assignor from any of its obligations under the Lease or
to alter any provision of the Lease and/or the primary liability of the
Assignor for the payment of minimum or base rent or any additional rent due
under the Lease or for the performance of any other obligations to be performed
by the Assignor under the Lease.
5. Successors and Assigns. This Assignment shall be binding on and
inure to the benefit of the parties hereto, and their respective heirs,
personal representatives, successors and assigns, provided that this Section 5
shall not be construed to permit any future assignments of the Lease or
subletting of the Premises except as permitted by the Lease.
6. Counterparts. This Assignment may be signed in counterpart and, as
so executed, shall constitute a binding agreement.
7. Governing Law. This Assignment shall be governed by and construed
in accordance with the laws of the state in which the Premises are located.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
as of the date first above written.
WITNESS/ATTEST: ASSIGNOR:
LOCKHEED MARTIN TACTICAL
SYSTEMS, INC.
___________________________ By:_______________________(SEAL)
Name:
Title:
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ASSIGNEE:
L-3 COMMUNICATIONS CORPORATION
_____________________________ By:_______________________(SEAL)
Name:
Title:
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WITNESS/ATTEST LANDLORD:
UNISYS CORPORATION
_____________________________ By:_______________________(SEAL)
Name:
Title:
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STATE OF NEW YORK, COUNTY OF QUEENS, TO WIT:
On this the 23 day of May 1997, before me a notary public of
said State, Michael T. Shianese, the undersigned officer, personally appeared
Michael T. Shianese, who acknowledge himself to be an office of L-3
Communication, a Delaware corporation, and that he, as such Vice President,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signed the name of the corporation by himself as a Vice
President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------
Notary Public
My Commission Expires:
STATE OF Maryland, COUNTY OF Montgomery, TO WIT:
On this the 30th day of April 1997, before me a notary public
of said State, Stephen M. Piper, the undersigned officer, personally appeared
before me, who acknowledge himself to be a Vice President & Asst. Secretary of
Lockheed Martin Tactical Systems, Inc., a New York corporation, and that he, as
such officer, being authorized so to do, executed the foregoing instrument for
the purposes therein contained, by signed the name of the corporation by
himself as a Vice President & Asst. Secretary.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------
Notary Public
My Commission Expires: Dec. 1, 2000
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--------------------------
Notary Public
My Commission Expires: Dec. 1, 2000
STATE OF PENNSYLVANIA, COUNTY OF MONTGOMERY, TO WIT:
On this the 29th day of April 1997, before me a notary public
of said State, Pennsylvania, the undersigned officer, personally appeared
Gregory T. Fisher, who acknowledged himself to be a Vice President of Unisys
Corporation, a Delaware corporation, and that he, as such Vice President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing the name of the corporation by himself as a Vice
President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------
Notary Public
My Commission Expires:
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EXHIBIT A
THE LEASE
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LEASE
Between
UNISYS CORPORATION,
as Lessor
and
LORAL CORPORATION,
as Lessee
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TABLE OF CONTENTS
Article Page
1. Demised Premises . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4. Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5. Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6. Alterations; Demising Costs; Signage . . . . . . . . . . . . . . . . 18
7. Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . 19
8. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9. Assignment, Subletting and Encumbrances . . . . . . . . . . . . . . . 20
10. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11. Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 24
13. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . 25
14. Right to Inspect . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15. Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
16. Damage and Destruction . . . . . . . . . . . . . . . . . . . . . . . 27
17. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . 28
18. Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . 28
19. Release of Lessor . . . . . . . . . . . . . . . . . . . . . . . . . 28
20. Surrender of Demised Premises . . . . . . . . . . . . . . . . . . . 28
21. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
22. Lessor's Inability to Perform . . . . . . . . . . . . . . . . . . . 29
23. Limitations or Liability . . . . . . . . . . . . . . . . . . . . . . 30
24. Asset Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . 30
25. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
26. Rider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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LEASE
LEASE, dated as of May 5, 1995, between UNISYS CORPORATION, a
Delaware corporation having an office at Township Line and Union Meeting Roads,
Blue Bell, Pennsylvania 19424 ("Lessor") and LORAL CORPORATION, a New York
corporation having an office at 600 Third Avenue, New York, New York 10016
("Lessee").
W I T N E S S E T H :
WHEREAS, Lessor is the owner of the real property, including
improvements thereon (collectively, the "Property") referenced on Schedule A
hereto; and
WHEREAS, Lessor desires to lease to Lessee, and Lessee desires
to hire from Lessor, certain premises at the Property upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter provided, Lessor and Lessee hereby agree as follows:
1. Demised Premises.
1.1. Lessor hereby leases to Lessee, and Lessee hereby leases
and hires from Lessor, the Demised Premises, as defined in Schedule B hereto,
together with the non-exclusive right to use the common areas of the Property
and such other rights as are necessary or desirable to provide Sublessee with
substantially the same rights and benefits as have been generally afforded to
and enjoyed by the Defense Systems unit of Unisys Corporation ("Defense
Systems") prior to the date hereof (including, without limitation, rights of
ingress and egress, parking consistent with past practice or otherwise as set
forth in the Rider attached to this Sublease, and access to public and private
utilities) for the lease term hereinafter stated and for the Base Rent and
Additional Rent (both as hereinafter defined) set forth herein, upon and
subject to all of the terms and provisions hereinafter provided or incorporated
in this Lease by reference.
1.2. Lessee agrees to accept the Demised Premises on the
Commencement Date (as hereinafter defined) in its "as is" condition and Lessor
shall not be obligated to perform any work or furnish any materials in, to or
about the Demised Premises in order to prepare the Demised Premises for
occupancy by Lessee or otherwise. Lessee hereby releases Lessor from any and
all liability resulting from (i) any latent or patent defects in the Demised
Premises, (ii) the failure of the Demised Premises to comply with any legal
requirements applicable thereto or (iii) the status of the title to the Demised
Premises, provided that the foregoing release of liability is not intended to
limit or otherwise affect any liability that Lessor or any affiliate of Lessor
may have to Lessee or any affiliate of Lessee which arises under any of the
other terms and conditions of this Lease or under the terms and conditions of
any other agreement. Lessee acknowledges that, except as expressly set forth
herein or as expressly set forth in any separate document, Lessor has made no
statements, representations, covenants or warranties with respect to (x) the
condition or manner of construction of the Property or any improvements
constructed in the Demised Premises, (y) the uses or purposes for which the
Demised Premises may be lawfully occupied or (z) any encumbrances, covenants,
restrictions or agreements affecting title
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to the Property or the Demised Premises. Lessee also agrees that, in executing
this Lease, it has not relied upon or been induced by any statements,
representations, covenants or warranties of any person other than those, if
any, set forth expressly in this Lease or in any other separate agreements by
or between Lessor and/or Lessee or any of their respective affiliates.
2. Term.
2.1. (a) The term of this Lease shall commence on the date
hereof (the "Commencement Date") and, unless earlier terminated or extended as
herein provided, shall expire on the Expiration Date. As used in this Lease,
(i) "Term" shall mean the term of this Lease, and (ii) "Expiration Date" shall
mean the Scheduled Expiration Date, as defined in Schedule C hereto; provided
that in the event of a termination of this Lease pursuant to the terms hereof
prior to the Scheduled Expiration Date, the "Expiration Date" shall mean such
date of termination of this Lease.
(b) References in this Lease to the "termination" of this
Lease include the stated expiration of the Term and any earlier termination
thereof pursuant to the provisions of this Lease, or by law. Except as
otherwise expressly provided in this Lease with respect to those obligations of
Lessee which by their nature or under the circumstances can only be, or under
the provisions of this Lease may be, performed after the termination of this
Lease, the Term and estate granted hereby shall end at noon on the date of
termination of this Lease as if such date were the Expiration Date, and neither
party shall have any further obligation or liability to the other after such
termination. Notwithstanding the foregoing, any liability of Lessor or Lessee
to make any payment under this Lease, including, without limitation, amounts
payable by Lessee as Base Rent or Additional Rent hereunder (both as
hereinafter defined), which shall have accrued prior to the termination of this
Lease shall survive the termination of this Lease.
3. Rent.
3.1. The rent ("Rent") payable during the Term under this
Lease shall consist of the following:
(a) the Base Rent, as defined in Schedule C hereto.
(b) additional rent ("Additional Rent") in an amount equal to
any and all other sums payable by Lessee to Lessor under this Lease.
3.2. Except as otherwise specifically provided in this Lease
(a) all payments of Base Rent shall be in equal monthly installments and shall
be made in advance on the first (1st) day of each month during the Term,
without notice (provided that if the amount of Base Rent is required to be
calculated by Lessor in accordance with Schedule C hereof, then Lessor shall
give Lessee prior written notice of such calculation, which notice shall
include an explanation of the basis for such calculation and reasonable backup
documentation relating thereto), and (b) all payments of Additional Rent shall
be made within 30 days after written notice from Lessor, in each case by check
payable to the order of "UNISYS CORPORATION" and addressed to Unisys
Corporation, P.O. Box 500, Blue Bell, Pennsylvania 19424-0003, Attention:
Disbursement & Control Dept., or to such other person or at such other place as
Lessor may from time to time designate in writing.
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3.3. Lessee shall pay all Rent when due, in lawful money of
the United States which shall be legal tender for the payment of all debts,
public and private, at the time of payment. All sums due and payable by Lessor
or Lessee pursuant to the terms of this Lease that are not paid within five (5)
days of the due date therefor shall from and after the due date bear interest
at an annual percentage rate of ten percent (10%). All interest accrued and
payable by Lessee under this subsection as hereinabove provided shall be deemed
to be Additional Rent payable hereunder and due at such time or times as the
rent with respect to which such interest shall have accrued shall be payable
under this Lease.
3.4. Lessee agrees to pay, an Additional Rent, any revenue tax
or charge, occupancy tax, business privilege tax, business use tax or any other
tax that may be levied against the Demised Premises or Lessee's use or
occupancy thereof during the Term; provided, however, that in no event shall
Lessee be obligated to pay any income tax that is imposed upon and/or payable
by Lessor, and provided further that payments made by Lessee pursuant to this
Section 3.4 shall not be duplicative of amounts paid by Lessee pursuant to any
other provision of this Lease.
3.5. In the event that Lessee shall dispute any calculation of
Rent charged to Lessee by Lessor, then Lessee shall send to Lessor a written
notice, within 30 days of receipt by Lessee of such charge, setting forth the
basis for Lessee's dispute. Lessor and Lessee shall thereupon use reasonable
and good faith efforts to resolve such dispute. If the parties are unable to
resolve such dispute within 30 days after submission by Lessee of its dispute
notice, then the parties shall designate an independent certified public
accountant mutually acceptable to both parties (the "Independent Accountant")
to resolve such dispute and the fees and charges of the Independent Accountant
shall be shared equally by the parties. Both parties shall provide the
Independent Accountant with all information reasonably requested by the
Independent Accountant in connection with its review of such dispute, and both
parties shall request that the Independent Accountant complete its work
expeditiously and issue a written report to both parties setting forth its
determination. The written determination of the Independent Accountant shall be
final and shall be binding upon both Lessor and Lessee. All disputes to be
resolved pursuant to this Section 3.5 shall be so resolved in accordance with
the principles and standards set forth in Section 3.6 below.
3.6. All calculations by Lessor of Base Rent, Additional Rent
and any other amounts that are payable by Lessee hereunder shall be made in
accordance with Lessor's past practices during calendar year 1994 with respect
to Defense Systems, and all charges and allocations relating to the Demised
Premises and all accounting practices utilized by Lessor with respect to
amounts charged to Lessee under this Lease (including the capitalization,
amortization and expensing of costs incurred and funds expended) shall also be
made in such manner.
4. Use.
4.1. Lessee shall occupy and use the Demised Premises solely
for manufacturing, light assembly, engineering, research and development,
office and warehouse and such other uses as may be approved by Lessor (which
approval shall not be unreasonably withheld, delayed or conditioned), provided
that any such use shall be subject in all respects to the other terms and
provisions of this Lease, and subject to any and all
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laws, statutes, ordinances, orders, regulations and requirements of all
federal, state and local governmental, public or quasi-public authorities,
whether now or hereafter in effect, which may be applicable to or in any way
affect the Demised Premises or any part thereof and all requirements,
obligations and conditions of all instruments of record on the date of this
Lease affecting the Demised Premises (collectively, "Legal Requirements").
5. Services.
5.1. It is the intent of the parties that Lessor shall
continue to provide to Lessee all services generally and customarily provided
by Unisys Corporation to the occupants of the Demised Premises prior to the
Commencement Date, together with any other services that may be appropriate
under the circumstances from time to time (such services being hereinafter
referred to collectively as the "Services"). In connection with the foregoing,
such Services shall include, without limitation, each of the services set forth
on Schedule D hereto, and such Services shall not include any of those items
set forth on Schedule D-1 hereto. Lessee shall pay to Lessor, in consideration
for the Services and as Additional Rent, an amount equal to Lessor's actual
costs in, to or for the benefit of the Demised Premises or Lessee which shall
be determined in accordance with the principles set forth in Section 3.6 above
("Actual Costs"). On a quarterly basis, Lessor shall provide to Lessee a
written statement, in reasonable detail, setting forth such Actual Costs for
Services. In the event that Lessee disputes Lessor's statement of Actual Costs,
such dispute shall be resolved in accordance with Section 3.5 hereof.
5.2. It is the intent of the parties that Lessee shall
continue to provide to Lessor, during the Term hereof, all reasonable services
generally and customarily provided by Defense Systems, prior to the
Commencement Date, to any other portions of the Property. Lessee shall perform
such services, and Lessor shall pay to Lessee a proportionate share of Lessee's
actual costs incurred in performing such services. On a quarterly basis, Lessee
shall provide to Lessor a written statement, in reasonable detail, setting
forth such costs. In the event of a dispute with respect to such costs, such
dispute shall be resolved in accordance with Section 3.5 hereof.
5.3. In the event that telephone switching equipment or other
telecommunications equipment utilized by Lessor or Lessee is located within the
premises occupied by the other party, then the party occupying such premises
shall grant the other party reasonable access to such telephone switching
equipment or other telecommunications equipment and other areas reasonably
required for such telecommunications use, subject in each case to reasonable
security requirements of the party granting such access.
5.4. The provisions of this Section shall survive the
expiration or earlier termination of this Lease.
6. Alterations; Demising Costs; Signage.
6.1. As used herein, the term "Alterations" shall mean,
collectively, any alterations, modifications installations, additions or
improvements to the Demised Premises. Without the prior written consent of
Lessor in each instance, which consent shall not be unreasonably withheld
conditioned or delayed, Lessee shall not make any (a) structural Alterations or
(b) non-structural Alterations having a design and construction cost in
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excess of $50,000 on a per project basis. Any Alterations consented to by
Lessor, or otherwise permitted under this Lease, shall be performed by Lessee,
at its sole cost and expense, in a good and workmanlike manner. Lessor shall
have the right to post notices of non-responsibility and similar notices, as
Lessor shall reasonably deem appropriate, on the Demised Premises while
Alterations are occurring.
6.2. Lessor and Lessee shall use reasonable and good faith
efforts to reach a mutual agreement as to whether any Alterations are necessary
and appropriate in order to separate the Demised Premises from the premises in
the Property occupied by Lessor. In the event that the parties reach such a
mutual agreement, then Lessor shall perform such agreed upon Alterations, and
Lessee shall, within 30 days after written demand by Lessor, reimburse Lessor
for one-half of the costs and expenses relating to such Alterations. Lessor may
request payment of Lessee's share of such costs, and (if requested) Lessee
shall pay its share of such costs, as such costs are incurred by Lessor during
the course of design and construction of such Alterations. Lessor shall require
that (a) any contractors or subcontractors performing any such work maintain
reasonable and appropriate liability insurance and (b) any such insurance
policies shall name Lessor and Lessee as additional insureds.
6.3. Lessee shall have the right to install reasonable and
appropriate signage, both at the entrance to the Demised Premises and in the
common areas of the Property, indicating Lessee's occupancy of the Demised
Premises, provided that the location, size and design of any such signage shall
be subject to the prior written consent of Lessor, which consent shall not be
unreasonably withheld or delayed.
6.4. In the event that the Demised Premises are measured or
re-measured pursuant to the terms of this Lease (inclusive of the Rider, if
any, and Schedule's attached hereto), Lessor and Lessee shall each pay one-half
(1/2) of the costs and expenses relating to such measurement or remeasurement.
7. Maintenance and Repair.
7.1. Except as provided to the contrary in Schedule D and
Schedule D-1 attached hereto, Lessor shall, at its sole cost and expense,
maintain the Premises in reasonably satisfactory repair and condition, except
for ordinary wear and tear, and will make all structural and nonstructural
repairs which may be required by law or required to keep the Premises in
reasonably satisfactory repair and condition, except for ordinary wear and
tear, and Lessor's Actual Costs for providing such maintenance and repair
Services shall be charged to Lessee as Additional Rent in accordance with
Section 5.1 hereof.
8. Insurance.
8.1. Lessee, at Lessee's sole expense, shall maintain for the
benefit of Lessor such policies of insurance (and in such form) with respect to
the Demised Premises which shall be reasonably satisfactory to Lessor as to
coverage and insurer (who shall be licensed to do business in the State in
which the Demised Premises are located) provided that such insurance shall at a
minimum include comprehensive general liability insurance protecting and
indemnifying Lessor and Lessee against any and all claims and liabilities for
injury or damage to persons or property occurring
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upon, in or about the Demised Premises, and the public portions of the
Property, caused by or resulting from or in connection with any act or omission
of Lessee or Lessee's employees, agents or invitees. Lessor shall be named as
an additional insured under any such policies of insurance obtained by Lessee,
and no such policy shall be subject to termination or modification unless at
least thirty (30) days' prior written notice (or ten (10) days' prior written
notice, if such termination results from Lessee's failure to pay the premiums
for such insurance) shall have been given by the applicable insurance company
to Lessor. Upon execution of this Lease by Lessee and at least thirty (30) days
prior to the expiration date of such policies, Lessee shall furnish to Lessor a
certificate or certificates of insurance confirming that the required insurance
is in full force and effect with all premiums paid current. Nothing contained
herein shall limit, or prohibit, Lessee from providing such coverage through
"blanket" policies of insurance and/or self-insuring therefor in a manner that
is consistent with the general corporate practices of Lessee.
8.2. Nothing contained in this Lease shall relieve Lessee from
any liability as a result of damage from fire or other casualty, but each party
shall look first to any insurance in its favor before making any claim against
the other party for recovery for loss or damage resulting from fire or other
casualty. To the extent that such insurance is in force and collectible and to
the extent permitted by law, Lessor and Lessee each hereby releases and waives
all right to recovery against the other or anyone claiming through or under the
other by way of subrogation or otherwise. The foregoing release and waiver
shall be in force only if the insurance policies of Lessor and Lessee provide
that such release or waiver does not invalidate the insurance; each party
agrees to use reasonable efforts to include such a provision in its applicable
insurance policies. If the inclusion of said provision would involve an
additional expense, either party, at its sole expense, may require such
provision to be inserted in the other's policy.
9. Assignment, Subletting and Encumbrances.
9.1. Lessee shall not sublease or mortgage, pledge or
otherwise encumber all or any part of the Demised Premises, assign or mortgage
this Lease (by operation of law or otherwise) or permit the Demised Premises to
be used or occupied by anyone other than Lessee, Lessee's divisions and other
Affiliates and Lessee's licensees, invitees, customers and vendors, without the
prior written consent of Lessor in each instance, which consent shall not be
unreasonably withheld, conditioned or delayed; provided, however, that Lessee,
upon at least 30 days' prior written notice to Lessor, may assign this Lease or
sublet all or part of the Demised Premises to (A) an Affiliate of Lessee, (B)
an entity into which Lessee is merged or consolidated, and (C) an entity which
acquires all or substantially all of the business or operations of Lessee. Any
consent by Lessor as hereinabove required shall not excuse Lessee from its
obligation to obtain the express written consent of Lessor to any further
action or matter with respect to which the consent of Lessor is hereinabove
required and Lessee shall not be released from any of its obligations
hereunder. The term "Affiliate", as used in this Section 9.1, shall have the
same meaning as is set forth in the Asset Purchase Agreement.
10. Liens.
10.1. Lessee shall not suffer or permit any mechanic's,
materialman's, vendor's, supplier's, laborer's or other similar liens
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(collectively, "mechanic's liens") to be filed against the Demised Premises, or
any part thereof, nor against Lessee's interest therein, by reason of work,
labor, services or materials supplied or claimed to have been supplied to
Lessee (except for mechanic's liens for payments that are not yet delinquent or
for payments that Lessee is contesting in good faith and in a diligent manner).
If any mechanic's lien described in the preceding sentence shall at any time be
filed against the Demised Premises, or any part thereof, or Lessee's interest
therein, Lessee shall, within forty-five (45) days after notice of the filing
thereof, cause the same to be discharged of record by payment, deposit, bond,
order of a court of competent jurisdiction or otherwise, or provide Lessor with
reasonable assurances as to Lessee's ability to satisfy such lien. If Lessee
shall fail to cause such lien to be discharged within such forty-five (45) day
period, then, in addition to any other right or remedy of Lessor, Lessor may,
but shall not be obligated to, discharge the same either by paying the amount
claimed to be due or by procuring the discharge of such lien by deposit or by
bonding proceedings, and in any such event Lessor shall be entitled to
reimbursement from Lessee for any reasonable costs expended by Lessor.
11. Default.
11.1. (a) Each of the following shall constitute an Event
of Default hereunder:
(i) if Lessee shall fail to pay when due any Rent or
any other amount Lessee may be required to pay hereunder, and Lessee shall fail
to remedy such default within seven (7) business days after written notice
thereof has been given to Lessee by Lessor, provided that an Event of Default
shall not be deemed to have occurred hereunder if Sublessee shall have timely
disputed in good faith its obligation to pay such Rent or the amount thereof;
or
(ii) if Lessee shall default in the observance or
performance of any term, covenant or condition of this Lease on Lessee's part
to be observed, performed or complied with (other than the payment of Base Rent
and Additional Rent and other amounts payable hereunder) and Lessee shall fail
to remedy such default within thirty (30) days after written notice to cure,
or, if such default is of such a nature that for reasons beyond Lessee's
control it cannot be completely remedied within said period of thirty (30)
days, then if Lessee (A) shall not promptly institute and thereafter diligently
prosecute to completion all steps necessary to remedy the same and (B) shall
not remedy the same within a reasonable time after the date of default; or
(iii) if any event shall occur or any contingency shall
arise whereby this Lease or the estate hereby granted or the unexpired balance
of the Term would, except as expressly permitted herein, by operation of law or
otherwise, devolve upon or pass to any person or entity other than Lessee, and
Lessee shall fail to remedy such default within sixty (60) days after written
notice thereof has been given to Lessee by Lessor;
(b) Upon the occurrence of any such Event of Default, Lessor
may, in addition to exercising any other available rights or remedies available
to Lessor under law, give to Lessee notice of its intention to end the Term at
the expiration of three (3) days from the date of the giving of such notice,
and, in the event such notice is given, this Lease and the Term and estate
hereby granted (whether or not the Term shall have commenced)
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shall terminate upon the expiration of said three (3) days with the same force
and effect as if that day were the Expiration Date, provided, however, that
Lessor and Lessee shall remain liable for the performance of their respective
obligations hereunder which survive the termination of this Lease and for
damages as provided in this Lease.
11.2. Notwithstanding anything to the contrary set forth
herein, this Lease shall immediately terminate if any of the following events
shall occur with respect to Lessee: (a) if Lessee shall (i) have applied for or
consented to the appointment of a receiver, trustee or liquidator, or other
custodian of Lessee, or any of its properties or assets, (ii) have made a
general assignment for the benefit of creditors, (iii) have commenced a
voluntary case for relief as a debtor under the United States Bankruptcy Code,
or any other applicable federal or state laws, or filed a petition to take
advantage of any bankruptcy, reorganization, insolvency, readjustment of debts,
dissolution or liquidation law or statute or an answer admitting the material
allegations of a petition filed against it in any proceeding under any such
law, or (iv) be adjudicated a bankrupt or insolvent; or (b) if without the
acquiescence or consent of Lessee, an order, judgment or decree shall have been
entered by any court of competent jurisdiction approving as properly filed a
petition seeking relief under the United States Bankruptcy Code, or any other
applicable federal or state laws, or any bankruptcy, reorganization,
insolvency, readjustment of debts, dissolution or liquidation law or statute
with respect to Lessee, or all or a substantial part of their respective
properties or assets, and such order, judgment or decree shall have continued
unstayed and in effect for any period of not less than ninety (90) days.
Neither Lessee, nor any person claiming through or under Lessee or by reason of
any statute or order of court shall, after such termination, be entitled to
possession of the Demised Premises but shall forthwith quit and surrender the
Demised Premises. Without limiting any of the foregoing provisions of this
Section 10.2, if pursuant to the United States Bankruptcy Code, or any other
applicable federal or state laws, Lessee is permitted to assign this Lease,
Lessee agrees that adequate assurance of future performance by an assignee
expressly permitted under such law shall be deemed to mean evidence in the form
of financial statements prepared and certified by a certified public accountant
that the assignee will have a net worth, after excluding the value of the
leasehold, sufficient to meet the remaining obligations under this Lease.
11.3. In the event of any breach by Lessee or any persons
claiming through or under Lessee of any of the terms, covenants or conditions
contained in this Lease, Lessor, after the giving of any notice required by the
terms of this Lease and the expiration of any notice and cure periods
hereunder, (a) shall be entitled to enjoin such breach and (b) shall have the
right to invoke any right and remedy available at law or in equity or by
statute or otherwise. The provisions of this Section 11.3 shall survive the
expiration or sooner termination of this Lease.
11.4. If this Lease and the Term shall terminate as provided
in Section 11.1 or in Section 11.2 above, or by or under any summary proceeding
or any other action or proceeding or if Lessor shall re-enter the Demised
Premises as hereinabove provided or by or under any summary proceeding or any
other action or proceeding, then in any of said events:
(a) Lessee shall pay to Lessor all Base Rent, Additional Rent
and other amount payable by Lessee hereunder to the date upon which this
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Lease and the Term shall have terminated or to the date of re-entry upon the
Demised Premises by Lessor, as the case may be;
(b) Lessor shall be entitled to retain all monies, if any,
paid by Lessee to Lessor, whether as advance Rent, security or otherwise, but
such monies shall be credited by Lessor against any Rent due at the time of
such termination or re-entry or, at Lessor's option, against any damages
payable by Lessee;
(c) Lessee shall be liable for and shall pay to Lessor, as
damages, any deficiency between the Base Rent and Additional Rent payable
hereunder for the period which otherwise would have constituted the unexpired
portion of the Term (conclusively presuming the Base Rent and Additional Rent
to be at the same rate as was payable for the year immediately preceding such
termination or re-entry less any Additional Rent for such one-year period
payable to Lessor by Lessee pursuant to Section 5.1 above) and the net amount,
if any, of rents ("Net Rent") collected under any reletting effected by Lessor
for any part of such period (after first deducting from the rents collected
under any such reletting all of Lessor's reasonable expenses in connection with
the termination of this Lease or Lessor's re-entry upon the Demised Premises
and in connection with such reletting including all reasonable repossession
costs, brokerage commissions, legal expenses, attorneys' fees, alteration or
similar costs and other expenses of preparing the Demised Premises for such
reletting);
(d) In the event that Lessor shall not have collected any
monthly deficiencies as aforesaid, Lessor shall be entitled to recover from
Lessee, and Lessee shall pay to Lessor, on demand, as and for liquidated and
agreed final damages, a sum equal to the amount by which the Base Rent and
Additional Rent payable hereunder for the period which otherwise would have
constituted the unexpired portion of the Term (conclusively presuming the Base
Rent and Additional Rent to be at the same rate as was payable for the year
immediately preceding such termination or re-entry less any Additional Rent for
such one-year period payable to Sublessor by Sublessee pursuant to Section 5.1
above) exceeds the then fair and reasonable rental value of the Demised
Premises for the same period, both discounted to present value at the rate of
eight percent (8%) per annum. If before presentation of proof of such
liquidated damages to any court, commission or tribunal, the Demised Premises,
or any part thereof, shall have been relet by Lessor for the period which
otherwise would have constituted the unexpired portion of the Term, or any part
thereof, the amount of rent upon such reletting shall be deemed, prima facie,
to be the fair and reasonable rental value for the part or the whole of the
Demised Premises so relet during the term of the reletting; and
(e) In no event shall Lessee be entitled to receive any excess
of Net Rent over the sums payable by Lessee to Lessor hereunder, and in no
event shall Lessee be entitled in any suit for the collection of damages
pursuant to this Article to a credit in respect of any Net Rent from a
reletting except to the extent actually received by Lessor prior to the
commencement of such suit.
11.5. If a default by Lessee shall have occurred and be
continuing with respect to any obligations of Lessee under this Lease, Lessor
may, at its option, upon reasonable prior notice to Lessee (unless Lessor
reasonably believes there to be an emergency threatening Lessor's property
outside the Demised Premises, or threatening substantial damage to Lessor's
interest in the Demised Premises as Lessor, in which event no notice shall be
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required and Lessor may act immediately), perform such obligations for the
account of, and at the expense of, Lessee. The sums so paid or incurred by
Lessor, in its sole discretion, together with interest at the rate specified in
Section 3.3 hereof, costs and damages shall be due from and paid by Lessee, as
Additional Rent, upon Lessee's receipt of written demand therefor from Lessor.
11.6. Nothing herein contained shall be construed as limiting
or precluding the recovery by Lessor against Lessee of any sums or damages to
which, in addition to the damages particularly provided above, Lessor may
lawfully be entitled by reason of any default hereunder on the part of Lessee;
provided, however, that in no event shall Lessor or Lessee be entitled to
special or consequential damages with respect to any matter arising hereunder
or relating hereto.
12. Indemnification.
12.1. Lessee shall indemnify and hold harmless Lessor and its
employees and agents from and against any and all loss, cost, liability, claim,
damage and expense, including, without limiting the generality of the
foregoing, reasonable attorneys' fees and expenses and court costs, penalties
and fines incurred in connection with or arising from any injury to Lessee or
for any damage to, or loss (by theft or otherwise) of, any of the property of
Lessee, irrespective of the cause of such injury, damage or loss and whether
occurring in or about the Demised Premises or the Property.
12.2. Lessee shall indemnify and hold harmless Lessor and its
officers, directors, shareholders and employees from and against any and all
loss, cost, liability, claims, damage and expenses, including, without limiting
the generality of the foregoing, reasonable attorneys' fees and expenses and
court costs, penalties and fines, whether or not due to third party claims,
suits or proceedings, incurred in connection with or arising from (a) any
default by Lessee in the observance or performance of, or compliance with, any
of the terms, covenants or conditions of this Lease on Lessee's part to be
observed, performed or complied with, (b) the use or occupancy or manner of use
or occupancy of the Demised Premises by Lessee or any of its agents, employees
or contractors, or the exercise by Lessee or any of its agents, employees or
contractors, of any rights granted to Lessee hereunder, (c) any acts, omissions
or negligence of Lessee or any of its agents, employees or contractors, in or
about the Demised Premises or the Property either prior to, during, or after
the termination of this Lease or (d) the condition of the Demised Premises, but
only to the extent that Lessee fails to perform any of its obligations
hereunder with respect to the condition of the Demised Premises. If any action
or proceeding shall be brought against Lessor by reason of any such claim,
Lessee shall be given prompt notice thereof and, upon notice from Lessor, shall
resist and defend such action or proceeding at Lessee's sole expense and employ
counsel therefor reasonably satisfactory to Lessor. Lessee shall pay to Lessor
on demand all sums which may be owing to Lessor by reason of the provisions of
this subsection. Lessee's obligations under this subsection shall survive the
Expiration Date or earlier termination of this Lease.
12.3. Lessor shall indemnify and hold harmless Lessee and
Lessee's officers, directors, shareholders and employees from and against any
and all loss, cost, liability, claims, damage and expenses, including, without
limiting the generality of the foregoing, reasonable attorneys' fees and
expenses and court costs, penalty and fines, whether or not due to third
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party claims, suits or proceedings, incurred in connection with or arising from
(a) any default by Lessor in the observance or performance of, or compliance
with, any of the terms, covenants or conditions of this Lease on Lessor's part
to be observed, performed or complied with, or (b) the gross negligence or
wilful misconduct of Lessor (in its capacity as lessor hereunder) or any of its
agents, employees or contractors (retained by Lessor in its capacity as lessor
hereunder), in or about the Demised Premises or the Property either prior to,
during, or after the termination of this Lease. If any action or proceeding
shall be brought against Lessee by reason of any such claim, Lessor shall be
given prompt notice thereof and, upon notice from Lessee, shall resist and
defend such action or proceeding at Lessor's sole expense and employ counsel
therefor reasonably satisfactory to Lessee. Lessor shall pay to Lessee on
demand all sums which may be owed to Lessee by reason of the provisions of this
subsection. Lessor's obligations under this subsection shall survive the
Expiration Date or earlier termination of this Lease.
12.4. Lessor shall not be liable for any loss or damage to
property of Lessee or any of its employees, guests, invitees or licensees by
reason of theft or otherwise. Lessor shall not be liable for any injury or
damage to persons or property resulting from fire, explosion, falling plaster,
steam, gas, electricity, water, rain or leaks from any part of the Demised
Premises or from the pipes, appliances or plumbing works or from the roof,
street or subsurface or from any other place or by dampness or by any other
cause of whatsoever nature, unless such injury or damage has been shown to have
been due solely to the gross negligence or willful act or omission of Lessor,
its affiliates, or the officers, directors, employees or agents of Lessor or
its affiliates in the course of their employment. Subject to the foregoing, all
property of Lessee or others kept or stored on the Demised Premises shall be so
kept or stored at the risk of Lessee only.
12.5. Notwithstanding anything in this Section 12 to the
contrary, neither party shall be required to indemnify the other party (an
"indemnitee") against the indemnitee's own negligence or wilful misconduct.
13. Hazardous Materials.
13.1. Lessee shall not cause or permit any Hazardous Material
(as hereinafter defined) to be brought upon, kept or used in or about the
Demised Premises by the agents, principals, employees, assigns, sublessees,
contractors, subcontractors, consultants or invitees of Lessee, except in full
compliance with applicable Legal Requirements. If Lessee breaches the
obligations stated in the preceding sentence, or if the introduction or release
of a Hazardous Material on the Demised Premises caused or permitted by Lessee
(or the aforesaid others) results in contamination of the Demised Premises or
any surrounding area(s), or if contamination of the Demised Premises or any
surrounding area(s) by Hazardous Material otherwise occurs for which Lessee is
legally, actually or factually liable or responsible (other than liability
which arises solely as a result of the tenancy created hereby or solely as a
result of Lessor's mere occupancy of the Demised Premises), then Lessee shall
fully and completely indemnify, defend and hold harmless Lessor (or any party
claiming by, through or under Lessor) from any and all claims, judgments,
damages, penalties, fines, costs, liabilities, expenses or losses, including,
without limitation: (i) diminution in the value of the Demised Premises; (ii)
any asserted damage to the Property or to neighboring properties or the
occupants of the Property or neighboring properties, and (iii) any sums paid in
settlement of claims,
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reasonable attorneys' fees, consultants fees and expert fees which arise or
arose before, during or after the term of this Lease as a consequence of such
contamination. This indemnification includes, without limitation, costs
incurred in connection with any investigation or site conditions or any
clean-up, remedial, removal or restoration work required by any federal, state
or local governmental agency or political subdivision because of Hazardous
Materials present in the soil or ground water on or under the Demised Premises
for which Lessee is responsible pursuant to the terms of this Lease. Without
limiting the foregoing, if the introduction or release of any Hazardous
Materials on, under or about the Demised Premises or any other surrounding
area(s) caused or permitted by Lessee (or the aforesaid others) results in any
contamination of the Demised Premises, Lessee shall immediately take all
actions at its sole expense as are necessary or appropriate to return the
Demised Premises to the condition existing prior to the introduction by Lessee
of any such Hazardous Materials thereto; provided that the prior written
approval (which approval shall not be unreasonable withheld, conditioned or
delayed) of such actions by Lessor shall be first obtained. The foregoing
obligations and responsibilities shall survive the expiration or earlier
termination of this Lease.
13.2. As used herein, the term "Hazardous Materials" means any
hazardous or toxic substance, material or waste, including, but not limited to,
those substances, materials, and wastes listed in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reorganization Act of 1986 (42 U.S.C. Section 9601
et seq., as amended), the Federal Clean Water Act, the Federal Clean Air Act,
the Federal Resource Conservation and Recovery Act, the Federal Toxic
Substances Control Act, the United States Department of Transportation
Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection
Agency as hazardous substances (40 CFR Part 301 and amendments thereto), and
all substances, materials and wastes that are defined as "toxic", "hazardous"
or "extremely hazardous" or are otherwise regulated under any applicable local,
state or federal law. In furtherance of, and not in limitation of the
foregoing, the term "Hazardous Materials" shall include asbestos,
asbestos-containing materials and petroleum.
13.3. Lessor and Lessee acknowledge and agree that the Asset
Purchase Agreement shall govern all matters relating to the presence of
Hazardous Materials in, on, under and about the Demised Premises prior to the
execution and delivery hereof.
14. Right to Inspect.
14.1. Lessor and the authorized representatives of Lessor
shall have the right to enter upon the Demised Premises upon reasonable advance
notice to Lessee at all reasonable times during usual business hours (and at
any time without notice in the case of an emergency) for the purpose of
inspecting the same, conducting an environmental review of Lessee's business
operations or exhibiting the same to prospective purchasers, tenants or
mortgagees.
15. Eminent Domain.
15.1. If all of the Demised Premises are taken by exercise of
the power of eminent domain (or conveyed by Lessor in lieu of such exercise)
this Lease will terminate on a date (the "termination date") which
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is the earlier of the date upon which the condemning authority takes possession
of the Demised Premises or the date on which title to the Demised Premises is
vested in the condemning authority. If more than 25% of the rentable area of
the Demised Premises is so taken, or if Lessee's rights of access to the
Demised Premises or Lessee's use of parking facilities at the Property are
materially impaired as a result of such a taking, then Lessee will have the
right to cancel this Lease by written notice to Lessor given within 20 days
after the termination date. If less than 25% of the rentable area of the
Demised Premises is so taken, or if the Lessee does not cancel this Lease
according to the preceding sentence, the Base Rent will be abated in the
proportion of the rentable area of the Demised Premises so taken to the
rentable area of the Demised Premises immediately before such taking, and
Lessee's Share will be appropriately recalculated. If 25% or more of the
Property is so taken, Lessor may cancel this Lease by written notice to Lessee
given within 30 days after the termination date. In the event of any such
taking, the entire award will be paid to Lessor and Lessee will have no right
or claim to any part of such award; however, Lessee will have the right to
assert a claim against the condemning authority in a separate action, so long
as Lessor's award is not otherwise reduced, for Lessee's moving expenses and
leasehold improvements owned by Lessee.
16. Damage and Destruction.
16.1. If the Demised Premises or the Property are damaged by
fire or other insured casualty, Lessor will give Lessee written notice of the
time which will be needed to repair such damage, as determined by Lessor in its
reasonable judgment, and the election (if any) which Lessor has made according
to this Section 16. Such notice will be given before the 30th day (the "notice
date") after the fire or other insured casualty.
16.2. If the Demised Premises or the building are damaged by
fire or other insured casualty to an extent which may be repaired within 120
days after the notice date, as reasonably determined by Lessor, Lessor will
promptly begin to repair the damage after the notice date and will diligently
pursue the completion of such repair. In that event this Lease will continue in
full force and effect except that Base Rent and (as appropriate) Additional
Rent will be abated on a pro rata basis from the date of the damage until the
date of the completion of such repairs (the "repair period") based on the
proportion of the rentable area of the Demised Premises that Lessee is unable
to use during the repair period.
16.3. If the Demised Premises or the Property are damaged by
fire or other insured casualty to an extent that may not be repaired within 120
days after the notice date, as reasonably determined by Lessor, then (a) Lessor
may cancel this Lease as of the date of such damage by written notice given to
Lessee on or before the notice date or (b) Lessee may cancel this Lease as of
the date of such damage by written notice given to Lessor within 10 business
days after Lessor's delivery of a written notice that the repairs cannot be
made within such 120-day period. If neither Lessor nor Lessee so elects to
cancel this Lease, Lessor will diligently proceed to repair the Property and
the Demised Premises, and Base Rent and (as appropriate) Additional Rent will
be abated on a pro rata basis during the repair period based on the proportion
of the rentable area of the Demised Premises that Lessee is unable to use
during the repair period.
16.4. Notwithstanding the provisions of this Section 16, if
a material portion of the Demised Premises or the Property is damaged by an
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uninsured casualty, or if the proceeds of insurance are insufficient to pay for
the repair of any material damage to the Demised Premises or the Property,
Lessor will have the option to repair such damage or cancel this Lease as of
the date of such casualty by written notice to Lessee on or before the notice
date, provided, however, that such termination shall not be effective if
Lessee, within 10 days after its receipt of such notice, delivers to Lessor the
written agreement of Lessee (in form and substance reasonably satisfactory to
Lessor) to pay or reimburse Lessor for the uninsured portion of the cost of
such repairs.
16.5. If any such damage by fire or other casualty is the
result of the negligence or wilful misconduct of Lessee, its agents,
contractors, employees, or invitees, there will be no abatement of Base Rent or
Additional Rent as otherwise provided for in this Section 16. Lessee will have
no rights to terminate this Lease on account of any damage to the Demised
Premises or the Property except as set forth in this Lease.
17. Remedies Cumulative.
17.1. Each right and remedy of Lessor under this Lease shall
be cumulative and be in addition to every other right and remedy of Lessor
under this Lease and now or hereafter existing at law or in equity, by statute
or otherwise.
18. Quiet Enjoyment.
18.1. Lessor covenants that, as long as Lessee shall pay the
Base Rent and Additional Rent and all other amounts Lessee shall be required to
pay hereunder and shall duly observe, perform and comply with all of the terms,
covenants and conditions of this Lease on its part to be observed, performed or
complied with, Lessee shall, subject to all of the terms of this Lease,
peaceably have, hold and enjoy the Demised Premises during the Term without
molestation or hindrance by Lessor.
19. Release of Lessor.
19.1. The term "Lessor", as used in this Lease so far as
covenants or obligations on the part of Lessor are concerned, shall be limited
to mean and include only the owner or owners at the time in question of the
Property, and in the event of any transfer or transfers of the fee interest in
the Property, Lessor herein named shall be automatically freed and relieved
from and after the date of such transfer of all liability with respect to the
performance of any covenants or obligations on the part of Lessor contained in
this Lease thereafter to be performed; provided, however, that no Lessor shall
be freed or relieved from any of its obligations or liabilities hereunder which
first arise or accrue prior to the transfer of such Lessor's interest in the
Property.
20. Surrender of Demised Premises.
20.1. Lessee shall, no later than the termination of this
Lease and in accordance with all of the terms of this Lease, vacate and
surrender to Lessor the Demised Premises, together with all Alterations, in
similar order, condition and repair as the same were in as of the Commencement
Date, and broom clean, reasonable wear and tear, damages resulting from a
casualty for which Lessee is not responsible, and other items the repair or
remediation of which is the responsibility of Lessor
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excepted. Tenant's obligation to observe or perform this covenant shall
survive the termination of this Lease.
20.2. Notwithstanding any provision of law or any judicial
decision to the contrary, no notice shall be required to terminate the Term on
the Expiration Date, and the Term shall expire on the Expiration Date without
notice being required from either party. In the event that Lessee remains
beyond the Expiration Date, it is the intention of the parties and it is hereby
agreed that a tenancy at sufferance shall arise at a monthly rent equal to 150%
of the monthly Base Rent in effect at the expiration of the Term. It is further
agreed that Lessee shall indemnify and hold harmless Lessor from and against
any and all liability, claims, demands, expenses, damages and judgments (other
than consequential or special damages) incurred by Lessor as a result of
Lessee's retaining possession, which indemnification obligation shall survive
the Expiration Date.
21. Notices.
21.1. All notices, consents, approvals or other communications
(collectively, a "Notice") required to be given under this Lease or pursuant to
law shall be in writing and, unless otherwise required by law, shall be
delivered personally or by overnight courier service or given by registered or
certified mail, return receipt requested, postage prepaid, to the parties at
the following addresses (unless such address shall be changed by Notice from
one party to the other):
To Lessor:
Unisys Corporation
P.O. Box 500
Blue Bell, PA 19424
Attention: Real Estate Administration
To Lessee:
Loral Corporation
600 Third Avenue
New York, NY 10016
Attention: Vice President/General Counsel
Any Notice given pursuant hereto shall be deemed to have been given and shall
be effective when received, or when delivered and refused.
22. Lessor's Inability to Perform.
22.1. This Lease and the obligation of Lessee to pay Rent
hereunder and perform all of the other covenants and agreements hereunder on
the part of Lessee to be performed shall in no way be affected, impaired or
excused because Lessor is unable to fulfill any of its obligations under this
Lease expressly or impliedly to be performed by Lessor or because Lessor is
unable to make, or is delayed in making, any repairs, additions, alterations,
improvements or decorations or is unable to supply or is delayed in supplying
any equipment or fixtures, if Lessor is prevented or delayed from so doing by
reason of strikes or labor trouble or by accident, adjustment of insurance or
by any cause whatsoever reasonably beyond Lessor's control, including but not
limited to, laws, governmental preemption in connection with a national
emergency or by reason of any rule, order or regulation or any federal,
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state, county or municipal authority or any department or subdivision thereof
or any government agency or by reason of the conditions of supply and demand
which have been or are affected by war or other emergency.
23. Limitations or Liability.
23.1. It is specifically understood and agreed that there
shall be absolutely no personal liability on the part of Lessor in respect of
any of the terms, covenants and conditions of this Lease, and Lessee shall look
solely to the interest of Lessor in the Demised Premises for the satisfaction
of each and every remedy of Lessee in the event of any breach or default by
Lessor, or by any successor in interest to Lessor, of any of the terms,
covenants and conditions of this Lease to be performed by Lessor.
23.2. Nothing in this Section is intended to limit or affect
any obligations of Lessor or any affiliate of Lessor which are contained in any
separate agreement.
24. Asset Purchase Agreement.
24.1. Notwithstanding anything to the contrary contained
herein, in the event of a conflict between the terms of this Lease and the
terms of the Asset Purchase Agreement, the terms of the Asset Purchase
Agreement shall govern.
24.2. As used herein, (a) the term "Asset Purchase Agreement"
shall mean the Asset Purchase Agreement, dated as of March 20, 1995, between
Unisys Corporation and Loral Corporation, as amended from time to time, and (b)
the term "Transaction Documents" shall mean all agreements between Lessor and
Lessee executed pursuant to, or in connection with, the Asset Purchase
Agreement.
25. Miscellaneous.
25.1. This Lease shall be governed by and construed in
accordance with the internal laws of the State in which the Demised Premises
are located, without regard to the conflicts of law principles thereof.
25.2. The section headings in this Lease and the table of
contents are inserted only as a matter of convenience for reference and are not
to be given any effect in construing this Lease.
25.3. If any of the provisions of this Lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision or provisions to persons or circumstances other than those as to
whom or which it is held invalid or unenforceable, shall not be affected
thereby, and every provision of this Lease shall be valid and enforceable to
the fullest extent permitted by law.
25.4. All of the terms and provisions of this Lease shall be
binding upon and inure to the benefit of the parties hereto and, subject to the
provisions of Article 9 hereof, their respective successors and assigns.
25.5. Lessor has made no representations, warranties or
covenants to or with Lessee with respect to the subject matter of this Lease
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except as expressly provided herein or in the Transaction Documents and all
prior negotiations and agreements relating thereto are merged into this Lease.
This Lease may not be amended or terminated, in whole or in part, nor may any
of the provisions be waived, except by a written instrument executed by the
party against whom enforcement of such amendment, termination or waiver is
sought.
26. Rider. A Rider to this Lease is attached hereto and
incorporated herein by reference.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease
as of the day and year first above written.
UNISYS CORPORATION, as Lessor
By:___________________________
Name: Harold S. Barron
Title: Senior Vice President
LORAL CORPORATION, as Lessee
By:____________________________
Name: Eric J. Zahler
Title: Vice President
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Salt Lake City, UT (Owned)
RIDER
1. This Rider is a part of this Lease. In the event of any
contradiction or inconsistency between the provisions of this Rider and the
provisions of the other portions of this Lease, the provisions of this Rider
shall govern and prevail, and the contradicting and inconsistent provisions of
the other portions of this Lease shall be deemed amended accordingly.
2. Lessee (together with its employees, licensees, and
invitees) shall have the non-exclusive right to use the 280 parking spaces at
the Property designated on Schedule B to this Lease.
3. Lessee hereby agrees to provide the services described on
Schedule D-1 attached hereto, which services were previously provided by
Lessor's non-Defense Systems personnel, to the Demised Premises during the Term
hereof. In connection therewith, Lessor and Lessee shall share supplies and
equipment located at the Property for performance of their respective service
obligations with respect to the Property until the exhaustion of such supplies
and equipment. Thereafter, Lessor and Lessee shall separately purchase and use
such supplies and equipment as each may determine it requires for performance
of its respective service obligations.
4. With respect to contracts entered into by Lessor prior to
the date of this Lease relating in whole or in part to the provision of
services to the Demised Premises, which services Lessee has assumed the
obligation to provide as of the date of this Lease and which services were
previously provided by Lessor's non-Defense Systems personnel, (a) Lessor shall
endeavor to terminate such contracts at the earliest possible time, provided
Lessor shall not be obligated to breach such contracts and (b) Lessee shall be
obligated to pay all sums due under such contracts for the provision of goods
and services to the Demised Premises.
5. From the date hereof until the earlier of (a) the
Expiration Date and (b) the service of written notice by Lessor of its election
to terminate receipt of such services, Lessee shall continue to provide
security services to the portions of the Property not part of the Demised
Premises, of the type generally and customarily provided by Lessor's Defense
Systems unit to the Property prior to the date hereof.
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SCHEDULE A
PROPERTY
As used in this Lease, the "Property" shall mean Buildings D,
D Annex and Z at 322 North 2200 West, Salt Lake City, Utah.
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SCHEDULE B
DEMISED PREMISES
As used in this Lease, the "Demised Premises" shall mean
133,888 rentable square feet, minus the usable square footage of the cafeteria
located in Building D, measured in accordance with BOMA standards, located in
Buildings D, D Annex and Z at 322 North 2200 West, Salt Lake City, Utah, which
premises are identified on the plans attached hereto.
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SCHEDULE C
SCHEDULED EXPIRATION DATE/BASE RENT
As used in this Lease, "Scheduled Expiration Date" means
December 31, 2001.
As used in this Lease, "Base Rent" shall mean, with respect to
any calendar month, all actual costs and expenses relating to the Property
(including common areas and facilities) that are allocated by Lessor to the
Demised Premises for such month, provided that Lessor's method of allocation
shall be consistent with the method of allocation used by Unisys Corporation to
allocate costs to the Unisys Defense Systems unit with respect to the occupancy
of the Demised Premises by the Unisys Defense Systems unit during calendar year
1994. Such costs and expenses shall include cash items and non-cash items, such
as depreciation. In the event that Base Rent for any calendar quarter (as
calculated above) shall not be determinable by Lessor until after the end of
such calendar quarter, then Base Rent shall be payable during such calendar
quarter based upon Lessor's reasonable estimate of costs and expenses to be
allocated to the Demised Premises. Lessor shall, as soon as practicable after
the end of such calendar quarter, provide Lessee with a written statement of
the Base Rent amount for such calendar quarter and, subject to Section 3.5 of
the Lease, the parties shall promptly thereafter make any necessary
reconciliation payments.
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SCHEDULE D
SERVICES TO BE PROVIDED BY LESSOR
With respect to Buildings D and D-Annex:
1. Repair and maintenance of building structure, including
building shell, windows, exterior doors and roof.
2. Repair and maintenance of all common mechanical and
electrical equipment and equipment exterior to the building, including boilers,
major air conditioning equipment, air compressor, major electrical panels, main
fire water systems and risers, main water supplies and building sewer systems.
3. Repair and maintenance of all building grounds including
parking lots, landscaping and snow removal.
With respect to Building Z:
1. Repair and maintenance of all building grounds,
including parking lots, landscaping and snow removal.
2. Repair and maintenance of all utilities up to the
termination point with the building.
3. Repair and maintenance of main fire water systems and
risers.
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SCHEDULE D-1
SERVICES NOT TO BE PROVIDED BY LESSOR
With respect to the Demised Premises in Buildings D, D-Annex
and Z:
1. Interior maintenance, repairs and janitorial services.
2. Alterations (as permitted by this Lease), moving and
rearranging services.
3. Fire protection services and monitoring.
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FIRST AMENDMENT TO LEASE
LORAL CORPORATION/UNISYS CORPORATION
Buildings D, D Annex and Z
322 North 2200 West
Salt Lake City, UT
In consideration of the mutual covenants contained herein, and for other good
and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree to amend the Lease dated May 5, 1995 between Loral
Corporation, as Lessor, and Unisys Corporation, as Lessee, for the Demised
Premises located in Buildings D, D Annex and Z at 322 North 2200 West, Salt
Lake City, Utah as follows:
1. Effective December 1, 1995 through December 31, 2001, Schedule B (the
"Demised Premises") as used in the Lease shall be increased by 37,034
rentable square feet which additional spaces are identified on Exhibit
A attached hereto.
2. Effective December 1, 1995 the rental shall be increased to reflect
said additional space utilizing the method described on Schedule C of
the Lease.
3. Effective December 1, 1995 the parking site plan shown on Exhibit B of
the Lease shall be replaced with the attached Exhibit B. Lessee will
have exclusive use of the Building D Annex dock area, however Lessee
must continue to provide the U.S. Postal Service access as provided in
their Lease.
4. Except as modified herein and amended herein, all other terms and
conditions of the Sublease shall remain unchanged and in full force
and effect.
LESSEE: LESSOR:
UNISYS CORPORATION LORAL CORPORATION
a Delaware Corporation a New York Corporation
By:______________________ By:_________________________
Richard J. L'Ecuyer W. B. Booker
Corporate Director Vice and Controller
Real Estate Operations Loral Communication Systems
By:___________________________
Stephen L. Jackson,
Vice President
LORAL CORPORATION
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SECOND AMENDMENT TO LEASE
LORAL Corporation/UNISYS CORPORATION
Buildings D, D Annex and Z
322 North 2200 West
Salt Lake City, UT
In consideration of the mutual covenants contained herein, and for other good
and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree to amend the Lease dated May 5, 1995 as amended by First
Amendment between Loral Corporation, as Lessor, and Unisys Corporation, as
Lessee, for the Demised Premises located in Buildings D, D Annex and Z at 322
North 2200 West, Salt Lake City, Utah as follows:
1. Effective December 1, 1995 through December 31, 2001, Schedule B (the
"Demised Premises") as used in the Lease shall be increased by 20,000
rentable square feet which additional space is identified on Exhibit A
attached hereto.
2. Effective December 1, 1995 the rental shall be increased to reflect
said additional space utilizing the method described on Schedule C of
the Lease.
3. Except as modified herein and amended herein, all other terms and
conditions of the Sublease shall remain unchanged and in full force
and effect
LESSEE: LESSOR:
UNISYS CORPORATION LORAL CORPORATION
a Delaware Corporation a New York Corporation
By:______________________ By:_________________________
Richard J. L'Ecuyer W. B. Booker
Corporate Director Vice President and Controller
Real Estate Operations Loral Communication Systems
By:___________________________
Stephen L. Jackson,
Vice President
LORAL CORPORATION
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THIRD AMENDMENT TO LEASE
LORAL CORPORATION/UNISYS CORPORATION
Buildings D, D Annex and Z
322 North 2200 West
Salt Lake City, UT
In consideration of the mutual covenants contained herein, and for other good
and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree to amend the Lease dated May 5, 1995 as amended by First,
and _______ Second Amendments between Loral Corporation, as Lessor, and Unisys
Corporation, as Lessee, for the Demised Premises located in Buildings D, D
Annex and Z at 322 North 2200 West, Salt Lake City, Utah as follows:
1. Effective January 15, 1996 through December 31, 2001, Schedule B (the
"Demised Premises") as used in the Lease shall be increased by 4,584
rentable square feet which additional space is identified on Exhibit A
attached hereto.
2. Effective January 15, 1996 the rental shall be increased to reflect
said additional space utilizing the method described on Schedule C of
the Lease.
3. Except as modified herein and amended herein, all other terms and
conditions of the Sublease shall remain unchanged and in full force
and effect.
LESSEE: LESSOR:
UNISYS CORPORATION LORAL CORPORATION
a Delaware Corporation a New York Corporation
By: _____________________ By:___________________________
Richard J. L'Ecuyer W. B. Booker
Corporate Director Vice President and Controller
Real Estate Operations Loral Communication Systems
By:___________________________
Stephen L. Jackson,
Vice President
Loral Corporation
10
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EXHIBIT B
DEFAULTS
NONE
9
<PAGE>
EXHIBIT 10.7
LIMITED NONCOMPETITION AGREEMENT
This Limited Noncompetition Agreement between Lockheed Martin Corporation
("Lockheed Martin") and L-3 Communications Corporation ("L-3") is dated as of
April 30, 1997 with reference to the following:
Recitals
WHEREAS, Lockheed Martin, Lehman Brothers Capital Partners III, L.P.,
Frank C. Lanza, Robert V. LaPenta and L-3 Communications Holdings, Inc.
("Holdings") have entered into a Transaction Agreement dated as of March 28,
1997 (as amended by Amendment No. 1 to Transaction Agreement dated as of
April 11, 1997, and as it may be further amended from time to time, the
"Transaction Agreement"); and
WHEREAS, the Transaction Agreement contemplates that the business and
assets of certain business elements of Lockheed Martin, the Business Units,
will be sold upon the terms and subject to the conditions of the Transaction
Agreement to Holdings; and
WHEREAS, Section 12.01 of the Transact on Agreement provides that the
obligations of Lockheed Martin, Holdings and the Purchasers to consummate the
Closing are subject to the satisfaction (or waiver) of certain enumerated
conditions one of which (contained with Section 12.01(e)) is that Lockheed
Martin and Holdings shall have executed and delivered the noncompetition
agreement contemplated by Section 9.09 of the Transaction Agreement; and
WHEREAS, Holdings will conduct the businesses sold to it under the
Transaction Agreement through L-3, a wholly-owned subsidiary of Holdings.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties contained herein, Lockheed Martin and
L-3 agree as follows:
1. Capitalized terms used but not defined in this Limited Noncompetition
Agreement shall have the meanings ascribed to them in the Transaction
Agreement.
2. Subject to the provisions of Paragraph 3, Paragraph 4, Paragraph 5 and
Paragraph 6 hereof, the Lockheed Martin Companies shall not sell products
anywhere in the world in competition with products of L-3 listed on "Attachment
A" hereto, or being supplied as of the Closing Date by the Business in
connection with its Performance of the specific programs listed on "Attachment
A" hereto (collectively, the "competing businesses"), in each instance for the
applications listed opposite the product or program listed on Attachment A and
for a period of three years commencing as of the Closing Date.
3. The provisions of Paragraph 2 shall prohibit the acquisition by
Lockheed Martin or any of its Affiliates of all or any part of a business or
Person (whether through the acquisition of assets, securities or other
ownership interest, the effecting of a merger, business combination,
reorganization, exchange or recapitalization or other similar transaction)
1
<PAGE>
(the "Acquired Business") with any Person where a primary purpose of the
acquisition is the avoidance of the prohibitions of Paragraph 2. For purposes
of the foregoing, in the case of any such acquisition by Lockheed Martin or any
of its Affiliates where the competing business conducted by the Acquired
Business represents greater than 35% of the revenues of the Acquired Business
for its most recently completed fiscal year, a primary purpose of the
transaction shall be deemed to be the avoidance of the prohibitions of
Paragraph 2. Notwithstanding the provisions of the preceding sentence, the
provisions of Paragraph 2 shall not prohibit the acquisition by Lockheed Martin
or any of its Affiliates of an Acquired Business where the competing business
conducted by the Acquired Business represents greater than 35% of the revenues
of the Acquired Business (a "Disqualifying Acquisition," and the portion of the
Acquired Business that is a competing business being the "Disqualified
Business"), provided that Lockheed Martin or any of its Affiliates offers to
sell and assign the Disqualified Business (and associated liabilities) obtained
and assumed in the Disqualifying Acquisition for cash to L-3 within 90 days of
the consummation of the Disqualifying Acquisition at the fair market value of
such Disqualified Business (and associated liabilities) with the benefit of
substantially similar representations, warranties and indemnification periods
from the fair market value of such Disqualified Business (and associated
liabilities), L-3 and such Lockheed Martin or their representatives shall meet
within 15 days of the date such offer is made and attempt mutually to determine
in good faith such fair market value. If L-3 and Lockheed Martin are unable to
determine a mutually acceptable fair market value within 20 days after their
initial meeting, L-3 and Lockheed Martin shall mutually engage (and share
equally in the fees and expenses of) an investment banking firm to determine
within 20 days of such firm's engagement the fair market value of the
Disqualified Business (and associated liabilities), which determination shall
be binding upon L-3 and Lockheed Martin for purposes of Lockheed Martin's offer
to L-3 as contemplated herein. Lockheed Martin shall not be obligated to keep
its offer to L-3 open for more than 20 days after final determination of the
fair market value of the Disqualified Business and its assumption of the
associated liabilities within 75 days of such acceptance, otherwise Lockheed
Martin and its Affiliates shall be permitted to keep and operate, or divest,
such Disqualified Business (and associated liabilities) in Lockheed Martin's
sole discretion.
4. The prohibitions of Paragraph 2 shall not apply to:
(a) businesses operated and managed by Lockheed Martin or its
Affiliates on behalf of the U.S. Government; or
(b) Acquired Businesses where the acquisition is permitted under
Paragraph 3; provided that in the case of any such acquisition (i) the
competing business was being conducted by the Acquired Business as of the
closing of the acquisition of the Acquired Business or (ii) Lockheed Martin or
the Acquired Business can affirmatively demonstrate that the Acquired Business
was considering entering the competing business as of the closing of the
acquisition of the Acquired Business, or (iii) the competing business is
reasonably related to the businesses referenced in either or both of the
preceding clauses (i) or (ii); or
(c) the acquisition by Lockheed Martin or any of its Affiliates of
not greater than twenty percent of the voting securities of any Person engaged
in a competing business; or
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<PAGE>
(d) the acquisition by Lockheed Martin or any of its Affiliates of
any non-voting securities of any Person engaged in a competing business.
5. Notwithstanding the provisions of Paragraph 2, nothing in this Limited
Noncompetition Agreement shall prevent Lockheed Martin or any of its Affiliates
from:
(a) continuing to engage without impediment in any business,
including but not limited to the unrestricted sale of products related to that
business, conducted by Lockheed Martin or any of its Affiliates as of Closing
(other than businesses conducted by Lockheed Martin solely through the Business
Units), any such business being hereinafter referred to as an "Existing
Business"; or
(b) entering into any business and thereafter engaging without
impediment in such business, including but not limited to the unrestricted sale
of products related to that business where Lockheed Martin can affirmatively
demonstrate that, as of the Closing, Lockheed Martin or any of its Affiliates
or any business element thereof (excluding the Business Units) was considering
entering such business, any such business being hereinafter referred to as a
"Planned Business"; or
(c) entering into any business and thereafter engaging without
impediment in such business, including but not limited to the unrestricted sale
of products related to that business, where such business is reasonably related
to either or both an Existing Business or a Planned Business.
6. For the purposes of Paragraph 2, the sale by Lockheed Martin or its
Affiliates (including, without limitation, any Acquired Business) of systems
manufactured, assembled, fabricated or integrated by Lockheed Martin or its
Affiliates (which systems may themselves be subsystems or components of larger
systems) where the system manufactured, assembled, fabricated or integrated by
Lockheed Martin or its Affiliates (A) includes as one or more subsystems,
components, subcomponents or other parts of the system products sold by (i) L-3
or (ii) third-party sources other than L-3 or (B) where such system includes as
one or more subsystems, components, subcomponents or other parts of the system
products manufactured, assembled, fabricated or integrated by Lockheed Martin
or its Affiliates shall be deemed not to be a sale in competition with products
sold by L-3 and, therefore, is permitted under Paragraph 2; provided, however,
that, if sale of the product manufactured, assembled, fabricated or integrated
is not permitted by any of the exceptions to Paragraph 2 other than by clause
(B) of this Paragraph 6, then prior to manufacturing the subsystem, component,
subcomponent or other part of the system Lockheed Martin shall in its good
faith business judgment (which may include, but is not limited to,
consideration of the optimum combination of performance, schedule, quality,
cost, customer preference, ability to provide a total solution and/or turnkey
system and other factors considered relevant to the decision by the Lockheed
Martin company making the make/buy decision) consider procuring the item from
L-3 and provided further that items manufactured by Lockheed Martin or any of
its Affiliates in reliance on the exception provided by clause (B) of this
Paragraph 6 may only be sold during the term of this Limited Noncompetition
Agreement as part of a system qualifying for the exception provided by clause
(B) of this Paragraph 6.
7. Lockheed Martin acknowledges that in the event of its or its
Subsidiaries' breach of the covenants contained in this Limited
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Noncompetition Agreement, money damages would be an inadequate remedy.
Accordingly, without prejudice to the rights of L-3 also to seek such damages
or other remedies available to it, L-3 may seek, and Lockheed Martin shall not
contest the appropriateness of injunctive or other equitable relief in any
proceeding that L-3 may bring to enforce the covenants contained in this
Limited Noncompetition Agreement. No waiver of any breach of the covenants
contained in this Limited Noncompetition Agreement shall be implied from
forbearance or failure of L-3 to take action in respect thereof.
8. Lockheed Martin and L-3 agree that, if any provision of this Limited
Noncompetition Agreement should be adjudicated to be invalid or unenforceable,
such provision shall be deemed deleted herefrom with respect, and only with
respect, to the operation of such provision in the particular jurisdiction in
which such adjudication was made. To the extent any such provisions may be
valid and enforceable in such jurisdiction by limitations on the scope of the
activities, geographical area or time period covered, L-3 and Lockheed Martin
agree that such provision instead shall be deemed limited to the extent, and
only to the extent, necessary to make such provision enforceable to the fullest
extent permissible under the laws and public policies in such jurisdiction.
9. All notices, requests and other communications to any party
hereunder shall be in writing (including telecopy or similar writing) and
shall be given,
if to Lockheed Martin:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Marcus C. Bennett
Telecopy: (301) 897-6083
with a copy to:
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Frank H. Menaker, Jr.
Telecopy: (301) 897-6791
and
Miles & Stockbridge, a
Professional Corporation
10 Light Street
Baltimore, Maryland 21202
Attention: Glenn C. Campbell
Telecopy: (410) 385-3700
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If to L-3:
L-3 Communications Corporation
600 Third Avenue
New York, New York 10016
Attention: General Counsel
Telecopy: (212) 805-5494
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: David B. Chapnick
Telecopy: (212) 455-2502
and
Lehman Brothers Capital Partners III, L.P.
3 World Financial Center
New York, New York 10285
Attention: Steven Berkenfeld
Telecopy: (212) 526-2198
and
Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Frank H. Menaker, Jr.
Telecopy: (301) 897-6791
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify for the purpose by notice to the other parties.
Each such notice, request or other communication shall be effective (i) if
given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Paragraph 9 and evidence of receipt is received or (ii) if
given by any other means, upon delivery or refusal of delivery at the address
specified in this Paragraph 9.
10. Any provision of this Limited Noncompetition Agreement may be amended
or waived if, and only if, such amendment or waiver is in writing and signed,
in the case of an amendment, by Lockheed Martin and L-3, or in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege under this
Limited Noncompetition Agreement shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
11. The provisions of this Limited Noncompetition Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns; provided that no party may assign, delegate or
otherwise transfer any of its right or obligations under this Agreement without
the consent of Lockheed Martin, in the case of L-3, and L-3 in the case of
Lockheed Martin. Notwithstanding the foregoing, the provisions of
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this Limited Noncompetition Agreement shall not apply to any of the Lockheed
Martin Companies to the extent that such companies no longer are Subsidiaries
of Lockheed Martin.
12. As used in this Limited Noncompetition Agreement, any reference to the
plural shall include the singular, and the singular shall include the plural.
With regard to each and every term and condition of this Limited Noncompetition
Agreement, the parties understand and agree that the same have or has been
mutually negotiated, prepared and drafted, and that if at any time the parties
desire or are required to interpret or construe any such term or condition or
any agreement or instrument subject hereto, no consideration shall be given to
the issue of which party actually prepared, drafted or requested any term or
condition of this Limited Noncompetition Agreement.
13. This Limited Noncompetition Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof, supersedes all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter thereof, and satisfies
all obligations, covenants and agreements of Lockheed Martin under Section 9.09
of the Transaction Agreement.
14. This Limited Noncompetition Agreement shall be construed in
accordance with and governed by the law of the State of New York.
15. This Limited Noncompetition Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Limited Noncompetition
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Limited
Noncompetition Agreement as of the date first set forth above.
LOCKHEED MARTIN CORPORATION
By: /s/ Stephen M. Piper
Stephen M. Piper
Assistant Secretary
L-3 COMMUNICATIONS CORPORATION
By: /s/ Michael T. Strianese
Michael T. Strianese
Vice President, Finance and
Controller
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ATTACHMENT A
LOCKHEED MARTIN TACTICAL COMMUNICATION SYSTEMS
640 NORTH 2200 WEST
SALT LAKE CITY, UTAH 84116
PRODUCT PROFILES
SURVEILLANCE PROGRAMS
o SENIOR YEAR SUPPORT. This a service contract that provides worldwide
technical, logistical and operational support to Senior Year fielded
equipment. It also includes support to specified Army/agency-related
equipment. Fielded equipment support includes spares, field support
representatives, contract field representatives, manuals, modifications and
upgrades, repairs, software, GFE/GFP management and sustaining engineering
support. The program continues the development and support of core
intelligence wideband communication systems.
o GUARDRAIL. Guardrail is a dual data link airborne system for air-to-air
networking for Army airborne signal intelligence collection. The system is
capable of providing tactical commanders with near-real-time targeting,
information. Using common data link based equipment on the RC-12 aircraft,
the data link provides secure high-rate data to an interactive processing
facility interface.
o DIRECT AIR-SATELLITE RELAY (DASR). DASR extends the range of the signal
intelligence (SIGINT) and electromagnetic intelligence (ELINT) collection
system on the Army's Guardrail Common Sensor program through a satellite
relay. It provides tactical/strategic mobility with flexible architecture
and an improved intelligence product. DASR provides quick-reaction
capability for low-intensity conflicts while creating a low-profile antenna
satellite relay system that can be used by all services.
UNMANNED AERIAL VEHICLES (UAV) PROGRAMS
o TIER II PREDATOR. The Predator Ku-band airborne data link is a high-rate
inter-operable link for remotely controlled UAVs through a satellite
commercial relay. The Predator link has multi-payload capability along
with a wideband satellite link which serves worldwide reconnaissance and
surveillance missions.
o TIER II PLUS. Tactical Communication Systems provides the integrated
communication system for the Global Hawk high-altitude endurance UAV
(Tier II Plus) and associated ground stations to provide near-real-time
surveillance information to the warfighter. The Tier II Plus communication
system integrates various links, including satellite relay links, line-of-
sight links and UHF Command-and-control data links. In addition to the
integrated airborne communication system, the company provides a suite
of ground communication equipment.
NAVY/AIRBORNE INFORMATION TRANSMISSION PROGRAMS
o COMMON HIGH-BANDWIDTH DATA LINK SURFACE TERMINAL (CHBDL-ST). This provides
a wideband shipboard terminal to Navy ES-3A, F/A-18R, UAV and ship-to-ship
communication requirements. CHBDL-ST provides the ability to acquire multi-
service data link signals from surveillance and reconnaissance aircraft. It
also provides communications between the airborne platforms BGPHES and
JSIPS(N) for shipboard workstations. CHBLD-ST is inter-operable with several
Air Force reconnaissance platforms, as well as future UAV deployments.
o BATTLE GROUP PASSIVE HORIZON EXTENSION SYSTEM (BGPHES). BGPHES provides the
data link for the airborne component (ES-3A) of a SIGINT collection system
for carrier battle group protection. BGPHES is inter-operable with the USAF
CDL surface terminals supporting U-2, RS-6B, RAS-1 and RAS-1A sensors.
o AIRBORNE INFORMATION TRANSMISSION (ABIT). Provides DoD with a 1,000nm, near-
real-time, high-data-rate relay capability. ABIT provides automatic air-to-
air acquisition and reacquisition, common data link inter-operability, low
probability of detection/anti-jam, variable data rates, common module usage,
and multi-sensor interfaces for multiple users.
GROUND SATCOM PROGRAMS
o TRIBAND SATCOM SUBSYSTEMS (TSS). The TSS system is a multi-use Army Tactical
Satellite Ground Terminal which provides a single SATCOM terminal
configuration. TSS employs a highpowered, tactical earth terminal with a
single point feed that can provide C and Ku, as well as X bands - with no
feed changeouts or re-focusing. it is operational with either US commercial,
military or international satellites.
o TRANSPORTABLE MEDIUM EARTH TERMINAL (TMET). The first medium earth terminal
(11.3 meter dish) transportable on two C-130 aircraft. The TMET operates in
C, X, or Ku bands and is reconfigurable for tri-band operations. The terminal
is fully DISA- and INTELSAT-certified.
SYSTEMS DEVELOPMENT/ADVANCED PROJECT PROGRAMS
o THE ARMY COMBINED ARMS WEAPONS SYSTEM (TACAWS). On TACAWS, a Horizontal
Technology Initiative (HTI) program for developing future missile technology,
the company's role is developing the data link to provide forward missile
commands and return target images to the launch platform. The data link
technology will be directly applicable to the TOW and Hellfire missile
replacements.
COMMERCIAL PROGRAMS
o Fixed Wireless Loop (FWL). The FWL system is an extremely flexible and
scaleable method of providing telephony and data services to homes and
businesses without having to extend copper wire to each subscriber.
<PAGE>
LOCKHEED MARTIN COMMUNICATIONS SYSTEMS
1 FEDERAL STREET
CAMDEN, NEW JERSEY 08102
PRODUCT PROFILES
SPACE AND SATELLITE COMMUNICATIONS SYSTEMS
- ------------------------------------------
o SPACE STATION COMMUNICATIONS & TRACKING SYSTEM. Communications Systems is
designing and testing three communication subsystems for the International
Space Station (ISS). These systems will control all the Station's radio
frequency (RF) communications and external video activities. One RF
subsystem operates at S-band for narrowband communications, including
telemetry, tracking and commands. The second SF subsystem operates at
Ku-band for wideband communications, including video and
payload/experiment data. The external video subsystem includes four camera
groups, video switching and baseband signal processing for wideband
communications. These space-qualified subsystems use advanced hardware and
software technologies including the first large-scale application of fiber
optics in space. Communications Systems is currently pursuing application
of these technologies to ISS experiments and to the Japanese Experiment
Module.
o SPACE RECORDING SYSTEMS. Communications Systems provides solid-state
product and buffer solutions for data capture, storage, transfer and
retrieval for space applications.
o SHF PORTABLE TERMINAL SYSTEM (PTS). Communications Systems has developed a
PTS for SHF satellite communications for U.S. and NATO forces. The
lightweight, manportable terminal, communicating through DSCS, NATO or
SKYNET satellites, bring unprecedented connectivity to small military
tactical units and mobile command posts. The system includes the portable
terminal, a network control applique and associated network control
software. An innovative Demand Assignment Multiple Access (DAMA) protocol
minimizes user waiting times and the network control processor
automatically adapts frequency data rate and transmission time to maximize
throughput, all transparent to the operator. Communications Systems
recently delivered 14 terminals for use by NATO in Bosnia. Advanced
technology efforts are currently aimed at further miniaturization,
enhancing system performance and reducing costs for the United States and
NATO.
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NAVY COMMUNICATIONS SYSTEMS
- ---------------------------
o SYSTEM INTEGRATED PRODUCTS. Communications Systems has off-the-shelf
products, based on communications industry standards, that serve as core
technologies for small-to-large networks. These products include radio
baseband switches, integrated services digital network (ISDN) switches,
packet switches, voice/data terminals and network management software.
Applications include systems requiring seamless, multimedia access to
interior and exterior communication services. The advantages of these
products include significant reduction of equipment and installation
costs, avoidance of development costs and risks, embedded information
security, automated capability and low-cost technology upgrades.
Communications Systems applies many years of integration experience to
these products to provide solutions to meet customer requirements.
o INTEGRATED VOICE COMMUNICATIONS SYSTEMS (IVCS). The AN/STC-2(v) IVCS is
the only fully militarized tactical communications switching system in the
U.S. Navy fleet. It integrates the intercom, tactical net and
administrative network into one reliable system accessing various types of
communication terminals throughout the ship.
o INTEGRATED RADIO ROOM (IRR). Communications Systems produced the IRR, the
automated exterior communications suite for the SSBN-726 Trident-class
submarines. IRR is the first computer-controlled communications center on
a submarine. It provides reliable exterior communications between the
Trident submarine and satellite, aircraft, shore facilities and other
ships. The system's 23 racks of equipment are monitorized and controlled
from a single console. This type of system also may be used on other types
of ocean going vessels.
o MARCOM 2000 SWITCHING SYSTEM. The MarCom 2000 Secure Digital Switch
provides an integrated approach to the specialized voice and data
communications needs of a shipboard environment for internal and external
communications, command and control and air traffic control. The MarCom
2000 time-division switch provides voice and data communications via
telephone or other communications terminals and provides interfaces to
radios, existing switches, cryptos, etc. A compact, modular design allows
the MarCom 2000 to serve small-to-large platforms. By using industry
standard telecommunications components, MarCom 2000 lowers costs and
greatly simplifies logistical support.
COMMUNICATIONS/INFORMATION SECURITY SYSTEMS
- -------------------------------------------
o INFORMATION SECURITY (INFOSEC). Communications Systems continues to be a
leader in the field of communications and information security, providing
critical technologies and systems to the U.S. government and its
contractors for secure communications and computer systems, equipment and
services. Communications
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Systems is a major participant in the Electronic Key Management Systems
initiative and is extending this participation to include benign fill and
multilevel secure networks. This support has spanned broad roles in system
concepts, equipment design, hardware and software development and
state-of-the-art custom secure very large scale integration (VLSI) and
application-specific integrated circuit (ASIC) designs. Communications
Systems is leading the development of next-generation, programmable
INFOSEC modules to embed in end-user equipment and for use on PCMCIA cards
for securing a wide range of voice, data, facsimile and video products.
Communications Systems information security experience encompasses full
military specification requirements as well as best commercial practices
for office environments.
o SECURE TERMINAL EQUIPMENT (STE). After producing more than 100,000 STU III
secure telephone units, Communications Systems has begun working on the
next-generation digital, ISDN-compatible product. The STE consists of a
host terminal and a security core. The host provides the application
hardware and software for the terminal. The security core, called a
CrytoCard, is a small, portable, cryptographic module mounted on a PCMCIA
card holding the algorithms, keys and personalized credentials a user
needs for secure communications. The terminal supports secure multimedia
communications including data, voice and video. The security functions are
independent of the host, enabling mobility for use at the office, on
travel or in the field. STE will use commercial network technologies such
as ISDN and asynchronous transfer mode (ATM) to extend high-quality secure
and nonsecure digital services to the user. The STE is being developed for
use in commercial and military networks and environments.
o LOCAL MANAGEMENT DEVICE/KEY PROCESSOR (LMD/KP). Communications Systems'
LMD/KP is the workstation component of the U.S. government's Electronic
Key Management System (EKMS), the next generation of information security
systems. The LMD/KP provides EKMS services that include requesting keys
and other electronic key materials. It also satisfies EKMS security
requirements for access control and privilege management, confidentiality,
authentication and status integrity and logging security-critical events.
The LMD provides such EKMS management functions as accounting for
electronic and physical material, registration and system management and
audit support. The LMD has been hosted on 486-based personal computers and
on the compartmented mode workstation. The KP performs cryptographic
functions and electronically transfers keys from the KP to end-user
equipment.
o Network Security. Information is increasingly becoming the critical
competitive advantage in both military and industrial operations. As we
become more reliant on the systems that gather and deliver information, we
also must become better able to defend these assets against attack. The
terms "hacker" and "virus" are relatively recent additions to computer
jargon; "information warfare" is a relatively new focus of the DoD.
Communications Systems is staying on the cutting edge through numerous
research and development efforts, such as: (1) intelligent agents required
to analyze a computer network for vulnearability problems and to report
the problems to a central controller; (2) a high performance, scaleable
platform-independent INFOSEC kernel and
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<PAGE>
applications for networks; (3) an "Intranet Firewall" to provide secure
subnets within a corporate intranet and a "Net Extender" to allow two
separate entities to use the internet as a virtual private network; and
(4) installing a prototype multilevel secure network and a secure e-mail
net server between classified and non-classified areas.
SIGNALS INTELLIGENCE SYSTEMS
- ----------------------------
o SIGNALS INTELLIGENCE (SIGINT). Communications Systems develops specialized
strategic and tactical SIGINT systems to detect, acquire, collect,
identify, locate, process, analyze and disseminate information derived
from electronic sources. This capability encompasses the total system
development process using commercial off-the-shelf (COTS) or customized
solutions including system studies, requirements definition, system
design, software and hardware development, systems engineering, design and
development of digital signal processing systems, integration and test,
production, site installation and test, training and integrated logistics
support. Communications Systems has developed more than three million
lines of Ada code to support these products. Communications Systems has
special expertise in channel processing, conventional signals analysis,
HF-DF systems and integrating collection and processing systems.
UNATTENDED GROUND SENSOR SYSTEMS
- -------------------------------
o IMPROVED REMOTELY MONITORED BATTLEFIELD SENSOR SYSTEM (IREMBASS). An
unattended ground sensor system, IREMBASS uses sensors placed along likely
avenues of approach or intrusion to respond to seismic and acoustic
disturbances, infrared energy and magnetic field changes, and thus detect
enemy activities. Using sensor data fusion, the intruder is classified.
This information is incorporated into short, digital messages and
communicated by radio burst transmission. The sensors communicate with the
IREMBASS monitor-programmer, either directly or through repeaters.
Messages at the monitoring set, or an enhanced display capability through
a portable computer, are demodulated, decoded, displayed and recorded to
provide a time-phased record of intrusive activities.
o Intrusion Detection Early Warning System (IDEWS). In order to address the
need for a lightweight, low-cost intrusion detection system,
Communications Systems has developed IDEWS, a sensor system designed for
platoon-level physical security applications. Weighing less than two
pounds, this sensor is ideal for covert perimeter intrusion detection,
border protection and airfield or military installation security. It
operates on a 9-volt battery and incorporates field-proven detection and
classification algorithms.
MEDICAL ARCHIVE SYSTEMS
- -----------------------
o GEMNET(TRADEMARK). Communications Systems and GE Medical Systems have
jointly developed GEMnet(Trademark), a cardiac image management and
archive system. GEMnet(Trademark) eliminates the use of cinefilm in a
cardiac catheterization
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<PAGE>
platoon-level physical security applications. Weighing less than two
pounds, this sensor is ideal for covert perimeter intrusion detection,
border protection and airfield or military installation security. It
operates on a 9-volt battery and incorporates field-proven detection and
classification algorithms.
MEDICAL ARCHIVE SYSTEMS
- -----------------------
o GEMNET(TRADEMARK). Communications Systems and GE Medical Systems have
jointly developed GEMnet(Trademark), a cardiac image management and
archive system. GEMnet(Trademark) eliminates the use of cinefilm in a
cardiac catheterization laboratory by providing a direct digital
connection to the laboratory. The system provides for acquisition,
display, analysis and short-and long-term archive of cardiac patient
studies, providing significant cost savings and process improvements to
the hospital. GEMnet(Trademark) is a high-performance system that employs
advanced storage, wide asynchronous transfer mode (ATM) bandwidth,
networks and hierarchical file management strategies and technologies.
GEMnet(Trademark) is a scaleable, open architecture system conforming to
medical (DICOM), computer and communications standards, such as ATM. The
initial beta site at the Mayo Clinic, Rochester, MN, has been acquiring
cardiac images since March 1994. Production shipments began in mid-1996.
Communications Systems is working to expand the GEMnet(Trademark)
technology for use in related radiology market applications.
o ECHONET(TRADEMARK). EchoNet(Trademark) is a digital archive management and
review system specifically designed for the echocardiology profession. The
system accepts digital echo studies from a variety of currently available
ultrasound systems, manages the studies, making them available on a
network, and allows the physicians and technicians to become more
productive. The system offers users the benefits of network accessibility,
digital technology and massive archiving to a profession that has had to
rely, for years, on making critical diagnoses from analog video tape. The
system has been in use for more than one year at Duke University Medical
Center and has dramatically improved both productivity and quality of
care. The system uses commercially available hardware and software
components. The EchoNet(Trademark) system is currently being marketed
through Communications Systems and distributors.
o DICOMVIEW(TRADEMARK). DICOMView(Trademark) is a multimodal, low-cost
viewing station based on standard Macintosh and Pentium PC platforms. It
makes full motion, full fidelity diagnostic images accessible for the
cardiologist, surgeon and referring physician. Single frames or loops can
be saved in standard formats. DICOMView(Trademark) frees digital
angiography from closed, proprietary, high-cost systems. It is compatible
with all DICOM compliant data sources, implementing the DICOM standards
for angiographic image exchange on both CD-ROM disks and over computer
networks. The networked system capability allows studies to be reviewed
anywhere in the institution. Images can also be reviewed simultaneously in
different locations.
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<PAGE>
LOCKHEED MARTIN PRODUCTS GROUP
9020 BALBOA AVENUE
SAN DIEGO, CA 92106
PRODUCT PROFILES
DISPLAY SYSTEMS
- ---------------
O E-2C HAWKEYE ENHANCED MAIN DISPLAY UNIT (EMDU). A ruggedized, full-color
beam index CRT cockpit display for the E-2C Hawkeye aircraft.
O F-14 PROGRAMMABLE TACTICAL INFORMATION DISPLAY (PTID). A ruggedized 8" x
8" monochrome CRT cockpit display for the U.S. Navy's F-14.
O V-22 COCKPIT MULTIFUNCTION DISPLAYS/DISPLAY PROCESSORS. A ruggedized,
full-color beam index CRT display for the V-22 tiltrotor aircraft.
O E-2C Q-70 ADVANCED DISPLAY SYSTEM. A ruggedized, full-color active matrix
LCD workstation providing a 10" x 12.5" viewable area and commercial
off-the-shelf (COTS) open architecture.
O ACTIVIEW ACTIVE MATRIX (AMLCD) FLAT PANEL DISPLAYS. For avionics
applications, the company's Actiview line provides practical solutions to
meet various systems architectures and aircraft installation requirements.
In addition to offering screen sizes up to 16.1" diagonal, the largest
currently available, each may be acquired as a stand-alone monitor or as
integrated "Smart" display. Features include embedded graphics generation,
sensor video processing, multiple line rate video inputs and a full
complement of interfaces. Development of a 20" diagonal AMLCD is underway,
and will be available for military applications in the near term.
ADVANCED RECORDERS
- ------------------
O GOVERNMENT PROGRAMS. Solid-State Flight Data Recorders (SSFDR) and
Solid-State Cockpit Voice Recorders (SSCVR) are offered as standard
equipment on the Lockheed Martin C-130J. For the Royal Australian Air
Force (RAAF), Advanced Recorders was selected to retofit all RAAF
non-combat aircraft with SSCVRs and some SSFDRs.
Use or disclosure of this data is subject to the restrictions noted on the
title page.
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<PAGE>
O COMMERCIAL RECORDER PRODUCTS.
MODEL F1000 SSFDR. Federal Aviation Administration (FAA)-certified 1990.
More than 4,000 in service
MODEL A100S SSCVR. FAA-certified 1992. Thirty-minute recording
MODEL A200S SSCVR. FAA-certified 1995. World's first fully certified by
both FAA and various international agencies. Up to two hours of recording.
Next generation combined Cockpit Voice and Flight Data Recorder Code named
"Scimitar."
CONIC
- -----
O SPACE PRODUCTS. High reliability telemetry, tracking and command STDN and
SGLStransponders, which feature high data rate QPSK and BPSK transmitters,
PM transmitters and NSA encryption/decryption modules.
O RANGE INSTRUMENTATION. 135-950 MHz transceivers, transmitters, receivers
and PAs that provide low cost, miniaturized, energy-efficient data links
for mobile and low power instrumentation packages. Range encryption
products include a standard encryption module for the REM program.
Products also include digital network communications subsystems (DCNS) and
CRI series transceivers.
O TRANSMITTERS/AMPLIFIERS. These products feature single frequency or
synthesized telemetry, video and command transmitters and amplifiers used
for the following applications: missile performance evaluation and failure
analysis, pulse and video data from surface exploration vehicles, manned
aircraft evaluation data, RPV command and video transmission, computer
data terminal transmission (air link) and ocean buoy surface-to-satellite
transmission.
O RECEIVERS. Receivers/decoders, airborne command receivers/decoders,
airborne telemetry & video receivers, all used for flight termination.
O ENCODERS/VIDEO COMPRESSION/ENCRYPTION. Data acquisition products including
PAM and PCM encoders (PCM-600), PCM decoders, video compression (VCS-600),
flight termination controllers, embedded encryption and signal
distribution.
O MICROWAVE PRODUCTS. Transportable, tunable, microwave radios that feature
rugged, modularized systems capable of data rates up to 45 Mb/s.
Frequencies are tunable in RF bands from 1.7 gHz to 19.7 gHz with simple
plug-in RFheads. Optional plug-in baseband modules easily convert mission
traffic to video with subcarriers or FDM operation. The radios are encased
in portable, all-weather outdoor housing for use in restoration and
temporary service and military tactical communications. The company
provides high capacity microwave radio systems.
Use or disclosure of this data is subject to the restrictions noted on the
title page.
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<PAGE>
capable of mission traffic of up to 155 Mb/s SDH/SONET data rates. These
radios are also tunable, portable and available in various RF frequency bands
provided in an all-weather outdoor housing for temporary and restoration
service. Optional modems provide a wide variety of interface capability
including fiber optic interface at 155 MB STM-1.
HF COMMUNICATIONS. The AN/PRC-130(PC) 2-30 MHz HFmanpack transceiver radio
system features optional frequency hopping, voice encryption or ALE modules.
Accessories include a 125 watt power amplifier used for vehicular or base
station configuration, numerous antenna, battery and mounting options. The
AN/PRC-132 1.6-50 MHz HF/VHF Special Operations Forces (SOF) radio
transceiver system is capable of 50 watts output power in a very small,
submersible package. It is available with a wide variety of antenna, battery
and mounting options. The SC160 1.6-30 MHz HFmanpack transceiver radio system
with digital signal processing features built-in voice encryption, frequency
hopping and ALE options. A liquid crystal display (LCD) readout with
alphanumeric keypad offers enhanced operational capability with improved
performance. The AN/PRC-132 utilizes standard battery, antenna and mounting
accessories.
MICROCOM
- --------
O TRANSMITTERS AND POWER AMPLIFIERS feature general applications for 100 mw
to 20 w VHF, UHL "L," "S" and "C" bands, fixed or agile applications with
FM, PM, FSK or BPSK modulation. Ballistic and tactical applications 100 mw
to 5w, 1,435 to 1,540 MHz, 2,200 to 2,400 MHz with also featuring FM and
PM modulation. Digital products include PCM encoders with IRIG-based
formats with 15 Mb/s capability, PC programmable, signal conditioning
inventory. Analog products include frequency division multiplexers, time
division multiplexers, custom signal conditioners and filters. Microcom is
known for expertise in airborne telemetry and video design with full
integration from sensor to antenna. Its specialties also include
system/link analysis, transducer selection, signal conditioning, data
video compression, power supply and multiplexing design, battery sizing
and packaging.
O DATA ACQUISITION --The Microdas-1000 products feature a distributed data
acquisition system, which is a completely integrated system from
transducer inputs to PCM out. It contains fully programmable GUI-based
set-up software, digital signal processing (DSP), 10 Mb/s throughput with
extensive library of signal conditioning and data bus monitors.
O SECURE PRODUCTS --Classified encryption support packages compatible with
KG-66, KGV compatible decryptors, secure video compression systems and
video ground stations.
Use or disclosure of this data is subject to the restrictions noted on the
title page.
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O RANGE INSTRUMENTATION -- Transponders/data links for T&E and training
ranges providing position location and data transmission for praticipants:
ships, helicopters, aircraft and targets.
TELEMETRY & INSTRUMENTATION
- ---------------------------
O SYSTEM 500. Designed for a full range of high-performance data acquisition
applications, the System 500 is a distributed system with complete
capabilities for real-time data acquisition, processing, distribution,
control, display, analysis and archival. More than 500 systems have been
fielded worldwide to support such key telemetry programs as PAC-3 missile
test and development and McDonnell Douglas F/A-18 CD Hornet flight test. A
powerful avionics system, the System 500, was recently selected by
Northrop Grumman as the avionics instrumentation system for its
next-generation electronic warfare system. The System 500 is also a
leading telemetry tracking and control system with equipment used at the
National Test Facility for satellite commanding and monitoring and at the
Johnson Space Center for shuttle communications. Upon completion of the
International Space Station, the 500 will also be deployed as part of a
payload data services system at Marshall Space Flight Center to process
experiment data from the station and distribute it to scientists on the
ground.
O O/S90. With major installations at Hill and Edwards Air Force Bases, the
Open System 90 (O/S90) is a high-performance real-time data acquisition
system widely fielded for the military test range community. Under a major
contract with Lockheed Martin Aeronautical Systems, Telemetry &
Instrumentation will deliver six O/S90 systems to support F-22 flight test
activities from development through the F-22's first flight, slated for
spring 1997 at Edwards Air Force Base. The O/S90 is also an integral part
of ground support equipment for Titan 4 launches at both eastern and
western ranges.
O VISUAL TEST SYSTEM(TRADEMARK) (VTS). VTS is a multi-stream Windows-based
data acquisition system that supports simultaneous real-time data
acquisition, processing, display, analysis and archiving in a true
network-based environment. Ten networked VTS systems have been installed
at the Andoya Rocket Range near the Arctic Circle to receive and process
telemetry data from science probes launched into the Northern Lights. The
networked VTS systems allow multiple scientists to analyze real-time data
remotely.
O UNIVERSAL SIGNAL CONDITIONING AMPLIFIER. In partnership with NASA and the
Florida Technological Research and Development Authority, Telemetry &
Instrumentation has developed a universal signal conditioning amplifier
(USCA) that for the first time allows test engineers to reset shuttle
sensor parameters from a single master station without having to manually
reset thousands of parameters. This capability is expected to save NASA
20,000 man-hours per year. Heralded as a breakthrough in signal
conditioning technology, Telemetry &
Use or disclosure of this data is subject to the restrictions noted on the
title page.
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Instrumentation is marketing the USCA commercially for such application areas
as launch system checkout and test, wind tunnels, engine test stands, oil
well logging and other areas where real-time data acquisition is critical.
RANDTRON
- --------
O TOTAL RADIATION APERTURE CONTROL-ANTENNA (TRAC-A). This airborne antenna
consists of a 24-foot rotating aerodynamic oblate spheroid radome
containing a UHF surveillance radar antenna, IFF antenna and forward and
aft auxiliary antennas. The TRAC-A provides extremely low sidelobes to
reduce clutter and jammer threats. This antenna began production in the
early 1980s; production is planned beyond 2000 for the E-2C, P-3 and C-130
AEW aircraft.
O ADAPTIVE DETECTION SYSTEMS (ADS). This next-generation AEW antenna is in
development with an early version located at the Pacific Missile Range
facility. The capabilities of the ADS antenna include ultra low sidelobes,
jammer nulling, electronic and mechanical scanning.
O STEALTH ANTENNAS. Technology evolved during development of leading-edge
antennas for the A-12 program, after which Randtron won B-2 interferometer
arrays. The company is a leader in antenna stealth technology and is
currently applying this technology to other programs.
O ANTENNAS. Randtron supplies antennas for the E/J band radar warning
system, the C/D direction finding and omni for the ALR-69 and ALR-74
threat analyzer. Randtron has delivered approximately 2,000 aircraft sets
of antennas with backlog through 1999.
O PRECISION DIRECTION FINDING INTERFEROMETERS. In addition to
stealth-related interferometers, Randtron is currently developing arrays
for the F/A-18 Targeting Avionics System (TAS) pylon, Raytheon's submarine
mast head program and F-15 Suppression of Enemy Air Defenses program.
O SINUOUS ANTENNAS. Randtron has developed a common aperture element that is
capable of simultaneously receiving or transmitting signals of any two
orthogonal polarizations. Currently in production for Canadian C-130s,
German Tornado aircraft and Israeli F-15 aircraft, the sinuous antenna is
a potential replacement for existing spirals on various aircraft,
including the F-4, F-15 and F-16.
O COOPERATIVE ENGAGEMENT CAPABILITY. Randtron is currently developing a very
low-profile 54-inch-diameter end-fire array. This array will be used on
the E-2C, AWACS and P-3 aircraft.
Use or disclosure of this data is subject to the restrictions noted on the
title page.
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MICROWAVE-NARDA EAST
- --------------------
o WIRELESS COMPONENTS, NETWORKS AND INSTRUMENTS. Exclusive Narda products
are meeting the wireless industry's needs with key products for cellular,
ESMR, SMR, PCS and paging applications. These products include
communication antenna test sets (CATS) that provide the complete solution
to cell site antenna monitoring and power measurement;
CellGuard(Trademark) Power/VSWR Monitors - precise in-line instruments
for monitoring transmitter antennas; and state-of-the-art dual receiver
multicouplers and hybrid Tx combiners and combining networks.
o STANDARD CATALOG PRODUCTS. The majority of Narda products are standard,
stocked, catalog units. The company maintains a high-technology, total
quality environment in its 150,000 square foot state-of-the-art
manufacturing plant that supports the large volume production and
off-the-shelf availability customers require. Publisher of the world's most
comprehensive microwave component catalog, Narda products are resident on
every major military microwave system. They are supplied to customers
throughout the world in fifteen product categories: wireless products,
electromechanical switches, power dividers and hybrids, couplers/detectors,
attenuators, terminations and phase shifters, isolators and circulators,
adapters, control products, sources, mixers, waveguide components, radio
frequency (RF) safety products, power meters/monitors and custom passive
products. The current 368 page, full-line catalog provides technical
overviews and product specifications.
o ELECTROMECHANICAL SWITCHES. Narda has brought its most popular custom
switches into the mainstream by making them standard, stocked catalog
products that are available off-the-shelf. With more than thirty distinct
models from SP2T to SP6T and transfer, Narda SEM switches address
application in ATE, satellite communications, wireless communications,
avionics, military and commercial test equipment. Custom switches (from
SP2T to SP6T and transfer) in four activation modes, matrix switches and
custom assemblies complete the product line. The current 108-page catalog
covers all specifications and capabilities.
o RF RADIATION SAFETY PRODUCTS. Ninety-five percent of the patents relating
to the detection of RF radiation are held by Narda non-ionizing radiation
safety equipment. A recognized industry leader, Narda offers seminars and
in-house training programs to enable companies to evaluate potential
sources of non-ionizing radiation and set up safety programs. Narda RF
safety products are designed to comply with government and industry
standards. They include revolutionary microprocessor survey meters (models
8712 and 8718), Nardalert(Registered Trademark) Personal Monitors,
SMARTS(Trademark) Area Monitors, induced and contact current products and
microwave oven survey systems. The company's 100-page catalog covers the
complete Narda RFsafety product line.
Use or disclosure of this data is subject to the restrictions noted on the
title page
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MICROWAVE-NARDA WEST
- --------------------
o FILTER PRODUCTS. This product line consists of bandpass, band reject, high
pass and low pass discrete and multiplexed filter designs. These filters
utilize combline, cavity, interdigital, suspended substrate, dielectric
resonator and waveguide manufacturing technologies to meet the performance
requirements. The applications for these products include receiver
pre-selection and transmitter bandpass filtering for telemetry,
communication, surveillance, countermeasure, instrumentation, wireless and
radar equipment that is used in ground, sea and air platform environments.
o FERRITE PRODUCTS. Narda West manufactures a complete line of isolators
and circulators that are offered in coaxial and drop-in package designs
with frequencies ranging from 400 mHz - 26.5 GHz for military, cellular,
space and commercial applications. These devices are designed to have low
insertion loss and high isolation. They are ideal for system VSWR matching
and reflected power protection, as well as a variety of other
applications. Traditionally a major supplier to the military marketplace,
Narda West has recently focused on the cellular market with much success
in AMPS, NAMPS, GSM (North American and European), CDMA, TDMA and PCS. A
wide range of commercial and cellular ferrite products are available as
catalog items.
o INTEGRATED SUBASSEMBLIES. This product line includes microwave integrated
assemblies opearating from 500 MHz to 18 GHz, coupled filters, dual channel
pre-amplifier filters, switch filter assemblies, multichannel pre-selectors,
integrated down converters, band pass/low pass filter assemblies,
quadraplexer filter assemblies, equalized diplexers and filter adapter
assemblies.
o VSAT PRODUCTS. The Narda West VSAT 8000 Series transceiver products are
specifically designed for high linearity single-carrier and multi-carrier
VSAT applications where maximum performance and reliability are mandatory.
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HYCOR
- -----
o MK 214 & MK 216 SEA GNAT RF DECOY. The MK 214 & MK 216 Sea Gnat Decoys are
the seduction and distraction decoys used by the U.S. Navy and NATO for
ship-defense against radar-guided threats. The MK 214 is mortar-launched,
while the MK 216 is rocket-launched, from the MK 36 Decoy Launch System
(DLS). Current production contracts call for the procurement, fabrication
and assembly of more than 20,000 countermeasure cartridges. Total
production to date has exceeded 120,000 countermeasure cartridges for the
MK 36 DLS.
o LAUNCH OF EXPENDABLE ACOUSTIC DEVICES (LEADS). LEADS, a joint
U.S./U.K.-sponsored program, is intended to provide surface fleets with
urgently needed defense capability against acoustic torpedoes, while
operating in littoral areas in support of regional conflicts and forward
presence missions. This engineering and manufacturing development program
is addressing the adaptation of the MK 36 launchers to allow deployment of
mortar -and rocket-dispensed acoustic decoys for torpedo defense.
o AUTOMATIC LAUNCH OF EXPENDABLES (ALEX). ALEX is a completely automated
ship-defense launch system developed by Lockheed Martin Hycor and sold
throughout the world. ALEX includes a central processor that takes threat
information from the ship's warning system and speed, direction and wind
conditions from the ship's navigation system and initiates the optimum
countermeasure response and/or maneuver based on the decoy load-out
inventory. A broad family of proprietary countermeasures tailored
specifically to the customers threat requirements are produced to support
the ALEX system. Tactics development software, training and maintenance
support are also provided.
26
<PAGE>
Exhibit 10.8
ASSET PURCHASE AGREEMENT
________________________________________________________________________________
Between
L-3 COMMUNICATIONS CORPORATION
and
CALIFORNIA MICROWAVE, INC.
________________________________________________________________________________
Dated as of December 19, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE I SALE AND PURCHASE OF THE ASSETS . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Books and Records; Intellectual Property . . . . . . . . . . . . . . 4
ARTICLE II THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Place and Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . 5
2.4 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Excluded Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Consent of Third Parties . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Adjustment of Purchase Price . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . 11
3.1 Authorization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 No Conflicts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . 12
3.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.9 Compliance with Laws; Governmental
Approvals and Consents; Governmental
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.11 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.12 Territorial Restrictions . . . . . . . . . . . . . . . . . . . . . . 18
3.13 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.14 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.15 Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . 18
3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.18 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . 20
3.20 Employees, Labor Matters, etc. . . . . . . . . . . . . . . . . . . . 20
3.21 Employee Benefit Plans and Related Matter . . . . . . . . . . . . . . 21
</TABLE>
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3.22 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . 21
3.23 Suppliers and Customers . . . . . . . . . . . . . . . . . . . . . . . 22
3.24 Order Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.25 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.26 Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . 23
4.1 Corporate Status; Authorization, etc. . . . . . . . . . . . . . . . . 23
4.2 No Conflicts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.4 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . 24
4.5 Adequate Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 Covenants of Seller . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2 Covenants of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . 31
6.2 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . 32
6.3 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . 35
ARTICLE VII EMPLOYEES AND EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . 35
7.1 Employment of Seller's Employees . . . . . . . . . . . . . . . . . . 35
7.2 Welfare and Fringe Benefit Plans . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1 By Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2 By Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.3 Adjustments to Indemnification Payments. . . . . . . . . . . . . . . 39
</TABLE>
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9.4 Indemnification Procedures. . . . . . . . . . . . . . . . . . . . . . 39
9.5 Expiration of Representations and Warranties, etc. . . . . . . . . 40
9.6 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X DEFINITIONS, MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.1 Definition of Certain Terms . . . . . . . . . . . . . . . . . . . . . 41
10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.5 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.6 Arbitration Procedure. . . . . . . . . . . . . . . . . . . . . . . . 51
10.7 Attorneys Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.8 Liability for Transfer Taxes . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
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EXHIBITS
EXHIBIT A Form of Cross-License Agreement
EXHIBIT B Form of Technology License Agreement
EXHIBIT C Form of Trademark License Agreement
EXHIBIT D Form of Supply Agreement
SCHEDULES
SCHEDULE 1.2 Excluded Assets
SCHEDULE 2.4(a) Retention Incentive Agreements
SCHEDULE 3.2(b) Qualification to Do Business; Good Standing
SCHEDULE 3.3 Conflicts
SCHEDULE 3.4 September Balance Sheet
SCHEDULE 3.5 Undisclosed Liabilities
SCHEDULE 3.6(a) Contested Taxes
SCHEDULE 3.7 Absence of Changes
SCHEDULE 3.8 Litigation
SCHEDULE 3.9(a) Compliance with Laws
SCHEDULE 3.9(b) Governmental Approvals and other Consents
SCHEDULE 3.9(c) Government Contracts
SCHEDULE 3.10 Asset Exceptions
SCHEDULE 3.11(a) Contracts
SCHEDULE 3.11(c) Defaults and Consents under Contracts
SCHEDULE 3.13 Inventory Exceptions
SCHEDULE 3.15 Product Warranties
SCHEDULE 3.16(a) Owned Intellectual Property
SCHEDULE 3.16(b) Intellectual Property Licensing Arrangements
SCHEDULE 3.16(c) Infringement by Third Parties
SCHEDULE 3.16(d) Claims by Third Parties
SCHEDULE 3.17 Insurance
SCHEDULE 3.18(a) Owned Real Property
SCHEDULE 3.18(b) Leases
SCHEDULE 3.19(a) Environmental Matters
SCHEDULE 3.21(a) Employee Benefit Plans
SCHEDULE 3.23 Suppliers and Customers
SCHEDULE 3.24 Backlog
SCHEDULE 4.2 Governmental Approvals and other Consents
SCHEDULE 5.2(e) Letters of Credit; Performance and Surety Bonds
SCHEDULE 5.2(f) Severance Agreements
SCHEDULE 6.2(c) Consents
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of December 19, 1997,
between L-3 Communications Corporation, a Delaware corporation (the "Buyer"),
and California Microwave, Inc., a Delaware corporation (the "Seller").
R E C I T A L S:
A. Seller is in the business of designing, integrating
and installing satellite communications systems (with a principal focus on the
telephony, video broadcasting, multimedia, trunk and VSAT hub niches) in the
United States and certain other countries through an unincorporated division
(the "STS Division").
B. Buyer wishes to purchase or acquire from Seller, and
Seller wishes to sell, assign and transfer to Buyer, substantially all of the
assets of the STS Division, and Buyer has agreed to assume certain of the
liabilities of such Division, all for the purchase price and upon the terms and
subject to the conditions hereinafter set forth.
C. Capitalized terms used herein without separate
definition have the meanings given to such terms in Section 10.1.
NOW THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF THE ASSETS
1.1 Assets. Subject to and upon the terms and conditions
set forth in this Agreement, at the Closing, Seller shall sell, transfer,
convey, assign and deliver to Buyer, and Buyer shall purchase and acquire from
Seller, all right, title and interest of Seller in and to the properties,
assets and rights of every nature, kind and description, tangible and
intangible (including goodwill), whether real, personal or mixed, whether
accrued, contingent or otherwise and whether now existing or hereinafter
acquired (other than the Excluded Assets) that primarily relate to and are used
in the Business as the same may exist on the Closing Date (collectively, the
"Assets"), including, without limitation,
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(a) the Owned Real Property described on Schedule
3.18(a) and the property leased at 125 Kennedy Drive, Hauppauge, New York,
described on Schedule 3.18(b) (the "Kennedy Facility");
(b) all machinery, equipment, furniture,
furnishings, vehicles, tools, dies, molds and other tangible personal property;
(c) all inventories of raw materials, work in
process, finished products, goods, spare parts, replacement and component
parts, and office and other supplies (whether on hand, in-transit or on order)
(collectively, the "Inventories");
(d) all rights in Intellectual Property owned by
Seller and used primarily in the Business;
(e) the GMACS and Universal System Controller;
(f) all rights under all Contracts;
(g) all credits, prepaid expenses, deferred
charges, advance payments, security deposits and prepaid items;
(h) all notes and accounts receivable held by
Seller (including intercompany and interdivisional accounts receivable) and all
notes, bonds and other evidences of indebtedness of and rights to receive
payments from any Person (in all cases, whether or not billed) and the benefit
of security therefor;
(i) all Books and Records;
(j) to the extent their transfer is permitted by
law, all Governmental Approvals, including all applications therefor;
(k) all rights to causes of action, lawsuits,
claims and demands of any nature available to or being pursued by Seller with
respect to the Assets or the Assumed Liabilities (subject to Section 1.2(e));
(l) all guarantees, warranties, indemnities and
similar rights in favor of Seller with respect to the Assets;
(m) all computer hardware and software used
exclusively in the Business, including all rights under licenses and other
instruments or agreements relating thereto;
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(n) all assets reflected on the Final Closing
Statement of Net Assets;
(o) the Names and Logos "Satellite Transmission
Systems" alone or in any combination of words, or any combination, variation or
derivation of any such name or mark; and
(p) the cash and the cash equivalents in the
non-U.S. bank accounts as provided in Section 2.7(b).
Subject to the terms and conditions hereof, at the Closing,
the Assets shall be transferred or otherwise conveyed to Buyer free and clear
of all Liens excepting only those Liens listed in the first and fourth
paragraphs of Schedule 3.10 and Permitted Liens.
1.2 Excluded Assets. Seller shall retain and not
transfer, and Buyer shall not purchase or acquire, the following assets
(collectively, the "Excluded Assets"):
(a) the assets listed on Schedule 1.2;
(b) the name and mark "California Microwave" and
any name or mark derived from or including the foregoing;
(c) all cash and cash equivalents and similar
type investments, such as certificates of deposit, treasury bills and other
marketable securities other than non-U.S. bank accounts as provided in Section
2.7(b);
(d) all Books and Records relating to or used in
the business of Seller and not primarily relating to or used in the Business;
(e) all insurance policies and all rights to
causes of action, lawsuits, claims and demands, rights of recovery and set-off,
and proceeds, under or with respect to insurance policies except to the extent
provided for in Section 5.1(e);
(f) all rights to causes of action, lawsuits,
claims and demands of any nature available to or being pursued by Seller with
respect to the Excluded Assets or the Excluded Liabilities;
(g) all Intellectual Property not used primarily
in the Business;
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(h) all right, title and interest of the Seller
in and to prepaid Taxes of the Business (except to the extent reflected on the
Final Closing Statement of Net Assets), and any claims for any refund, rebate
or abatement with respect to Taxes of the Business (except to the extent
reflected on the Final Closing Statement of Net Assets) for any period or
portion thereof through the Closing Date and any interest payable with respect
thereto; and
(i) the lease of the warehouse located at 65
Commerce Drive, Hauppauge, New York.
1.3 Books and Records; Intellectual Property.
(a) From and after the Closing and until the
sixth anniversary thereof, (i) Seller agrees to grant to Buyer, upon reasonable
notice and during normal business hours, reasonable access to any Books and
Records that pertain to the operations of the Business but that are not Books
and Records that primarily relate to the Business, and (ii) Buyer agrees to
grant to Seller, upon reasonable notice and during normal business hours,
reasonable access to any Books and Records included in the Assets that pertain
to the operation of the Business on or prior to the Closing Date, for any
reasonable business purpose of Seller.
(b) At the Closing, Seller shall grant to Buyer a
fully-paid, nonexclusive license to use intellectual property of Seller used in
the operation of the Business but not constituting Intellectual Property that
primarily relates to the Business. Such license shall be substantially in the
form of the Cross-License Agreement between Buyer and Seller attached as
Exhibit A hereto (the "Cross- License Agreement").
(c) At the Closing, Buyer shall grant to Seller a
fully-paid, non-exclusive license to use the GMACS, Universal System Controller
and the patent pending referenced in Schedule 3.16(a). Such license shall be
substantially in the form of the Technology License Agreement between Buyer and
Seller attached as Exhibit B hereto (the "Technology License Agreement").
(d) At the Closing, Buyer shall grant to Seller a
fully-paid, non-exclusive license to use the trademarks, service marks,
tradenames and service names associated with the GMACS and the Universal System
Controller. Such agreement shall be substantially in the form of the Trademark
License Agreement between Buyer and Seller attached as Exhibit C hereto (the
"Trademark License Agreement").
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ARTICLE II
THE CLOSING
2.1 Place and Date. The closing of the sale and purchase
of the Assets (the "Closing") and the assumption of the Assumed Liabilities
shall take place at 10:00 A.M. local time on the 26th day of January, 1998 at
the offices of Whitman Breed Abbott & Morgan LLP, 200 Park Avenue, New York, NY
10166, or such other time and place upon which the parties may agree. The day
on which the Closing actually occurs is herein sometimes referred to as the
"Closing Date."
2.2 Purchase Price. On the terms and subject to the
conditions set forth in this Agreement, Buyer agrees to pay to Seller at the
Closing an aggregate of U.S. $27 million, subject to adjustment as provided for
in Section 2.7 (the "Purchase Price"), and to assume the Assumed Liabilities as
provided in Section 2.4. The Purchase Price shall be paid by the wire transfer
of immediately available funds to such bank account or accounts as are
specified by Seller in written instructions given to Buyer at least three days
prior to the Closing.
2.3 Allocation of Purchase Price. The parties agree to
allocate the aggregate of the Purchase Price and the Assumed Liabilities
(collectively, the "Aggregate Purchase Price") among the Assets, including
solely for this purpose the agreements contained in Section 5.1(f), in
accordance with Section 1060 of the Code as mutually agreed to by the parties
within 180 days following the Closing. All such mutually agreed to allocations
shall be (a) at the election and expense of Buyer, based upon appraisal(s)
prepared by independent firm(s) selected by Buyer and approved by Seller (such
approval not to be unreasonably withheld or delayed), and (b) used by each
party in preparing any filings required pursuant to Section 1060 of the Code or
any similar provisions of state or local law and all relevant income and
franchise tax returns, subject to adjustment to reflect the adjustment to the
Purchase Price provided for in Section 2.7. Neither Buyer nor Seller will take
any position before any taxing authority or in any judicial proceeding that is
inconsistent with such mutually agreed to allocations without the prior consent
of the other party. The parties shall in good faith exercise reasonable
efforts to support such reported allocations in any audit proceedings initiated
by any taxing authority.
2.4 Assumption of Liabilities. Subject to the terms and
conditions set forth herein, at the Closing, Buyer shall assume and agree to
pay, honor and discharge when due only the following liabilities and
obligations relating to the Assets or the Business: (a) all payment
obligations of Seller under all retention incentive agreements as set forth in
Schedule
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2.4(a), but only to the extent that such payment obligations relate to the
failure of Buyer to hire employees of the STS Division or the involuntary
termination by Buyer without cause of the employment of any Transferred
Employee after the Closing; (b) all product warranty obligations of the
Business; (c) all liabilities and obligations of Seller to be performed from
and after the Closing Date under or relating to Contracts and Governmental
Approvals included in the Assets; (d) all liabilities and obligations of Seller
relating to or arising out of the operation of the Business and reflected on
the June Balance Sheet and/or the September Balance Sheet or disclosed in the
notes thereto other than those relating to income taxes; and (e) to the extent
reflected on the Final Closing Statement of Net Assets, all trade and other
accounts payable and other liabilities (other than those relating to income
taxes) arising out of or in respect of the ordinary course of business of the
Business (including intercompany and interdivisional trade accounts payable)
consistent with past practice since September 30, 1997 (collectively, the
"Assumed Liabilities").
2.5 Excluded Liabilities. Other than for the Assumed
Liabilities, Buyer shall not be responsible for any other debts, claims,
commitments, liabilities or obligations of Seller or the Business
(collectively, the "Excluded Liabilities"), including without limitation any
and all liabilities, obligations or commitments of Seller (except those that
constitute Assumed Liabilities) relating to and arising out of any of the
following:
(a) any liability, obligation or commitment that,
in accordance with GAAP, was required to have been shown as a liability in the
Financial Statements or in the notes thereto and was not so shown, unless
reflected on the Final Closing Statement of Net Assets;
(b) except as expressly assumed by Buyer pursuant
to Article VII hereof or as accrued or otherwise reflected on the Final Closing
Statement of Net Assets, (i) the sponsorship, administration, contribution
obligation of any entity under any Employee Benefit Plan or termination of any
Employee Benefit Plan on or prior to the Closing Date, or (ii) the termination
of employment of any employee of the Business by Seller;
(c) any cause of action or judicial or
administrative action, suit, proceeding or investigation, pending or threatened
on the Closing Date, relating to periods prior to the Closing Date, that is not
disclosed on Schedule 3.8 hereto;
(d) any failure or alleged failure to comply
with, or any violation or alleged violation of, (i) any law, rule, regulation,
statute, ordinance, permit, judgment, injunction, order, decree, license or
other Governmental Approval applicable to the Business or the Assets or (ii)
any
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Contract, in each case which failure or violation occurred or was alleged to
have occurred prior to the Closing Date;
(e) any infringement or alleged infringement of
the rights of any other person or entity arising out of the use of any
Intellectual Property in connection with the Business prior to the Closing
Date;
(f) any rights of any other Person relating to
the Intellectual Property pursuant to any license, sublicense or agreement
required to be disclosed and not so disclosed;
(g) any obligations against Seller with respect
to any notes, bonds, accounts receivable or other evidences of indebtedness of
or rights to receive payment from any Person that have been transferred to a
third person by Seller;
(h) any liability for any Taxes imposed on Seller
arising from the operation of the Business on or before the Closing Date;
(i) the Excluded Assets;
(j) all Environmental Liabilities and Costs
arising from, relating to, in respect of, or incurred in connection with (i)
any real property, business entities or assets, whether domestic or foreign,
formerly owned, occupied or operated by or in connection with the Business and
not owned, occupied or operated by or in connection with the Business as of the
Closing Date, (ii) the transportation or disposal of any Hazardous Substances
to or at any offsite facility or location by or in connection with the Business
occurring prior to the Closing Date and (iii) conditions existing or events
occurring on or prior to the Closing Date on any real property owned, occupied
or operated by or in connection with the Business as of the Closing Date;
(k) all obligations of Seller under all retention
agreements, severance agreements (subject to the provisions of Section 5.2(f)),
change of control agreements and similar arrangements not listed on Schedule
2.4(a);
(l) all obligations of Seller under all retention
incentive agreements listed on Schedule 2.4(a) (including any payments due
thereunder upon and by reason of the sale of the STS Division), other than
those payment obligations of Seller referred to in Section 2.4(a);
(m) any claim, litigation, action or proceeding,
whether or not now pending or threatened, relating to the Business or the
Assets to the
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extent based on or arising out of or based upon product liability with respect
to products shipped or sold prior to the Closing; or
(n) all intercompany obligations and liabilities
owed by the Business to Seller other than intercompany or interdivisional trade
accounts payable reflected on the Final Closing Statement of Net Assets.
2.6 Consent of Third Parties. Notwithstanding anything
to the contrary in this Agreement, this Agreement shall not constitute an
agreement to assign or transfer any Governmental Approval, instrument,
contract, lease, permit or other agreement or arrangement or any claim, right
or benefit arising thereunder or resulting therefrom if an assignment or
transfer or an attempt to make such an assignment or transfer without the
consent of a third party would constitute a breach or violation thereof or
affect adversely the rights of Buyer or Seller thereunder; and any transfer or
assignment to Buyer by Seller of any interest under any such Governmental
Approval, instrument, contract, lease, permit or other agreement or arrangement
that requires the consent of a third party shall be made subject to such
consent or approval being obtained. In the event any such consent or approval
is not obtained on or prior to the Closing Date, Seller shall (i) continue to
use all reasonable efforts to obtain any such approval or consent after the
Closing Date until such time as such consent or approval has been obtained
without any third party cost to Buyer, (ii) hold such Governmental Approval,
instrument, contract, lease, permit or other agreement or arrangement on behalf
of Buyer, (iii) cooperate with Buyer in any lawful arrangement to provide that
Buyer shall receive the benefits under any such Governmental Approval,
instrument, contract, lease or permit or other agreement or arrangement,
including performance by Seller, as agent, and (iv) enforce and perform for the
account of Buyer any rights of Seller arising from such Government Approval,
instrument, contract, lease, permit or other agreement or arrangement, provided
that Buyer shall undertake to pay or satisfy the corresponding liabilities for
the enjoyment of such benefit to the extent Buyer would have been responsible
therefor if such consent or approval had been obtained. Nothing in this
Section 2.6 shall be deemed a waiver by Buyer of its right to receive an
effective assignment of all of the Assets.
2.7 Adjustment of Purchase Price.
(a) Calculation of Adjustment. The Purchase
Price shall be (i) increased by the amount that the Closing Date Net Assets (as
hereinafter defined), are greater than $25,099,080 (which amount is the book
value of the net assets as shown on the adjusted September Balance Sheet (the
"Target Net Assets"); or (ii) decreased by the amount that the Closing Date Net
Assets are less than the Target Net Assets. The term "Closing Date Net Assets"
as used herein shall mean the book value of the Assets set forth on the Final
Closing
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Statement of Net Assets (as hereinafter defined) in excess of the amount of the
Assumed Liabilities set forth on the Final Closing Statement of Net Assets,
determined in accordance with the procedures set forth below. The amount of
any decrease or increase to the Purchase Price pursuant to this Section 2.7(a)
plus interest from and including the Closing Date to but excluding the date of
payment at the Prime Rate (as hereinafter defined) shall be paid by Seller or
Buyer, as the case may be, by wire transfer in immediately available funds
within five (5) business days after the Final Closing Statement of Net Assets
is agreed to by Seller and Buyer or is determined by the Neutral Auditor (as
hereinafter defined). For purposes of this Agreement, "Prime Rate" means the
prime rate of interest in effect on the Closing Date as stated in the "Money
Rates" section of the Wall Street Journal.
(b) Preparation of Closing Statement of Net
Assets. As soon as practicable, and in any event within sixty (60) days after
the Closing Date, Seller shall cause Ernst & Young LLP ("E&Y") to prepare an
audited statement of net assets for the Business consisting of the Assets and
the Assumed Liabilities, as of the close of business on the Closing Date
determined on a pro forma basis as if the parties hereto had not consummated
the transactions contemplated by this Agreement (the "Closing Statement of Net
Assets"), to be prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a basis consistent with the September
30, 1997 Financial Statements (including the September Balance Sheet) through
full application of the policies and procedures used in preparing the September
30, 1997 Financial Statements (including the September Balance Sheet) and
taking into account the type of adjustments included in the September Balance
Sheet set forth in Schedule 3.4, and with changes in contract estimates at
completion ("EAC's") and estimates to complete ("ETC's") determined on a basis
consistent with the method used for the determination of the September 30, 1997
Financial Statements (including the September Balance Sheet); provided that,
for purposes of the Closing Statement of Net Assets, the cash and cash
equivalents held in non-US bank accounts for the benefit of the STS Division
shall be transferred to Buyer and shall be reflected as assets of the STS
Division and shall be included in the calculation of any Purchase Price
adjustment required by this Section. The Closing Statement of Net Assets shall
be accompanied by the report of E&Y thereon and by a certificate of Seller's
Chief Financial Officer, each of which shall state that the Closing Statement
of Net Assets presents fairly, in all material respects, the Assets and Assumed
Liabilities presented on such statement as provided for in this Agreement at
the Closing Date in conformity with GAAP consistently applied with the
September 30, 1997 Financial Statements, except that it does not contain all
the notes required by GAAP. Buyer shall provide Seller, E&Y and the Neutral
Auditor such access to the Books and Records as may reasonably be required for
the preparation and/or review of the Closing
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Statement of Net Assets. All fees and expenses of E&Y relating to the
preparation of the Closing Statement of Net Assets shall be borne equally by
Seller and Buyer.
(c) Review of Closing Statement of Net Assets.
After receipt of the Closing Statement of Net Assets, Buyer shall have thirty
(30) days to review it. Buyer and its authorized representatives shall have
full access to all Books and Records and appropriate employees of the Seller
and its accountants to the extent required to complete their review of the
Closing Statement of Net Assets including work papers used in preparation
thereof. Unless the Buyer delivers written notice to Seller on or prior to the
30th day after receipt of the Closing Statement of Net Assets specifying in
reasonable detail all disputed items and the basis therefor, the parties shall
be deemed to have accepted and agreed to the Closing Statement of Net Assets.
If Buyer so notifies the Seller of an objection to the Closing Statement of Net
Assets, the parties shall, within thirty (30) days following the date of such
notice (the "Resolution Period") attempt to resolve their differences and any
resolution by them as to any disputed amount shall be final, binding,
conclusive and nonappealable for all purposes under this Agreement.
(d) Resolution. If at the conclusion of the
Resolution Period the parties have not reached an agreement on the objections,
then all amounts remaining in dispute may, at the election of either party, be
submitted to Price Waterhouse or another large international accounting firm
not otherwise engaged by either party (the "Neutral Auditor"). Each party
agrees to execute, if requested by the Neutral Auditor, a reasonable engagement
letter. All fees and expenses relating to the work, if any, to be performed by
the Neutral Auditor shall be borne equally by Seller and Buyer, unless the
Neutral Auditor finds one party acted in bad faith in which case that party
pays all. Except as provided in the preceding sentence, all other costs and
expenses incurred by the parties in connection with resolving any dispute
hereunder before the Neutral Auditor shall be borne by the party incurring such
cost and expense. The Neutral Auditor shall act as an arbitrator to determine,
based solely on the presentations by Seller and Buyer, and not by independent
review, only those issues still in dispute. The Neutral Auditor's
determination shall be made within thirty (30) days of its engagement (which
engagement shall be made no later than five (5) business days after the
election by either party to submit the objections to the Neutral Auditor) or as
soon thereafter as possible, shall be set forth in a written statement
delivered to Seller and Buyer and shall be final, binding, conclusive and
nonappealable for all purposes hereunder. The term "Final Closing Statement of
Net Assets," as hereinafter used, shall mean the definitive Closing Statement
of Net Assets agreed to by Seller and Buyer in accordance with Section 2.7(c)
or the definitive Closing Statement of Net Assets resulting
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from the determination made by the Neutral Auditor in accordance with this
Section 2.7(d) (in addition to those items theretofore agreed to by Seller and
Buyer).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Authorization, etc. Seller has the corporate power
and authority to execute and deliver this Agreement, to perform fully its
obligations thereunder, and to consummate the transactions contemplated hereby.
The execution and delivery by Seller of this Agreement, and the consummation of
the transactions contemplated hereby, have been duly authorized by all
requisite corporate action of Seller. Seller has duly executed and delivered
this Agreement. This Agreement is a legal, valid and binding obligation of
Seller, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar laws affecting creditor's rights generally and by
general equitable principles.
3.2 Corporate Status.
(a) Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to carry on the Business and to own or
lease and to operate the properties of the Business as and in the places where
the Business is conducted and such properties are owned, leased or operated.
(b) Seller is duly qualified or licensed to do
business and is in good standing in each of the jurisdictions in which the
operation of the Business or the character of the properties owned, leased or
operated by it in connection with the Business makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed
would not have a Material Adverse Effect. Such jurisdictions are listed on
Schedule 3.2(b).
(c) Seller has delivered to Buyer complete and
correct copies of its certificate of incorporation and by-laws in each case, as
amended and in effect on the date hereof and on the Closing Date. Seller is
not in violation of any of the provisions of its certificate of incorporation
or by-laws or other organizational documents.
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3.3 No Conflicts, etc. The execution, delivery and
performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby, do not and will not conflict with or result
in a violation of or a default under (with or without the giving of notice or
the lapse of time or both), or result in the acceleration of or give rise to
any party the right to terminate, modify or cancel under, or result in the loss
of any rights, privileges, options or alternatives under, or result in the
creation of any Lien on any assets of Seller (including the Assets) under (i)
any Applicable Law applicable to Seller or any of the Assets, (ii) the
certificate of incorporation or by-laws of Seller or (iii) except as set forth
in Schedule 3.3, any Contract or other agreement or instrument to which Seller
is a party or by which Seller or the Assets is bound. Except as specified in
Schedule 3.3 and as may be required under the HSR Act, no Governmental Approval
or other Consent is required to be obtained or made by Seller in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
3.4 Financial Statements. Seller has delivered to Buyer
(a) the audited balance sheet (the "June Balance Sheet") and the related
statements of operations and cash flows of the Business as at and for the
fiscal year ended June 30, 1997 and (b) the unaudited balance sheet and the
unaudited adjusted balance sheet, a copy of which is attached hereto as
Schedule 3.4 (the "September Balance Sheet") and the related statement of
income of the Business as at and for the three-month period ended September 30,
1997 (collectively, the "Financial Statements"). The September 30, 1997
Financial Statements have been prepared on a basis consistent with the June 30,
1997 Financial Statements. The Financial Statements are in accordance with the
books and records of the STS Division, have been prepared in accordance with
GAAP and fairly present the financial condition and results of operations of
the Business as at and for the periods specified, except that the September 30,
1997 Financial Statements do not contain notes required by GAAP.
3.5 Absence of Undisclosed Liabilities. Seller has no
debts, claims, liabilities or obligations of any nature, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to
become due, asserted or unasserted, arising out of or relating to the Business,
except (a) as set forth in Schedule 3.5, (b) as and to the extent disclosed or
reserved against in the September Balance Sheet, and (c) liabilities and
obligations that were incurred after September 30, 1997 in the ordinary course
of business consistent with prior practice.
3.6 Taxes. Seller has (or by the Closing will have) duly
and timely filed all Tax Returns relating to the Business with respect to Taxes
required to be filed on or before the Closing Date. Except for Taxes set forth
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on Schedule 3.6(a), which are being contested in good faith and by appropriate
proceedings, the following Taxes have (or by the Closing Date will have) been
duly and timely paid: (i) all Taxes shown to be due on the Tax Returns, (ii)
all deficiencies and assessments of Taxes of which notice has (or by the
Closing Date will have) been received by Seller that are or may become payable
by Buyer or chargeable as a lien upon the Business, and (iii) all other Taxes
in respect of periods prior to the Closing.
3.7 Absence of Changes. Except as set forth in Schedule
3.7 (which Schedule includes, as Schedule 3.7(a), certain STS Division summary
financial data showing the actual results of the STS Division for the quarter
ended September 30, 1997 and the STS Division's forecasted results, by quarter,
for the fiscal year ending June 30, 1998) and for the results shown and changes
forecast in Schedule 3.7(a), since September 30, 1997, Seller has not in
connection with or relating to the Business or the Assets:
(a) suffered any material adverse change in the
financial condition, results of operation or Assets of the Business, other than
changes in the STS Division's intercompany account with CMI corporate, which
changes represent (i) the results of operations of the STS Division, (ii) the
cash advanced to the STS Division by CMI corporate or repaid by the STS
Division to CMI corporate, and (iii) certain allocations between CMI corporate
and the STS Division, which allocations were made in the ordinary course of
business consistent in type and amount with past practice;
(b) incurred, assumed, guaranteed or discharged
any obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, or any indebtedness for borrowed money, except
current liabilities for trade or business obligations incurred in connection
with the purchase of goods or services in the ordinary course of business
consistent with prior practice;
(c) mortgaged, pledged or subjected to Lien, any
property, business or assets, tangible or intangible;
(d) sold, transferred, leased to others or
otherwise disposed of any of the Assets, except for inventory sold in the
ordinary course of business, or cancelled or compromised any debt or claim, or
waived or released any right of substantial value;
(e) received any notice of termination of any
material contract, lease or other agreement;
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(f) suffered any damage, destruction or loss
(whether or not covered by insurance), in any case or in the aggregate, in
excess of $150,000;
(g) transferred or granted any rights under, or
entered into any settlement regarding the breach or infringement of, any
Intellectual Property, or modified any existing rights with respect thereto;
(h) made any change in the rate of compensation,
commission, bonus or other direct or indirect remuneration payable, or paid or
agreed or orally promised to pay, conditionally or otherwise, any bonus,
incentive, retention or other compensation, retirement, welfare, fringe or
severance benefit or vacation pay, to or in respect of any employee,
distributor or agent of the Business, other than increases in the ordinary
course of business consistent with past practice in the compensation payable to
those employees of the Business earning less than $50,000 per annum each;
(i) encountered any labor union organizing
activity, had any actual or threatened employee strikes, work stoppages,
slowdowns or lockouts, or had any material change in its relations with its
employees, distributors, agents, customers or suppliers;
(j) entered into any transaction, contract or
commitment other than in the ordinary course of business or paid or agreed to
pay any legal, accounting, brokerage, finder's fee, Taxes or other expenses in
connection with, or incurred any severance pay obligations by reason of, this
Agreement or the transactions contemplated hereby;
(k) made any grant of credit to any customer or
distributor on terms or in amounts materially more favorable than had been
extended to that customer or distributor in the past; or
(l) taken any action or omitted to take any
action that would result in the occurrence of any of the foregoing.
Seller makes no representation or warranty as to the
realization of any results forecast in Schedule 3.7(a).
3.8 Litigation. Except as set forth on Schedule 3.8,
there is no action, claim, demand, suit, proceeding, arbitration, grievance,
citation, summons, subpoena, inquiry or investigation, civil, criminal,
regulatory or otherwise, in law or in equity, pending or, to the knowledge of
Seller, threatened against or relating to Seller in connection with the Assets
or the Business seeking unspecified damages, damages in excess of $50,000 or
any
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injunctive or other equitable relief or against or relating to the transactions
contemplated by this Agreement.
3.9 Compliance with Laws; Governmental Approvals and
Consents; Governmental Contracts.
(a) Except as disclosed in Schedule 3.9(a),
Seller has complied in all respects with all Applicable Laws applicable to the
Business or the Assets, except for any non-compliance that has not had or would
not result in, individually or in the aggregate, a Material Adverse Effect.
(b) Schedule 3.9(b) sets forth all Governmental
Approvals and other Consents necessary for, or otherwise material to, the
conduct of the Business as conducted by Seller. Except as set forth in
Schedule 3.9(b), all such Governmental Approvals and Consents have been duly
obtained and are in full force and effect, and Seller is in compliance in all
material respects with each of such Governmental Approvals and Consents held by
it with respect to the Assets and the Business.
(c) Schedule 3.9(c) sets forth all Contracts with
any Governmental Authority.
3.10 Assets.
(a) Except for those Liens listed on Schedule
3.10, on the date hereof, Seller has good and valid title to all the Assets
free and clear of any and all Liens other than Permitted Liens. Except for
those Liens listed as Items 1 and 4 on Schedule 3.10, on the Closing Date,
Seller will have good and valid title to all the Assets free and clear of any
and all Liens other than Permitted Liens. The Assets include all material
assets required for the continued conduct of the Business by Buyer as now being
conducted or material to the financial condition or results of operations of
the Business, except for the Excluded Assets. The Assets do not include stock
or equity interests in any Person.
(b) All material property and assets owned or
utilized by the Business are in good operating condition and repair (except for
ordinary wear and tear), free from any defects (except such minor defects as do
not interfere with the use thereof in the conduct of the normal operations),
and are sufficient to carry on the Business as presently conducted. All
buildings, plants and other structures utilized by the Business are in good
condition and repair (except for ordinary wear and tear).
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3.11 Contracts.
(a) Schedule 3.11(a) contains a complete and
correct list of all agreements, contracts, commitments, orders, licenses,
leases, and other instruments and arrangements (whether written or oral) of the
types described below to which Seller is a party or by which it or any of its
assets is bound in connection with the Business, the Assets or the Assumed
Liabilities (the "Contracts"):
(i) leases, licenses, permits,
franchises, insurance policies, Governmental Approvals and other contracts
concerning or relating to the Real Property;
(ii) employment, consulting, agency,
collective bargaining or other similar contracts, agreements, and other
instruments and arrangements relating to or for the benefit of employees, sales
representatives, distributors, dealers, agents, or (if material) independent
contractors;
(iii) loan agreements, indentures, letters
of credit, mortgages, security agreements, pledge agreements, deeds of trust,
bonds, notes, guarantees, and other agreements and instruments relating to the
borrowing of money or obtaining of or extension of credit;
(iv) licenses, licensing arrangements and
other contracts providing in whole or in part for the use of, or limiting the
use of, any Intellectual Property;
(v) brokerage or finder's agreements;
(vi) joint venture, partnership and
similar contracts involving a sharing of profits or expenses (including but not
limited to joint research and development and joint marketing contracts);
(vii) asset purchase agreements and other
acquisition or divestiture agreements, including but not limited to any
agreements relating to the sale, lease or disposal of any Assets (other than
sales of inventory in the ordinary course of business) or involving continuing
indemnity or other obligations;
(viii) any contract with respect to which
the aggregate amount that could reasonably be expected to be paid or received
thereunder in the future exceeds $100,000 per annum;
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(ix) sales agency, manufacturer's
representative, marketing or distributorship agreements;
(x) contracts, agreements or
arrangements with respect to the representation of the Business in foreign
countries;
(xi) purchase commitments for inventory
items or supplies that, together with amounts on hand, constitute in excess of
six months normal usage;
(xii) any agreement, understanding,
contract or commitment (written or oral) with (x) any employee, agent,
consultant, distributor, dealer or franchisee other than those involving in the
aggregate consideration or other expenditure of less than $100,000, or (y) any
Affiliate;
(xiii) any collective bargaining agreements
with any unions, guilds, shop committees or other collective bargaining groups;
(xiv) any guarantee of the payment or
performance of any Person agreement to indemnify any Person, or act as a
surety, or other agreement to be contingently or secondarily liable for the
obligations of any Person other than (x) the endorsement of checks in the
ordinary course of business and (y) guarantees or agreements which in the
aggregate do not exceed $100,000;
(xv) any outstanding bid or proposal or
any outstanding customer option relating to Contracts in the Backlog in excess
of $100,000; and
(xvi) any other contracts, agreements or
commitments that are material to the Business.
(b) Seller has furnished Buyer with access to all
written Contracts, together with all amendments thereto, set forth in Schedule
3.11(a). Seller has furnished Buyer with a complete and accurate summary of
all oral contracts listed on Schedule 3.11(a).
(c) There does not exist under any Contract any
event of default or event or condition that, after notice or lapse of time or
both, would constitute a violation, breach or event of default thereunder on
the part of Seller or, to the knowledge of Seller, any other party thereto
except as set forth in Schedule 3.11(c) and except for such events or
conditions that, individually and in the aggregate, (i) have not had or
resulted in a Material Adverse Effect and (ii) have not materially impaired the
ability of Seller to
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perform its obligations under the Agreement. Except as set forth in Schedule
3.11(c), each Contract is a legal, valid, binding and enforceable obligation of
Seller and, to the knowledge of Seller, the other parties thereto. Except as
set forth in Schedule 3.11(c), no consent of any third party is required under
any Contract as a result of or in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
3.12 Territorial Restrictions. Seller is not restricted
by any agreement or understanding with any other Person from carrying on the
Business anywhere in the world.
3.13 Inventories. Except as set forth on Schedule 3.13
and net of reserves as reflected in the September Balance Sheet or to be
reflected in the Final Closing Statement of Net Assets, (a) Inventories are of
such quality as to meet the quality control standards of Seller and any
applicable governmental quality control standard and are usable in the ordinary
course of business in amounts consistent with past practice, and (b)
Inventories that are finished goods are saleable in the ordinary course of
business.
3.14 Receivables. Seller's receivables (including
accounts receivable, loans receivable and advances) which have arisen in
connection with the Business and which are reflected in the September Balance
Sheet or will be reflected in the Final Closing Statement of Net Assets, and
all such receivables which will have arisen since the date of the Financial
Statements, have arisen only from bona fide transactions in the ordinary course
of business. Seller has no knowledge of any facts or circumstances generally
(other than general economic conditions) which would result in any material
increase in the uncollectability of such receivables as a class in excess of
the reserves therefor set forth on the Financial Statements. To Seller's
knowledge, there has not been any material adverse change in the collectability
of such receivables since September 30, 1997.
3.15 Product Warranties. Except as set forth in Schedule
3.15 and for warranties under Applicable Law, (a) there are no warranties
express or implied, written or oral, with respect to the products of the
Business and (b) except as reflected in the Financial Statements or as incurred
in the ordinary course of business thereafter there are no pending or
threatened claims with respect to any such warranty. Seller is not aware of
any facts that indicate that the reserves for product warranties reflected in
the September Balance Sheet are materially understated. Schedule 3.15 sets
forth a list of all pending or, to the knowledge of Seller, threatened product
warranty claims in excess of $50,000.
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3.16 Intellectual Property. Schedule 3.16(a) sets forth a
complete and correct list of all material Intellectual Property that is owned
by Seller and used in connection with the Business (the "Owned Intellectual
Property"). Schedule 3.16(b) sets forth a complete and correct list of all
material written or oral licenses and arrangements, (i) pursuant to which the
use by any Person of Intellectual Property is permitted by Seller and (ii)
pursuant to which the use by Seller of Owned Intellectual Property is permitted
by any Person (collectively, the "Intellectual Property Licenses"). The Owned
Intellectual Property and the Intellectual Property Licenses (including the
GMACS and Universal System Controller) constitute all Intellectual Property
necessary to operate the Business consistent with past practice. On the date
hereof and at the Closing, all Intellectual Property Licenses are or will be in
full force and effect in accordance with their terms, and are free and clear of
any Liens (other than Permitted Liens). To the knowledge of Seller, the
conduct of the Business does not infringe the rights of any third party in
respect of any Intellectual Property, except as set forth on Schedule 3.16(c).
To the knowledge of Seller, none of the Intellectual Property is being
infringed by third parties. Except as set forth on Schedule 3.16(d), there is
no claim or demand of any Person pertaining to, or any proceeding which is
pending or, to the knowledge of Seller, threatened, that challenges the rights
of Seller in respect of any Intellectual Property, or claims that any default
exists under any Intellectual Property License.
3.17 Insurance. Schedule 3.17 contains a list of all
insurance policies maintained by Seller for the benefit of or in connection
with the Assets or the Business and no notice of cancellation, termination, or
reduction of coverage, and no notice of intention to cancel, terminate or
reduce coverage, has been received. Seller has given Buyer access to complete
and correct copies of all such policies together with all riders and amendments
thereto. Such policies are in full force and effect, and all premiums due
thereon have been paid.
3.18 Real Property.
(a) Owned Real Property. Schedule 3.18(a)
contains a complete and correct list of all Owned Real Property setting forth
the address and owner of each parcel of Owned Real Property and generally
describing all improvements thereon including, without limitation, the
properties reflected as being so owned on the Financial Statements and not
disposed of after the date of the Financial Statements in the ordinary course
of Business. Seller has, or on the Closing Date will have, good and marketable
fee simple title to the Owned Real Property indicated on Schedule 3.18(a) as
being owned by it, free and clear of all Liens other than Permitted Liens.
There are no outstanding options or rights of first refusal to purchase the
Owned Real Property, or any
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portion thereof or interest therein. Notwithstanding the foregoing provisions,
for the purposes of this Section 3.18, Section 3.10, and the last sentence of
Section 1.1, Permitted Liens shall not include, with the exception of the
mortgage liens and easements of record described on Schedule 3.18(c), any
mortgage lien encumbering the Owned Real Property or the Kennedy Facility or
any easement of record.
(b) Leases. Schedule 3.18(b) contains a complete
and correct list of all Leases setting forth the address, landlord and tenant
for each Lease. Seller has delivered to Buyer correct and complete copies of
the Leases. Each Lease is legal, valid, binding and enforceable, and in full
force and effect, except as may be limited by bankruptcy, insolvency,
reorganization and similar Applicable Laws affecting creditors generally and by
the availability of equitable remedies. Seller is not in default, violation or
breach in any respect under any Lease, and no event or condition has occurred
and is continuing that constitutes or, with notice or the passage of time or
both, would constitute a default, violation or breach in any respect under any
Lease. No renewal or extension options have been granted to tenants. Schedule
3.18(c) sets forth all easements, covenants, mortgages and restrictions of
record encumbering the Owned Real Property and the Leased Real Property subject
to the lease from the Suffolk County Industrial Development Agency.
3.19 Environmental Matters.
(a) Compliance with Environmental Law. To the
knowledge of Seller, Seller is and has been in compliance in all material
respects with all applicable Environmental Laws pertaining to any of the
properties and assets of the Business and the use by Seller thereof. Except as
disclosed on Schedule 3.19(a) hereto, Seller has obtained all material permits,
licenses and other authorizations that are required under Environmental Law
necessary to operate the Business and the same are listed on Schedule 3.19(a)
hereto. No violation by Seller is being alleged of any applicable
Environmental Law relating to any of the Assets.
(b) Other Environmental Matters. To the
knowledge of Seller, Seller has not caused or taken any action that resulted
in, and Seller is not subject to, any material liability or obligation on the
part of Seller, relating to (x) the environmental conditions on, under, or
about the Real Property or other properties or assets owned, leased, operated
or used by Seller in the Business including without limitation, the air, soil
and groundwater conditions at such properties or (y) the use, management,
handling, transport, treatment, generation, storage, disposal or Release of any
Hazardous Materials by Seller.
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3.20 Employees, Labor Matters, etc. Seller is not a party
to or bound by any collective bargaining agreement and there are no labor
unions or other organizations representing, purporting to represent or
attempting to represent any employees employed in the operation of the
Business. Since August 31, 1994, there has not occurred or, to the knowledge
of Seller, been threatened any material strike, slowdown, picketing, work
stoppage, concerted refusal to work overtime or other similar labor activity
with respect to any employees employed in the operation of the Business. There
are no labor disputes currently subject to any grievance procedure, arbitration
or litigation and there is no representation petition pending or, to the
knowledge of Seller, threatened with respect to any employee employed in the
operation of the Business.
3.21 Employee Benefit Plans and Related Matters.
(a) Schedule 3.21(a) lists each pension,
retirement, profit-sharing, deferred compensation, bonus or other incentive
plan, or other employee benefit program, arrangement, agreement or
understanding, or medical, vision, dental or other health plan, or life
insurance or disability plan, or any other employee benefit plan, including,
without limitation, any "employee benefit plan" as defined in Section 3(3) of
ERISA, to which Seller contributes or is a party or is bound and under which it
may have liability and under which employees or former employees of the
Business (or their beneficiaries) are eligible to participate or derive a
benefit ("Employee Benefit Plans"). Seller has delivered to Buyer true,
correct and complete copies of all Employee Benefit Plans. The Assets are not
subject to any Lien in favor of, or enforceable by, the Pension Benefit
Guaranty Corporation.
(b) Compliance; Liability.
(i) No liability has been or is expected
to be incurred by Seller under or pursuant to Title I or IV of ERISA or the
penalty, excise tax or joint and several liability provisions of the Code or
ERISA relating to employee benefit plans and, to the knowledge of the Seller,
no event, transaction or condition has occurred or exists that could result in
any such liability to the Business or, following the Closing, Buyer or any such
Employee Benefit Plan.
(ii) No Employee Benefit Plan is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA, a
"multiple employer plan" within the meaning of Section 413(c) of the Code, or a
defined benefit plan within the meaning of Section B(35) of ERISA.
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3.22 Brokers, Finders, etc. With the exception of fees
and expenses payable to J.P. Morgan & Co. Incorporated and certain employees of
Seller and its Affiliates which shall be paid by Seller, all negotiations
relating to this Agreement, and the transactions contemplated hereby, have been
carried on without the participation of any Person acting on behalf of Seller
or its Affiliates in such manner as to give rise to any valid claim against
Buyer for any brokerage or finder's commission, fee or similar compensation, or
for any bonus payable to any officer, director, employee, agent or sales
representative of or consultant to Seller or its Affiliates upon consummation
of the transactions contemplated hereby or thereby.
3.23 Suppliers and Customers. Schedule 3.23 attached
hereto sets forth the twenty (20) largest suppliers and all sole source
suppliers and the twenty (20) largest customers of the Business for the period
July 1, 1996 through the date hereof. During the period July 1, 1996 through
the date hereof, (a) none of the 20 largest customers referred to in the next
preceding sentence has cancelled in whole or in part its agreement or
commitment with Seller or the Business to purchase products or services (or
threatened in writing to do any of the foregoing). During the period July 1,
1996 through the date hereof, none of the sole source suppliers referred to in
the first sentence of this Section has cancelled in whole or in part its
agreement or commitment to supply services or supplies to Seller or the
Business (or threatened in writing to do any of the foregoing). To Seller's
knowledge, the relationship of Seller with each of its suppliers and each of
its customers is a good commercial working relationship. Seller does not have
knowledge that any such supplier or customer intends to cancel or otherwise
substantially modify its relationship with Seller or the Business or limit its
services, supplies or materials to Seller or the Business, or its usage or
purchase of the services and products of the Business either as a result of the
transactions contemplated hereby or otherwise.
3.24 Order Backlog. A true and complete list of (a) all
firm product and service purchase orders and contracts for the sale of goods or
the delivery of services by Seller in connection with the Business to Persons
other than Governmental Authorities, and (b) all firm funded product and
service purchase orders and contracts for the sale of goods or the delivery of
services by Seller in connection with the Business to Governmental Authorities
(collectively, the "Backlog") pending as of the latest practical date prior to
the date of this Agreement is set forth in Schedule 3.24 attached hereto.
3.25 Disclosure. No representation or warranty of Seller
in this Agreement and the Schedules or certificates attached hereto or
delivered by Seller in accordance with the terms hereof contains any untrue
statement of a material fact or omits any statement of a material fact
necessary in order to
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make the statements contained herein or therein, in light of the circumstances
in which they were made, not misleading.
3.26 Mortgages. If any parcel of Owned Real Property is
encumbered by one or more existing mortgages (each, an "Existing Mortgage"), no
written notice has been received from the mortgagee(s) asserting that a default
or breach exists thereunder or under any note or other obligation secured
thereby which remains uncured. Seller knows of no default, or event which with
notice or the passage of time will constitute a default, under the Existing
Mortgage(s) or under any note or other obligation secured thereby which has
occurred and is continuing. Seller has delivered to Buyer complete copies of
the documents constituting the Existing Mortgage(s) and the note(s) secured
thereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Corporate Status; Authorization, etc. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation with full corporate power and
authority to execute and deliver the Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery by Buyer of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly authorized by all requisite
corporate action of Buyer. Buyer has duly executed and delivered this
Agreement. This Agreement is a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
4.2 No Conflicts, etc. The execution, delivery and
performance by Buyer of the Agreement, and the consummation of the transactions
contemplated hereby, do not and shall not conflict with or result in a
violation of or under (with or without the giving of notice or the lapse of
time, or both) (i) the certificate of incorporation or by-laws or other
organizational documents of Buyer, (ii) any Applicable Law applicable to Buyer
or any of its properties or assets or (iii) any contract, agreement or other
instrument applicable to Buyer or any of its properties or assets, except, in
the case of clause (iii), as set forth in Schedule 4.2 and for violations and
defaults that, individually and in the aggregate, have not and shall not
materially impair the ability of Buyer to perform its obligations under the
Agreement. Except as specified in Schedule 4.2 and except as required under
the HSR Act, no Governmental Approval or other Consent is required to be
obtained or made by Buyer in
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connection with the execution and delivery of the Agreement or the consummation
of the transactions contemplated hereby.
4.3 Litigation. There is no action, claim, suit or
proceeding pending, or to Buyer's knowledge threatened, by or against or
affecting Buyer in connection with or relating to the transactions contemplated
by this Agreement or of any action taken or to be taken in connection herewith
or the consummation of the transactions contemplated hereby.
4.4 Brokers, Finders, etc. All negotiations relating to
this Agreement and the transactions contemplated hereby have been carried on
without the participation of any Person acting on behalf of Buyer in such
manner as to give rise to any valid claim against Seller for any brokerage or
finder's commission, fee or similar compensation.
4.5 Adequate Funds. Buyer has all funds necessary to
enable it to perform this Agreement in accordance with its terms.
ARTICLE V
COVENANTS
5.1 Covenants of Seller.
(a) Public Announcements. Except as required by
Applicable Law (in which case the nature of the announcement shall be described
to Buyer prior to dissemination to the public), Seller shall not make any
public announcement in respect of this Agreement or the transactions
contemplated hereby without the prior written consent of Buyer.
(b) Conduct of Business. From the date hereof to
the Closing Date, except as permitted or required by this Agreement or as
otherwise consented to by Buyer in writing, Seller shall:
(i) carry on the Business in the
ordinary course, in substantially the same manner as heretofore conducted, and
use all reasonable best efforts to maintain the Business in good operating
condition and repair, and preserve its relationships with customers, suppliers
and others having business dealings with the Business;
(ii) not grant (or commit to grant) any
increase in the compensation (including incentive or bonus compensation) of any
employee employed in the operation of the Business other than increases in the
ordinary course of business consistent with past practice in the
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compensation payable to those employees of the Business earning less than
$50,000 per annum each; or institute, adopt or amend (or commit to institute,
adopt or amend) any compensation or benefit plan, policy, program or
arrangement or collective bargaining agreement applicable to any such employee.
(iii) not sell, assign, voluntarily
encumber, grant a Lien on or license with respect to, or dispose of, any of the
Assets having a fair market value of at least $50,000 individually or $100,000
in the aggregate, or incur any liabilities or obligations (including, without
limitation, liabilities with respect to capital leases or guarantees thereof)
in excess of $100,000 individually or in the aggregate, except for sales and
dispositions made or liabilities incurred, including the creation of purchase
money security interests, in the ordinary course of business consistent with
past practice;
(iv) take any action inconsistent with,
the representations and warranties of Seller hereunder or that would cause any
of the representations and warranties of Seller hereunder to become untrue in
any material respect; and
(v) not make, give or grant any bid or
proposal, or any customer option relating to contracts in the Backlog,
involving an amount in excess of $250,000 (or amend, supplement or terminate
any existing bid or proposal, or any existing customer option relating to
contracts in the Backlog, involving an amount in excess of $250,000), in each
case without the prior approval of Buyer (which approval shall not be
unreasonably withheld or delayed).
(c) Access and Information. (i) Prior to and
after the Closing, Seller shall (and shall cause its accountants, counsel,
consultants, employees and agents to) give Buyer and its respective
accountants, counsel, consultants, employees and agents, reasonable access
during normal business hours to, and furnish them with all documents, records,
work papers and information with respect to, all properties, assets, books,
contracts, commitments, reports and records relating to the Business, as Buyer
shall from time to time reasonably request. In addition, Seller shall permit
Buyer, and its accountants, counsel, consultants, employees and agents,
reasonable access to such personnel of Seller during normal business hours as
may be necessary to Buyer in its review of the properties, assets and business
affairs of the Business and the above-mentioned documents, records and
information. Buyer and Buyer's agents shall have the right, upon giving
reasonable advance notice to enter upon and inspect the Real Property,
including physical inspection of the surface and sub-surface land and all
improvements and the major components thereof, including heating, plumbing, air
conditioning,
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electrical equipment and wiring and roof. Buyer shall indemnify and hold
Seller harmless from and against any and all costs and liabilities resulting
from the negligence or willful misconduct of any third party engaged by Buyer
to perform such inspections, and Buyer shall return the Real Property to
substantially the same condition as before such inspections. Inspections shall
be conducted during times reasonably convenient to Seller and the Business.
(ii) Buyer shall remain bound by the
terms of its existing Confidentiality Agreement with Seller, dated August 6,
1997 (the "Confidentiality Agreement"), except that from and after the Closing:
(A) the terms "Evaluation Material" and "Notes" as defined and used in the
Confidentiality Agreement, shall no longer include information concerning the
Business and properties of the STS Division; (B) clause (d) of the second
paragraph of the Confidentiality Agreement shall cease to have any further
force and effect insofar as the provisions thereof relate to the STS Division
or the Business; and (C) the seventh and eighth paragraphs of the
Confidentiality Agreement shall cease to have any further force and effect
insofar as the provisions thereof relate to the STS Division or the Business.
(d) Further Actions.
(i) Seller agrees to use commercially
reasonable efforts to take all actions and to do all things necessary, proper
or advisable to consummate the transactions contemplated hereby by the Closing
Date.
(ii) Seller, as promptly as practicable,
shall file or supply, or cause to be filed or supplied, all applications,
notifications and information required to be filed or supplied by Seller
pursuant to Applicable Law in connection with the Agreement, the sale and
transfer of the Assets pursuant to the Agreement and the consummation of the
other transactions contemplated hereby, including but not limited to filings
pursuant to the HSR Act.
(iii) Seller, as promptly as practicable,
shall use all reasonable efforts to obtain, or cause to be obtained, all
Consents (including, without limitation, all Governmental Approvals and any
Consents required under any Contract) necessary to be obtained by it in order
to consummate the sale and transfer of the Assets pursuant to the Agreement and
the consummation of the other transactions contemplated hereby.
(iv) Seller shall coordinate and
cooperate with Buyer in exchanging such information and supplying such
assistance as may be reasonably requested by Buyer in connection with the
filings and other actions contemplated by Section 5.2.
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(e) Further Assurances. Following the Closing,
Seller shall from time to time, execute and deliver such additional
instruments, documents, conveyances or assurances and take such other actions
as shall be necessary, or otherwise reasonably requested by Buyer, to confirm
and assure the rights and obligations provided for in this Agreement and render
effective the consummation of the transactions contemplated hereby. Seller
until the Closing shall maintain in force in respect of the Business the
existing insurance covering the Business, subject to normal variations required
by ordinary operations of the Business. Seller shall cooperate with Buyer in
order to afford Buyer the benefit of all insurance policies covering the
Business for periods prior to the Closing to the extent that the claims
thereunder relate to any of the Assets or the Assumed Liabilities.
(f) Noncompete. Seller will not and will cause
its Subsidiaries and operating units and Affiliates not to (collectively, the
"Restricted Parties and individually, a "Restricted Party"), for a period of
three years following the Closing (the "Non- Competition Period"), manufacture,
sell or provide products or services which are competitive to the Primary
Activities, except that this provision shall not preclude (i) EFData Corp. from
manufacturing, selling or providing products which it currently manufactures,
sells or provides; (ii) EFData Corp. from providing services under those
contracts where the EFData Corp. manufactured product content (consisting of
products of the type currently manufactured by EFData Corp.) exceeds 50% of the
contract value; (iii) the GCS unit of CMI from providing products and services
to U.S. Government entities which it currently provides to such U.S. Government
customers; or (iv) the bona fide sale, whether by a merger or otherwise, of all
or substantially all of the properties and assets of Seller (in one transaction
or a series of related transactions) to a Person that is not an Affiliate of
Seller that manufactures or sells products or services competitive to the
Primary Activities or restrict the activities of any such acquiring Person
after such sale (other than any such sale in which the stockholders of Seller
immediately before the transaction or series of related transactions possess
immediately thereafter 50% or more of the voting power of Seller or the
acquiring Person or any parent entity of either). "Primary Activities" shall
mean the manufacture and global sale of portable L- Band satellite
communications terminals for use in the Inmarsat-B system, the manufacture and
global sale of single-channel digital video exciters and receivers, using
MPEG-2 or equivalent digital compression algorithms, for satellite-based
applications, the manufacture and global sale of X-Band frequency converters
for satellite applications, and the bidding and executing of satellite
communications projects and/or contracts with commercial customers or foreign
governmental authorities in which the primary added-value is system design,
integration, installation and/or program management.
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Seller will not use or permit the use of any of the
intellectual property licensed to it pursuant to the Technology License
Agreement or the Trademark License Agreement in a manner that would cause a
violation of this Section 5.1(f).
During the Non-Competition Period, Seller will not, and will
cause its Affiliates not to, (i) directly or indirectly, induce or solicit, or
aid or assist any Person to induce or solicit, any employees, salespersons,
agents, consultants, distributors, representatives, advisors, customers or
suppliers of the Business to terminate, curtail or otherwise limit their
employment by or business relationship with the Business, or (ii) license,
assign or otherwise grant any interest in the Name or Logo "California
Microwave" (alone or in any combination of words, or any combination, variation
or derivation of such Name or Logo), for use by any Person in connection with
the manufacturing, marketing, sale or provision of any products or services
which are competitive to the Primary Activities.
(g) No Solicitation. From the date hereof to the
Closing Date, Seller shall cause its employees, directors, agents and
Affiliates to immediately suspend any existing negotiations or discussions
relating to any sale, joint venture or other transfer of actual or beneficial
ownership of the STS Division, its operations or any of its assets associated
therewith (other than inventory in the ordinary course of business)
(collectively a "Transaction") and Seller shall not, and shall cause its
employees, directors, agents and Affiliates to not, (a) solicit any proposals
or offers relating to a Transaction, or (b) negotiate or discuss with any third
party concerning any proposal or offer for a Transaction.
(h) Post-Closing Confidentiality. From and after
the Closing, Seller will, and will cause its Affiliates to, hold in strict
confidence, and will not use to the detriment of Buyer or any of its
Affiliates, all information with respect to the Business. Notwithstanding the
foregoing, Seller may disclose such information (i) if compelled to disclose
the same by judicial or administrative process or by other requirements of law,
(ii) if the same hereafter is in the public domain through no fault of Seller,
or (iii) if the same is later acquired by Seller from another source and Seller
is not aware that such source is under an obligation to another Person to keep
such information confidential.
(i) Mail; Payments. Seller authorizes and
empowers Buyer from and after the Closing Date to receive and open all mail and
other communications received by Buyer and to act with respect to such
communications in such manner as Buyer may elect if such communications relate
to the Business other than the Excluded Assets or Excluded Liabilities,
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or, if such communications do not relate to the Business or relate to the
Excluded Assets or Excluded Liabilities, to forward the same promptly to
Seller. Seller and Buyer shall promptly deliver to the other any cash, checks
or other instruments of payment to which the other is entitled and shall hold
the same in trust for the other until such delivery.
(j) Performance of Contracts. With respect to
each Contract, Governmental Approval, Lease and Intellectual Property License,
Seller shall duly perform and comply with all agreements and conditions
required thereby to be performed or complied with by it prior to or on the
Closing Date.
5.2 Covenants of Buyer.
(a) Public Announcements. Except as required by
Applicable Law (in which case the nature of the announcement shall be described
to the Seller prior to dissemination to the public), Buyer shall not, and shall
not permit its Affiliates to, make any public announcement in respect of this
Agreement or the transactions contemplated hereby without the prior written
consent of Seller.
(b) Further Actions.
(i) Buyer agrees to use commercially
reasonable efforts to take all actions and to do all things necessary, proper
or advisable to consummate the transactions contemplated hereby by the Closing
Date.
(ii) Buyer shall, as promptly as
practicable, file or supply, or cause to be filed or supplied, all
applications, notifications and information required to be filed or supplied by
Buyer pursuant to Applicable Law in connection with this Agreement, Buyer's
acquisition of the Assets pursuant to this Agreement and the consummation of
the other transactions contemplated thereby, including but not limited to
filings pursuant to the HSR Act.
(iii) Buyer shall coordinate and cooperate
with Seller in exchanging such information and supplying such reasonable
assistance as may be reasonably requested by Seller in connection with the
filings and other actions contemplated by Section 5.1.
(c) Further Assurances. Following the Closing,
Buyer shall, from time to time, execute and deliver such additional
instruments, documents, conveyances or assurances and take such other actions
as shall be necessary, or otherwise reasonably requested by Seller, to confirm
and assure
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the rights and obligations provided for in this Agreement and render effective
the consummation of the transactions contemplated hereby.
(d) Use of Business Names by Buyer.
(i) Buyer acknowledges that Seller has
the absolute and exclusive proprietary right to all names, marks, trade names,
trademarks, service names and service marks (collectively, "Names")
incorporating "California Microwave" or any similar Name and to all corporate
symbols or logos (collectively, "Logos") incorporating California Microwave or
any similar Name. All rights of Seller and its respective affiliates to which
and the goodwill represented thereby and pertaining thereto are being retained
by Seller. Buyer agrees that it will not, and will cause the Business not to,
use the Name California Microwave or any similar Name or any Logo incorporating
such Name or any similar Name in any manner, including in connection with the
sale of any products or services or otherwise in the conduct of its business,
except as expressly permitted by clause (ii) of this Section 5.2(d).
(ii) For a period of six months from the
Closing Date (the "Window Period"), Seller shall and hereby irrevocably grants,
effective as of the Closing Date, on a fully-paid, royalty-free basis, the
Buyer the right to use the California Microwave Logo and the California
Microwave Name in connection with the operation of the Business as currently
conducted including, during the Window Period, to (A) use any molds or castings
included in the equipment or machinery included in the Assets despite the
appearance thereon and on the products manufactured therewith of the Name
California Microwave or the California Microwave Logo, (B) market and sell all
such products produced by the Business and (C) use any other assets on hand
included in the Assets, including, without limitation, any catalogs, invoices,
packaging material or stationery, bearing the California Microwave Name or
California Microwave Logo. Immediately upon the expiration of the Window
Period, Buyer shall cease to use in any manner the Name California Microwave or
the California Microwave Logo incorporating such Name and remove or obliterate
such Name or the California Microwave Logo from any molds, castings, products
or other assets and clearly and prominently mark the new name of the Business
thereon. At all times following the Closing, Buyer shall indicate that neither
Buyer nor the Business are affiliated with Seller or any of its affiliates.
(e) Substitute Letters of Credit and Bonds.
Buyer shall use commercially reasonable efforts to furnish as of the Closing or
as soon as practicable thereafter, its own letters of credit or performance or
surety bonds in substitution for the letters of credit and bonds referred to in
Schedule 5.2(e)
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attached hereto and agrees to reimburse Seller for any out-of-pocket bank fees
or charges incurred by Seller by reason of any of the same remaining
outstanding from and after 30 days after the Closing Date.
(f) Reimbursement of Certain Severance
Obligations. Schedule 5.2(f) lists three severance agreements heretofore
entered into between Seller and each of Messrs. Maloney, Strean and Pinto (each
an "Executive"), respectively (each a "Severance Agreement"). If (i) an
Executive becomes employed by Buyer as of the Closing Date as a Transferred
Employee, (ii) there shall occur thereafter a termination by such Executive of
his employment with Buyer for Good Reason (as defined below) within one year
after the Closing Date, and (iii) as a result of the termination of employment
of the type described in clause (ii) above, Seller shall be obligated to make
any cash payment to such Executive pursuant to the provisions of the Severance
Agreement with such Executive, then Buyer shall reimburse Seller for any such
cash payment it so makes to such Executive, such reimbursement to occur
promptly upon receipt by Buyer of evidence of the making of such payment;
provided, however, that the reimbursement obligation of Buyer to Seller under
this Section 5.2(f) with respect to any Executive shall not in any event exceed
the amount that would have been payable to such Executive under his retention
incentive agreement that is listed on Schedule 2.4(a) in the event of an
involuntary termination by Buyer without cause of the employment of such
Executive after the Closing; provided further, however, Buyer shall have no
reimbursement obligation to Seller under this Section 5.2(f) if Buyer otherwise
is obligated to make a payment to the Executive under his retention incentive
agreement pursuant to Section 2.4(a).
As used herein, "Good Reason" means the occurrence of any of
the following: (x) the assignment to the Executive in question of duties
inconsistent with, or a substantial alteration in the nature or status of, such
Executive's responsibilities with respect to the Business at the STS Division
immediately before the Closing; (y) a reduction in the Employee's base salary
or in the benefits that Buyer is required to provide such Executive pursuant to
Section 7.2; or (z) such Executive's relocation to a work site requiring an
increase in one-way commute from such Executive's residence of more than 35
miles.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Obligations of Each Party. The
obligations of the parties to consummate the transactions contemplated hereby
shall be subject to the fulfillment on or prior to the Closing Date of the
following conditions:
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(a) HSR Act Notification. In respect of the
notifications of Buyer and Seller pursuant to the HSR Act, the applicable
waiting period and any extensions thereof shall have expired or been terminated
without the receipt of any objection from any Governmental Authority.
(b) No Injunction, etc. Consummation of the
transactions contemplated hereby shall not have been restrained, enjoined or
otherwise prohibited by any Applicable Law, including any order, injunction,
decree or judgment of any court or other Governmental Authority. No court or
other Governmental Authority shall have determined that any Applicable Law
makes illegal the consummation of the transactions contemplated hereby, and no
proceeding with respect to the application of any such Applicable Law to such
effect shall be pending.
(c) Supply and License Agreements. Buyer and
Seller shall have entered into the Cross-License Agreement (substantially in
the form of Exhibit A), the Technology License Agreement (substantially in the
form of Exhibit B), the Trademark License Agreement (substantially in the form
of Exhibit C) and the Supply Agreement (substantially in the form of Exhibit
D).
6.2 Conditions to Obligations of Buyer. The obligations
of Buyer to consummate the transactions contemplated hereby shall be subject to
the fulfillment (or waiver by Buyer) on or prior to the Closing Date of the
following additional conditions:
(a) Representations, Performance. Each of the
representations and warranties of Seller contained in this Agreement that is
qualified as to materiality shall be true and correct and each such
representation and warranty that is not so qualified shall be true and correct
in all material respects in each case on the date hereof and at and as of the
Closing Date as though made on and as of the Closing Date. Seller shall have
duly performed and complied in all material respects with all agreements and
conditions required by the Agreement to be performed or complied with by it
prior to or on the Closing Date. Seller shall have delivered to Buyer a
certificate, dated the Closing Date and signed by its duly authorized officer,
to the foregoing effect.
(b) No Material Adverse Change. Since the date
hereof, (i) there shall not have occurred any material adverse change in the
financial condition, results of operations or Assets of the Business, except
for the results shown and changes forecast in Schedule 3.7(a), and other than
changes in the STS Division's intercompany account with CMI corporate, which
changes represent (x) the results of operations of the STS Division, (y) the
cash advanced to the STS Division by CMI corporate or repaid by the STS
Division
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to CMI corporate, and (z) certain allocations between CMI corporate and the STS
Division, which allocations shall have been made in the ordinary course of
business consistent in type and amount with past practice, and (ii) there shall
not have occurred, in the aggregate, any change in the ETC's and EAC's of the
Business' Contracts such as to cause a material adverse change in its financial
quarterly contribution.
(c) Consents. Seller shall have obtained and
shall have delivered to Buyer copies of (i) all Governmental Approvals required
to be obtained by Seller in connection with the execution and delivery of the
Agreement and the consummation of the transactions contemplated hereby or
thereby and (ii) all Consents (including, without limitation, all Consents
required under any Contract) necessary to be obtained in order to consummate
the sale and transfer of the Assets pursuant to this Agreement and the
consummation of the other transactions contemplated hereby and listed on
Schedule 6.2(c). Buyer shall have obtained the Consents listed on Schedule
4.2.
(d) Corporate Proceedings. All corporate and
other proceedings of Seller in connection with this Agreement and the
transactions contemplated hereby, and all documents and instruments incident
thereto, shall be reasonably satisfactory in substance and form to Buyer and
its counsel, and Buyer and its counsel shall have received all such documents
and instruments, or copies thereof, certified if requested, as may be
reasonably requested.
(e) Transfer Documents. Seller shall have
delivered to Buyer at the Closing all documents, certificates and agreements
necessary to transfer to Buyer title to the Assets, free and clear of any and
all Liens thereon, other than Permitted Liens, including without limitation:
(i) a bill of sale, assignment and
general conveyance, in form and substance reasonably satisfactory to Buyer,
dated the Closing Date, with respect to the Assets (other than any Asset to be
transferred pursuant to any of the instruments referred to in any other clause
of this Section 6.2);
(ii) assignments of all Contracts,
Intellectual Property and any other agreements and instruments constituting
Assets, dated the Closing Date, assigning to Buyer all of Seller's right, title
and interest therein and thereto;
(iii) a bargain and sale deed with
covenants against grantor's acts, dated as of the Closing Date, with respect to
each parcel of Owned Real Property;
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(iv) an assignment of lease, dated as of
the Closing Date, with respect to each Lease;
(v) certificates of title to all motor
vehicles included in the Assets to be transferred to Buyer hereunder, duly
endorsed for transfer to Buyer as of the Closing Date; and
(vi) an assignment of lease, assignment
of sale agreement, and consent by the Suffolk County Industrial Development
Agency and other necessary parties to assignment of lease and sale agreement,
and any other documents, consents or approvals necessary to convey all of
Seller's interest in the property leased from the Suffolk County Industrial
Development Agency.
(f) Title Policies. Buyer shall have received
from a nationally recognized title insurance company at its expense (the "Title
Company") a title insurance policy issued to Buyer in form and substance
reasonably satisfactory to it with respect to the Owned Real Property,
insuring Buyer and issued as of the Closing Date by the Title Company, showing
Buyer to have a fee simple title to the Owned Real Property, subject only to
Permitted Liens and the mortgage liens and easements of record described on
Schedule 3.18(c). In conjunction with the receipt of the foregoing title
policy, Seller shall deliver to Buyer a Certificate of Occupancy for each of
the Owned Real Property and the Kennedy Facility issued by the municipal
authority having the jurisdiction allowing the property to be used as a
commercial or industrial building in the manner presently used.
(g) FIRPTA Certificate. Buyer shall have
received a certificate of Seller, dated the Closing Date and sworn to under
penalty of perjury, setting forth the name, address and federal tax
identification number of Seller and stating that Seller is not a "foreign
person" within the meaning of Section 1445 of the Code, such certificate to be
in the form set forth in the Treasury Regulations thereunder.
(h) Environmental Reports. Buyer at its own
expense shall have received from an environmental consulting firm of its
choice, an environmental site assessment report and analytical report covering
the Real Property (including analyses of samples, soil and groundwater taken
from all areas of the Real Property as may be deemed appropriate by such
consulting firm), which reports shall be in form, scope and substance
satisfactory to Buyer
in all respects. In addition, Buyer shall be reasonably satisfied with the
results of its due diligence investigation of environmental matters in respect
of the Real Property.
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6.3 Conditions to Obligations of Seller. The obligation
of Seller to consummate the transactions contemplated hereby shall be subject
to the fulfillment (or waiver by Seller), on or prior to the Closing Date, of
the following additional conditions:
(a) Representations, Performance, etc. Each of
the representations and warranties of Buyer contained in this Agreement that is
qualified as to materiality shall be true and correct and each such
representation and warranty that is not so qualified shall be true and correct
in all material respects in each case on the date hereof and at and as of the
Closing Date as though made on and as of the Closing Date. Buyer shall have
duly performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date. Buyer shall have delivered to Seller a
certificate, dated the Closing Date and signed by its duly authorized officer,
to the foregoing effect.
(b) Assumption Agreement. Seller shall have
received from Buyer an Assumption Agreement, in substance and form satisfactory
to Seller, under which Buyer shall have assumed the Assumed Liabilities.
(c) Corporate Proceedings. All corporate
proceedings of Buyer in connection with this Agreement and the transactions
contemplated hereby, and all documents and instruments incident thereto, shall
be reasonably satisfactory in substance and form to Seller, and its counsel,
and Seller and its counsel shall have received all such documents and
instruments, or copies thereof, certified if requested, as may be reasonably
requested.
(d) Consents and Approvals. Seller shall have
obtained all Governmental Approvals necessary to consummate the transactions
contemplated hereby.
ARTICLE VII
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
7.1 Employment of Seller's Employees. Buyer intends to
offer employment, effective as of the Closing Date, to all employees who are
employed by Seller in the STS Division primarily in the operation of the
Business at then current wage or salary levels. Those employees who accept
such offers of employment and become employees of Buyer shall be referred to
herein as the "Transferred Employees". Effective as of the Closing Date, Buyer
shall assume the liability of Seller in respect of the Transferred Employees
for accrued but unpaid salaries, wages, vacation and sick pay and 1998 cash
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incentive compensation, but only to the extent such liability is accrued or
otherwise reflected on the Final Closing Statement of Net Assets. Buyer shall
not have any liability with respect to any employee of Seller or Employee
Benefit Plan or any claim thereof or related thereto except to the extent
expressly provided in this Article VII with respect to Transferred Employees
and except as provided in Section 2.4(a).
7.2 Welfare and Fringe Benefit Plans. Following the
Closing Date and through December 31, 1998, Buyer shall provide Transferred
Employees with life insurance, medical coverage, and other employee welfare
benefit plans, programs, policies or arrangements, other than stock-based plans
relating to equity securities (or their equivalent, such as phantom stock plans
or SARs) or (except as provided in the next sentence) any incentive bonus
programs based on the achievement of financial targets, on a basis comparable
in the aggregate to those provided Transferred Employees prior to the Closing
Date. Buyer will provide or establish a cash incentive bonus program(s) based
on the achievement of financial targets to those Transferred Employees who
currently are eligible for cash incentive bonus program(s) of Seller based on
the achievement of financial targets, which cash incentive program(s) of Buyer
shall be comparable in the aggregate to such cash incentive bonus program(s) of
Seller.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by the written agreement of Buyer and Seller;
(b) by either Seller or Buyer by written notice
to the other party if the transactions contemplated hereby shall not have been
consummated pursuant hereto by 5:00 p.m. California time on February 15, 1998,
unless such date shall be extended by the mutual written consent of Seller and
Buyer;
(c) by Buyer by written notice to Seller if (i)
the representations and warranties of Seller shall not have been true and
correct in all material respects as of the date when made or (ii) if any of the
conditions set forth in Section 6.1 or 6.2 shall not have been, or if it becomes
apparent that any of such conditions will not be, fulfilled by 5:00 p.m.
California time on February 15, 1998, unless such failure shall be due to the
failure of Buyer to
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perform or comply with any of the covenants, agreements or conditions hereof to
be performed or complied with by it prior to the Closing; or
(d) by Seller by written notice to Buyer if (i)
the representations and warranties of Buyer shall not have been true and
correct in all material respects as of the date when made or (ii) if any of the
conditions set forth in Section 6.1 or 6.3 shall not have been, or if it
becomes apparent that any of such conditions will not be, fulfilled by 5:00
p.m. California time on February 15, 1998, unless such failure shall be due to
the failure of Seller to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by it prior to
the Closing.
8.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to the provisions of Section 8.1, this
Agreement shall become void and have no effect, without any liability to any
Person in respect hereof or of the transactions contemplated hereby on the part
of any party hereto, or any of its directors, officers, employees, agents,
consultants, representatives, advisers, stockholders or Affiliates, except as
specified in Section 10.2 and except for any liability resulting from such
party's breach of this Agreement.
ARTICLE IX
INDEMNIFICATION
9.1 By Seller. Subject to the terms and conditions of
this Article IX, Seller covenants and agrees to defend, indemnify and hold
harmless Buyer, its officers, directors, employees, agents, advisers,
representatives and Affiliates (collectively, the "Buyer Indemnitees") from and
against, and pay or reimburse Buyer Indemnitees for, any and all claims,
liabilities, obligations, losses, fines, costs, proceedings, deficiencies or
damages (whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including out-of-pocket expenses and
reasonable attorneys' fees incurred in the investigation or defense of any of
the same or in asserting any of their respective rights hereunder
(collectively, "Losses"), resulting from or arising out of:
(i) Any misrepresentation or breach of any
warranty of Seller contained in this Agreement; provided that any claim for
indemnification by Buyer under this clause (i) may be made no later than 18
months from and after the Closing Date, excepting only that any claim for
misrepresentation or breach of warranty under Sections 3.6, 3.10(a), 3.18(a),
3.19 and 3.21 may be made no later than a date thirty days from and after the
expiration of the period of the applicable statute of limitations;
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(ii) any failure of Seller to perform any covenant
or agreement made or contained in this Agreement or fulfill any obligation in
respect thereof;
(iii) any Excluded Liabilities;
(iv) any and all Benefit Liabilities in respect of
Employees except, with respect to Transferred Employees, to the extent assumed
by Buyer pursuant to Article VII; and
(v) any product liability claim with respect to
products manufactured by Seller and sold prior to the Closing.
Seller shall not be required to indemnify Buyer Indemnitees
with respect to any claim for indemnification resulting from or arising out of
matters described in clauses (i) and (v) above pursuant to this Section unless
and until the aggregate amount of all claims against Seller exceeds $270,000
and then only to the extent such aggregate amount exceeds $270,000. Claims
thereafter may be asserted regardless of amount. Seller's maximum liability to
Buyer Indemnitees under clauses (i) and (v) of this Section shall not exceed
$13,750,000.
9.2 By Buyer. Subject to the terms and condition of this
Article IX, Buyer covenants and agrees to defend, indemnify and hold harmless
Seller and its officers, directors, employees, agents, advisers,
representatives and Affiliates (collectively, the "Seller Indemnitees") from
and against any and all Losses resulting from or arising out of:
(i) any misrepresentation or breach of warranty
of Buyer contained in this Agreement or in any Schedule of Buyer; provided that
any claim for indemnification by Seller under this paragraph (i) may be made no
later than 18 months from and after the Closing Date;
(ii) any failure of Buyer to perform any covenant
or agreement made or contained in the Agreement or fulfill any other obligation
in respect thereof;
(iii) the Assumed Liabilities;
(iv) claims made on or drawings under any of the
letters of credit or performance or surety bonds referred to in Schedule 5.2(e)
attached hereto;
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(v) the use by Buyer of any Seller tradenames or
trademarks after the Closing Date other than as permitted or contemplated by
Section 5.2(d); and
(vi) the operation of the Business by Buyer or
Buyer's ownership, operation or use of the Assets following the Closing Date
except to the extent that such Loss is the result of any action of Seller prior
to the Closing.
Buyer shall not be required to indemnify Seller Indemnitees
with respect to any claim for indemnification resulting from or arising out of
matters described in clause (i) above pursuant to this Section unless and until
the aggregate amount of all claims against Buyer exceeds $270,000 and then only
to the extent such aggregate amount exceeds $270,000. Buyer's maximum
liability to Seller Indemnitees under clause (i) of this Section shall not
exceed $13,750,000.
9.3 Adjustments to Indemnification Payments. Any payment
made by Seller to Buyer Indemnitees, on the one hand, or by Buyer to Seller
Indemnitees, on the other hand, pursuant to this Article IX in respect of any
claim shall be net of any insurance proceeds realized by and paid to the
Indemnified Party in respect of such claim. The Indemnified Party shall use
its reasonable efforts to make insurance claims relating to any claim for which
it is seeking indemnification pursuant to this Article IX; provided that the
Indemnified Party shall not be obligated to make such an insurance claim if the
Indemnified Party in its reasonable judgment believes that the cost of pursuing
such an insurance claim together with any corresponding increase in insurance
premiums or other chargebacks to the Indemnified Party, as the case may be,
would exceed the value of the claim for which the Indemnified Party is seeking
indemnification.
9.4 Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under
this Agreement (the "Indemnified Party"), notice shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and the Indemnified
Party shall permit the Indemnifying Party (at the expense of such Indemnifying
Party) to assume the defense of any third party claim or any litigation with a
third party resulting therefrom, provided that (i) the counsel for the
Indemnifying Party who shall conduct the defense of such claim or litigation
shall be reasonably satisfactory to the Indemnified Party, (ii) the Indemnified
Party may participate in such defense at such Indemnified Party's expense, and
(iii) the omission by any Indemnified Party to give notice as provided herein
shall not relieve the
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Indemnifying Party of its indemnification obligation under this Agreement except
and only to the extent that such Indemnifying Party is materially damaged as a
result of such failure to give notice. Except with the prior written consent of
the Indemnified Party, no Indemnifying Party, in the defense of any such claim
or litigation, shall consent to entry of any judgment or enter into any
settlement that provides for injunctive or other nonmonetary relief affecting
the Indemnified Party or that does not include as an unconditional term thereof
the giving by each claimant or plaintiff to such Indemnified Party of a release
from all liability with respect to such claim or litigation. In the event that
the Indemnified Party shall in good faith determine that the conduct of the
defense of any claim subject to indemnification hereunder or any proposed
settlement of any such claim by the Indemnifying Party might be expected to
affect adversely the Indemnified Party's Tax liability or the ability of Buyer
to conduct its business, or that the Indemnified Party may have available to it
one or more defenses or counterclaims that are inconsistent with one or more of
those that may be available to the Indemnifying Party in respect of such claim
or any litigation relating thereto, the Indemnified Party shall have the right
at all times to take over and assume control over the defense, settlement,
negotiations or litigation relating to any such claim at the sole cost of the
Indemnifying Party, provided that if the Indemnified Party does so take over and
assume control, the Indemnified Party shall not settle such claim or litigation
without the written consent of the Indemnifying Party, such consent not to be
unreasonably withheld. In the event that the Indemnifying Party does not accept
the defense of any matter as above provided, the Indemnified Party shall have
the full right to defend against any such claim or demand and shall be entitled
to settle or agree to pay in full such claim or demand. In any event, the
Indemnifying Party and the Indemnified Party shall cooperate in the defense of
any claim or litigation subject to this Article IX and the records of each shall
be available to the other with respect to such defense.
9.5 Expiration of Representations and Warranties, etc.
All representations and warranties contained in this Agreement shall survive
the Closing for a period of 18 months; provided that the representations and
warranties stated in Sections 3.6, 3.10(a), 3.18(a), 3.19 and 3.21 shall
survive the Closing for the applicable statute of limitations.
9.6 Exclusive Remedy. The indemnifications provided for
in this Article IX shall be the sole and exclusive post-Closing remedies
available to either party against the other party for any claims under or based
upon this Agreement.
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ARTICLE X
DEFINITIONS, MISCELLANEOUS
10.1 Definition of Certain Terms. The terms defined in
this Section 10.1, whenever used in this Agreement (including in the
Schedules), shall have the respective meanings indicated below for all purposes
of this Agreement. All references herein to a Section, Article or Schedule are
to a Section, Article or Schedule of or to this Agreement, unless otherwise
indicated.
Affiliate: of a Person means a Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, the Person. "Control" (including the terms
"Controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
Aggregate Purchase Price: has the meaning set forth in
Section 2.3.
Agreement: means this Asset Purchase Agreement (including the
Exhibits and the Schedules), as the same from time to time may be amended,
supplemented or waived.
Applicable Law: all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority, (ii)
Governmental Approvals and (iii) orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any Governmental Authority.
Assets: has the meaning set forth in Section 1.1.
Assumed Liabilities: has the meaning set forth in Section
2.4.
Backlog: has the meaning set forth in Section 3.24.
Books and Records: all books and records, including manuals,
price lists, mailing lists, lists of customers, production data, sales and
promotional materials, purchasing materials, personnel records, manufacturing
and quality control records and procedures, research and development files,
accounting records, tax records and litigation files (regardless of the media
in which stored), in each case relating to or used in the Business.
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Business: the business currently conducted by Buyer through
its STS Division, as described in Recital A at the head of this Agreement.
Buyer: has the meaning set forth in the first paragraph of
this Agreement.
Buyer Indemnitees: has the meaning set forth in Section 9.1.
Buyer's Arbitrator: has the meaning set forth in Section
10.6(c).
Closing: has the meaning set forth in Section 2.1.
Closing Date: has the meaning set forth in Section 2.1.
Closing Statement of Net Assets: has the meaning set forth in
Section 2.7(b).
Code: the Internal Revenue Code of 1986, as amended.
Consent: any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, exemption or order
of, registration, certificate, declaration or filing with, or report or notice
to, any Person, including but not limited to any Governmental Authority.
Cross-License Agreement: has the meaning set forth in Section
1.3(b).
Disputes: has the meaning set forth in Section 10.6(a).
Disputing Person: has the meaning set forth in Section
10.6(b).
$ or dollars: lawful money of the United States.
E&Y: has the meaning set forth in Section 2.7(b).
EAC's: has the meaning set forth in Section 2.7(b).
Employee Benefit Plans: has the meaning set forth in Section
3.21(a).
Environmental Laws: all Applicable Laws relating to the
protection of the environment, to human health and safety, or to any emission,
discharge, generation, processing, storage, holding, abatement,
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existence, Release, threatened Release, arranging for the disposal or
transportation of any Hazardous Substances.
Environmental Liabilities and Costs: all Losses imposed by,
under or pursuant to Environmental Laws, including all fees, disbursements and
expenses of counsel based on, arising out of or otherwise in respect of: (i)
the ownership or operation of the Business or Real Property, by Seller, and
(ii) the environmental conditions existing on the Closing Date on, under,
above, or about any Real Property owned, leased or operated by Seller.
ERISA: the Employee Retirement Income Security Act of 1974,
as amended.
ETC's: has the meaning set forth in Section 2.7(b).
Excluded Assets: has the meaning set forth in Section 1.2.
Excluded Liabilities: has the meaning set forth in Section
2.5.
Executive: has the meaning set forth in Section 5.2(f).
Existing Mortgage: has the meaning set forth in Section 3.6.
Final Closing Statement of Net Assets: has the meaning set
forth in Section 2.7(d).
Final Determination: has the meaning set forth in Section
10.6(e).
Financial Statements: has the meaning set forth in Section
3.4.
GAAP: generally accepted accounting principles as in effect
in the United States.
Good Reason: has the meaning set forth in Section 5.2(f).
Governmental Approval: any Consent of, with or to any
Governmental Authority.
Governmental Authority: any nation or government, any state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the
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United States or any political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction, and any self- regulatory organization.
Hazardous Substances: any substance that: (i) requires
investigation, removal or remediation under any Environmental Law, or is
defined, listed or identified as a "hazardous waste" or "hazardous substance"
thereunder, or (ii) is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated
by any Governmental Authority or Environmental Law.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"include" and "including" shall be construed as if followed by
the phrase "without being limited to".
Indemnified Party: has the meaning set forth in Section 9.4.
Indemnifying Party: has the meaning set forth in Section 9.4.
Intellectual Property: any and all United States and foreign:
(a) patents (including design patents, industrial designs and utility models)
and patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations-in-part and extensions), patent disclosures
awaiting filing determination, inventions and improvements thereto; (b)
trademarks, service marks, trade names, trade dress, logos, business and
product names, slogans, and registrations and applications for registration
thereof but excluding the name "California Microwave;" (c) copyrights
(including software) and registrations thereof; (d) inventions, processes,
designs, formulae, trade secrets, know-how, industrial models, confidential and
technical information, manufacturing, engineering and technical drawings,
product specifications and confidential business information; (e) mask work and
other semiconductor chip rights and registrations thereof; (f) intellectual
property rights similar to any of the foregoing; and (g) copies and tangible
embodiments thereof (in whatever form or medium, including electronic media).
Intellectual Property Licenses: has the meaning set forth in
Section 3.16.
Inventories: has the meaning set forth in Section 1.1(c).
IRS: the Internal Revenue Service.
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Kennedy Facility: has the meaning set forth in Section
1.1(a).
June Balance Sheet: has the meaning set forth in Section 3.4.
Leased Real Property: means all space leased pursuant to the
Leases.
Leases: means the real property leases, subleases, use
agreements, licenses and occupancy agreements pursuant to which Seller is the
lessee, sublessee, user, licensee or occupant related to the Business, other
than real property leases, subleases, licenses and occupancy agreements
included in Excluded Assets.
Lien: any mortgage, pledge, hypothecation, right of others,
claim, security interest, encumbrance, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant, encroachment, burden,
title defect, title retention agreement, voting trust agreement, interest,
equity, option, lien, right of first refusal, charge or other restrictions or
limitations.
Logos: has the meaning set forth in Section 5.2(d).
Losses: has the meaning set forth in Section 9.1.
Material Adverse Effect: any event, occurrence, fact,
condition, change or effect that is materially adverse to the business,
operations, results of operations, financial condition, properties, assets or
liabilities of the Business.
Names: has the meaning set forth in Section 5.2(d).
Neutral Auditor: has the meaning set forth in Section 2.7(d).
Non-Competition Period: has the meaning set forth in Section
5.1(f).
Notice of Arbitration: has the meaning set forth in Section
10.6(b).
Owned Intellectual Property: has the meaning set forth in
Section 3.16.
Owned Real Property: the real property owned by Seller and
used primarily in the Business, together with all other structures, facilities,
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improvements, fixtures, systems, equipment and items of property presently or
hereafter located thereon attached or appurtenant thereto and all easements,
licenses, rights and appurtenances relating to the foregoing.
Permitted Liens: (i) Liens reserved against in the September
Balance Sheet, to the extent so reserved, (ii) Liens for Taxes not yet due and
payable or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on
Seller's books in accordance with GAAP, (iii) contract rights of third parties
to Contracts, or (iv) Liens that, individually and in the aggregate, do not and
would not materially detract from the value of any of the property or assets of
the Business or materially interfere with the use thereof as currently used or
contemplated to be used or otherwise.
Person: any natural person, firm, partnership, association,
corporation, company, limited liability company, trust, business trust,
Governmental Authority or other entity.
Prime Rate: has the meaning set forth in Section 2.7(a).
Purchase Price: has the meaning set forth in Section 2.2.
Real Property: the Owned Real Property and the Leased Real
Property.
Release: any releasing, disposing, discharging, injecting,
spilling, leaking, leaching, pumping, dumping, emitting, escaping, emptying,
seeping, dispersal, migration, transporting, placing and the like, including
without limitation, the moving of any materials through, into or upon, any
land, soil, surface water, ground water or air, or otherwise entering into the
environment.
Resolution Period: has the meaning set forth in Section
2.7(c).
Seller: has the meaning set forth in the first paragraph of
this Agreement.
Seller Indemnitees: has the meaning set forth in Section 9.2.
Seller's Arbitrator: has the meaning set forth in Section
10.2(c).
September Balance Sheet: has the meaning set forth in Section
3.4.
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Severance Agreement: has the meaning set forth in Section
5.2(f).
STS Division: has the meaning set forth in Recital A at the
head of this Agreement.
Subsidiaries: each corporation or other Person in which a
Person owns or controls, directly or indirectly, capital stock or other equity
interests representing at least 50% of the outstanding voting stock or other
equity interests.
Target Net Assets: has the meaning set forth in Section
2.7(a).
Tax: any federal, state, provincial, local or foreign income,
alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits, gross
receipts, value added, sales, use, goods and services, excise, customs duties,
transfer, conveyance, mortgage, registration, stamp, documentary, recording,
premium, severance, environmental (including taxes under Section 59A of the
Code), real property, personal property, ad valorem, intangibles, rent,
occupancy, license, occupational, employment, unemployment insurance, social
security, disability, workers' compensation, payroll, health care, withholding,
estimated or other similar tax, duty or other governmental charge or assessment
or deficiencies thereof, and including any interest, penalties or additions to
tax attributable to the foregoing.
Tax Return: any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
Technology License Agreement: has the meaning set forth in
Section 1.3(c).
Title Company: has the meaning set forth in Section 6.2(f).
Trademark Consent Agreement: has the meaning set forth in
Section 1.3(d).
Transaction: has the meaning set forth in Section 5.1(g).
Transaction Expenses: has the meaning set forth in Section
10.2.
Transfer Taxes: has the meaning set forth in Section 10.8.
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Transferred Employee: has the meaning set forth in Section
7.1.
Treasury Regulations: the regulations prescribed pursuant to
the Code.
Window Period: has the meaning set forth in Section 5.2(d).
10.2 Expenses. Except to the extent otherwise provided
hereby, Seller, on the one hand, and Buyer, on the other hand, shall bear their
respective expenses, costs and fees (including filing fees (if any) required in
connection with the HSR Act and attorneys', auditors' and financing commitment
fees) in connection with the transactions contemplated hereby, including the
preparation, execution and delivery of this Agreement and compliance herewith
(the "Transaction Expenses"), whether or not the transactions contemplated
hereby shall be consummated.
10.3 Severability. If any provision of this Agreement,
including any phrase, sentence, clause, Section or subsection is inoperative or
unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever.
10.4 Notices. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a)
delivered personally, (b) mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or (c) sent by next-day or overnight
mail or delivery or (d) sent by facsimile transmission or telegram.
(i) if to Buyer, to
L-3 Communications Corporation
600 Third Avenue
New York, NY 10016
Facsimile: 212/805-5494
Attention: Christopher C. Cambria, Esq.
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with a copy to:
Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, NY 10166
Facsimile: 212/351-3131
Attention: James P. Gerkis, Esq.
(ii) if to Seller, to
California Microwave, Inc.
555 Twin Dolphin Drive
Redwood City, California 94065
Attn: George L. Spillane
Facsimile: 650/596-6600
with a copy to:
Richard W. Canady, Esq.
Howard, Rice, Nemerovski, Canady,
Falk & Rabkin
A Professional Corporation
Three Embarcadero Center, 7th Floor
San Francisco, California 94111
Facsimile: 415/399-3041
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (w) if by personal
delivery on the day after such delivery, (x) if by certified or registered
mail, on the seventh business day after the mailing thereof, (y) if by next-day
or overnight mail or delivery, on the day delivered, (z) if by facsimile or
telegram, on the next day following the day on which such facsimile or telegram
was sent, provided that a copy is also sent by certified or registered mail.
10.5 Miscellaneous.
(a) Headings. The headings contained in this
Agreement are for purposes of convenience only and shall not affect the meaning
or interpretation of this Agreement.
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(b) Entire Agreement. This Agreement (including
the Schedules and Exhibits hereto) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
(c) Counterparts. This Agreement may be executed
(including by facsimile transmission) with counterpart signature pages or in
several counterparts, each of which shall be deemed an original and all of
which shall together constitute one and the same instrument.
(d) Governing Law, etc. This Agreement shall be
governed in all respects, including as to validity, interpretation and effect,
by the internal laws of the State of New York without giving effect to the
conflict of laws rules thereof. Buyer and Seller hereby irrevocably submit to
the jurisdiction of the courts of the State of New York, and the Federal courts
of the United States of America located in the Southern District of New York
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and of the documents referred to in this Agreement, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it
is not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may not
be appropriate or that this Agreement or any of such document may not be
enforced in or by said courts, and the parties hereto irrevocably agree that
all claims with respect to such action or proceeding shall be heard and
determined in such a New York State or Federal court. Buyer and Seller hereby
consent to and grant any such court jurisdiction over the person of such
parties and over the subject matter of any such dispute and agree that mailing
of process or other papers in connection with any such action or proceeding in
the manner provided in Section 10.4, or in such other manner as may be
permitted by law, shall be valid and sufficient service thereof.
(e) Bulk Sales. Buyer and Seller hereby waive
compliance by the other with the provisions of the bulk sales laws of any
jurisdiction.
(f) Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and permitted assigns.
(g) Assignment. This Agreement shall not be
assignable or otherwise transferable by any party hereto without the prior
written consent of the other party hereto; provided that from and after the
Closing Buyer shall have the right to assign its rights (but not its
obligations) hereunder.
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(h) No Third Party Beneficiaries. Except as
provided in Section 8.2 with respect to indemnification of Indemnified Parties
hereunder, nothing in this Agreement shall confer any rights upon any person or
entity other than the parties hereto and their respective heirs, successors and
permitted assigns.
(i) Amendment; Waivers, etc. No amendment,
modification or discharge of this Agreement, and no waiver hereunder, shall be
valid or binding unless set forth in writing and duly executed by the party
against whom enforcement of the amendment, modification, discharge or waiver is
sought. Any such waiver shall constitute a waiver only with respect to the
specific matter described in such writing and shall in no way impair the rights
of the party granting such waiver in any other respect or at any other time.
Neither the waiver by any of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure by any of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall be construed
as a waiver of any other breach or default of a similar nature, or as a waiver
of any of such provisions, rights or privileges hereunder.
10.6 Arbitration Procedure.
(a) Buyer and Seller agree that the arbitration
procedure set forth below shall be the sole and exclusive method for resolving
and remedying any and all disputes regarding claims for money damages based
upon, arising out of or in any way connected with this Agreement or the
transactions contemplated herein (the "Disputes"). Nothing in this Section
10.6 shall prohibit a party hereto from instituting litigation to enforce any
Final Determination (as defined below). The parties hereby agree and
acknowledge that, except as otherwise provided in this Section 10.6 or in the
Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, the arbitration procedures and any Final
Determination hereunder shall be governed by and shall be enforced pursuant to
the Uniform Arbitration Act as in effect in the State of New York.
(b) In the event that any party asserts that
there exists a Dispute, such party shall deliver a written notice to each other
party involved therein specifying the nature of the asserted Dispute and
requesting a meeting to attempt to resolve the same. If no such resolution is
reached within 45 days after such delivery of such notice, the party delivering
such notice of Dispute (the "Disputing Person") may, within 75 days after
delivery of such notice, commence arbitration hereunder by delivering to each
other party involved therein a notice of arbitration (a "Notice of
Arbitration") and by filing a copy of such Notice of Arbitration with the New
York City office of the American
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Arbitration Association. Such Notice of Arbitration shall specify the matters
as to which arbitration is sought, the nature of any Dispute, the claims of
each party to the arbitration and the amount and nature of damages or other
relief sought to be recovered as a result of any alleged claim and any other
matters required by the Commercial Arbitration Rules of the American
Arbitration Association as in effect from time to time to be included therein.
(c) Buyer and Seller each shall select one
arbitrator expert in the subject matter of the Dispute (the arbitrators so
selected shall be referred to herein as "Buyer's Arbitrator" and "Seller's
Arbitrator," respectively). In the event that either party fails to select an
arbitrator as set forth herein within 30 days after the delivery of a Notice of
Arbitration, then the matter shall be resolved by the arbitrator selected by
the other party. Seller's Arbitrator and Buyer's Arbitrator shall select a
third independent, neutral arbitrator expert in the subject matter of the
Dispute, and the three arbitrators so selected shall resolve the Dispute
according to the procedures set forth in this Section 10.6. If Seller's
Arbitrator and Buyer's Arbitrator are unable to agree on a third arbitrator
within 20 days after their selection, Seller's Arbitrator and Buyer's
Arbitrator shall each prepare a list of three independent arbitrators.
Seller's Arbitrator and Buyer's Arbitrator shall each have the opportunity to
designate as objectionable and eliminate one arbitrator from the other
arbitrator's list within ten days after submission thereof, and the third
arbitrator shall then be selected by lot from the arbitrators remaining on the
lists submitted by Seller's Arbitrator and Buyer's Arbitrator.
(d) The arbitrators selected pursuant to Section
10.6(c) shall determine the allocation of the costs and expenses of
arbitration.
(e) The arbitration shall be conducted in New
York City, under the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time, except as otherwise set forth
herein or as modified by the agreement of Buyer and Seller. The arbitrators
shall conduct the arbitration such that a final result, determination, finding,
judgment and/or award (the "Final Determination") is made or rendered as soon
as practicable, but in no event later than 120 days after the delivery of the
Notice of Arbitration nor later than ten days following completion of the
arbitration. The Final Determination shall be made in writing, shall state the
basis for such determination and shall be agreed upon and signed by the sole
arbitrator or by at least two of the three arbitrators (as the case may be).
The Final Determination shall be final and binding on all parties, and there
shall be no appeal from or reexamination of the Final Determination, except for
fraud, perjury, evident partiality or misconduct by an arbitrator prejudicing
the rights of any party and to correct manifest clerical errors.
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(f) Buyer and Seller may enforce any Final
Determination in any state or federal court having jurisdiction over the
Dispute. For the purpose of any action or proceeding instituted with respect
to any Final Determination, each party hereto hereby irrevocably submits to the
jurisdiction of such courts, irrevocably consents to the service of process by
registered mail or personal service and hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may have or hereafter
have as to personal jurisdiction, the laying of the venue of any such action or
jurisdiction, the laying of the venue of any such action or proceeding brought
in any such court and any claim that any such action or proceeding brought in
any court has been brought in an inconvenient form.
10.7 Attorneys Fees. In the event any party hereto
initiates any legal action arising out of or in connection with this Agreement,
the prevailing party shall be entitled to recover from the other party all
reasonable attorneys' fees, expert witness fees and expenses incurred by the
prevailing party in connection therewith.
10.8 Liability for Transfer Taxes. Buyer and Seller shall
each be responsible for and pay in a timely manner 50% of all sales (including,
without limitation, bulk sales), use, value added, documentary, stamp, gross
receipts, registration, transfer, conveyance, excise, recording, license and
other similar Taxes and fees ("Transfer Taxes"), arising out of or in
connection with or attributable to the transactions effected pursuant to this
Agreement. Each party hereto shall prepare and timely file all Tax Returns
required to be filed in respect of Transfer Taxes (including, without
limitation, all notices required to be given with respect to bulk sales taxes)
that are the primary responsibility of such party under applicable law;
provided, however, that such party's
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preparation of any such Tax Returns shall be subject to the other party's
approval, which approval shall not be withheld or delayed unreasonably.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
L-3 COMMUNICATIONS CORPORATION
By:_____________________________________
Name: Robert Mehmel
Title: Vice President
CALIFORNIA MICROWAVE, INC.
By:_____________________________________
Name: George L. Spillane
Title: Vice President and Secretary
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EXHIBIT A
CROSS-LICENSE AGREEMENT
CROSS-LICENSE AGREEMENT dated as of _________________, 1998 (this
"Agreement"), between L-3 Communications Corporation, a Delaware corporation
("L-3"), and California Microwave, Inc., a Delaware corporation ("CMI").
RECITALS
WHEREAS, L-3 and CMI have entered into that certain Asset Purchase
Agreement dated as of December 19, 1997 (the "Purchase Agreement"), in
connection with the sale and purchase of the Assets (as defined below) of the
Satellite Transmission System Division of CMI (the "STS Division"), which sale
and purchase has closed or is closing effective as of the date hereof (the
"Closing Date") simultaneously with the execution and delivery of this
Agreement; and
WHEREAS, effective as of the Closing Date the parties hereto and their
respective Subsidiaries currently own or have licenses to use various
intellectual property rights heretofore used primarily (in some circumstances)
and not primarily (in other circumstances) in connection with the Business (as
defined below) of the STS Division; and
WHEREAS, the parties hereto have determined that this Agreement is
appropriate in order to effectuate the purposes of the Purchase Agreement as
described therein, and in order to promote a clear understanding of their
respective intellectual property rights subsequent to the Closing Date;
NOW, THEREFORE, in consideration of the mutual agreements, undertakings
and covenants herein and therein, the sufficiency and receipt of which hereby
are acknowledged, the parties hereby agree as follows:
ARTICLE I. DEFINITIONS.
Section 1.01 General. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
<PAGE>
"Affiliate" shall have the meaning set forth in the Purchase Agreement.
"Agreement" shall have the meaning specified in the first paragraph
hereof.
"Assets" shall have the meaning set forth in the Purchase Agreement.
"Business" shall have the meaning set forth in the Purchase Agreement.
"Closing" shall have the meaning set forth in the Purchase Agreement.
"Closing Date" shall have the meaning specified in the recitals to this
Agreement.
"CMI Intellectual Property" shall have the meaning specified in Section
2.02.
"Intellectual Property" shall have the meaning set forth in the Purchase
Agreement. Notwithstanding the foregoing and for the purposes of this Agreement
only, Intellectual Property shall not include: (a) Intellectual Property
relating to the GMACS software or to the Universal System Controller; (b) the
U.S. patent application serial number No. 08/815,593 filed March 12, 1997
entitled "Wireless Communications Systems Having Fixed and Dynamically Assigned
Links" and any right in or to the invention subject thereof throughout the
world; or (c) any trademarks, service marks, trade names, trade dress, logos,
business and product names, slogans, registrations and applications for
registration in respect of any of the intellectual property referred to in
either clause (a) or clause (b) above.
"L-3 Intellectual Property" shall have the meaning specified in Section
2.01.
"Notice" shall have the meaning specified in Section 10.03.
"Purchase Agreement" shall have the meaning specified in the recitals to
this Agreement.
"STS Division" shall have the meaning specified in the recitals to this
Agreement.
"Subsidiary", shall have the meaning set forth in the Purchase Agreement.
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"Term" shall have the meaning specified in Section 8.01.
ARTICLE II. OWNERSHIP OF INTELLECTUAL PROPERTY ASSETS.
Section 2.01. The parties agree that, as a result of the Closing under the
Purchase Agreement, L-3 and its Subsidiaries will acquire and own all right,
title and interest, including the right to sue and collect past and future
damages, in any Intellectual Property which relates primarily to the Business
(the "L-3 Intellectual Property").
Section 2.02. The parties agree that, as a result of the Closing under the
Purchase Agreement CMI and its Subsidiaries own all right, title and interest,
including the right to sue and collect past and future damages, in any
Intellectual Property which is being used as of the Closing Date in the
operation of the Business but does not constitute Intellectual Property that
relates primarily to the Business (the "CMI Intellectual Property").
Section 2.03. The confirmation of ownership of the Intellectual Property
rights provided for under Sections 2.01 and 2.02 is subject to all pre-existing
third party rights, obligations and restrictions as of the Closing Date.
ARTICLE III. INTELLECTUAL PROPERTY LICENSES.
Section 3.01. L-3, on behalf of itself and its Subsidiaries, hereby grants
as of the Closing Date to CMI and its Subsidiaries a non-assignable, worldwide,
fully paid-up, non-exclusive license for the duration of the Term, including the
right to grant sublicenses (but such sublicenses may be granted only to
Subsidiaries, contractors for whom Licensee is acting as a subcontractor (who
will also have the right to sub-license to end-user customers) and end-user
customers of Licensee), under the L-3 Intellectual Property, to manufacture,
have manufactured, use, offer to sell, and sell, lease, license or otherwise
transfer any and all methods, apparatus, processes, compositions and products,
and offer and provide any services, in each case in connection with all fields
of activity other than the fields of activity of the Business of L-3. Any
sublicense permitted hereunder shall not extend beyond the Term.
Section 3.02. CMI, on behalf of itself and its Subsidiaries, hereby grants
as of the Closing Date to L-3 and its Subsidiaries a non-assignable, worldwide,
fully paid-up, non-exclusive license for the duration of the Term, including the
right to grant sublicenses (but such
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sublicenses may be granted only to Subsidiaries, contractors for whom Licensee
is acting as a subcontractor (who will also have the right to sub-license to
end-user customers) and end-user customers of Licensee), under the CMI
Intellectual Property, to manufacture, have manufactured, use, offer to sell,
and sell, lease, license or otherwise transfer any and all methods, apparatus,
processes, compositions and products, and offer and provide any services, in
each case in connection with all fields of activity other than the fields of
activity of the business of CMI. Any sublicense permitted hereunder shall not
extend beyond the Term.
Section 3.03. The rights granted by the parties under Sections 3.01 and
3.02 are subject to all pre-existing third party rights, obligations and
restrictions as of the Closing Date.
Section 3.04. Each of the parties hereto understands and agrees that,
except as otherwise expressly provided, no party hereto is in this Agreement
making any representation or warranty whatsoever, including, without limitation,
as to title, value or legal sufficiency. The foregoing provisions of this
Section shall not, however, limit, modify or impact in any manner whatsoever any
of the representations and warranties of CMI or L-3 in the Purchase Agreement,
all of which shall remain unaffected hereby.
Section 3.05. The rights granted by the parties under Sections 3.01 and
3.02 are limited to the Intellectual Property owned by the parties as of the
Closing Date and do not include any intellectual property rights that are
acquired or come into existence thereafter.
Section 3.06. Except as may be specifically provided for in this Agreement
or the Purchase Agreement, the parties agree that no party shall be obligated to
provide any technical assistance, or to transfer any technical information or
documentation associated therewith, to any other party.
ARTICLE IV. UNDERTAKINGS.
Section 4.01. To the extent that the grants of Intellectual Property
rights and licenses under Article III herein would violate or be prohibited by
any agreement with a third party, and such Intellectual Property actually is
used by the grantee party, then the granting party undertakes to use reasonable
efforts to obtain the necessary consent(s) from such third party so as to be
permitted to make such grants. However, each party hereto understands and agrees
that no party hereto is, in this Agreement
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representing or warranting in any way that the obtaining of any consents or
approvals, the execution and delivery of any amendatory agreements and the
making of any filings or applications, possibly contemplated by this Agreement
will satisfy the provisions of any and all applicable agreements or the
requirements of any or all applicable laws or judgments. The foregoing
provisions of this Section shall not, however limit, modify or impact in any
manner whatsoever any of the representations and warranties of CMI or L-3 in the
Purchase Agreement, all of which shall remain unaffected hereby.
Section 4.02. To the extent a party or its Subsidiaries shall require
technical assistance in connection with technology, technical information or
software transferred or licensed from another party, then that technical
assistance may be provided (but shall not be required to be provided), if at
all, pursuant to a separate agreement entered into by the parties pursuant to
terms and conditions agreed to by the parties.
ARTICLE V. CONFIDENTIALITY.
From and after the Closing Date, each party will, and will cause its
Subsidiaries to, hold in strict confidence, and will not use to the detriment of
the other party or any of such party's Subsidiaries, all information that is
licensed pursuant to this Agreement; provided, however, that either party may
disclose any of such information to third parties performing services on behalf
of the disclosing party who have a need to know such information in order to
perform such services and have agreed in writing to maintain the same
confidential. Also, each party may disclose such information to contractors or
end user customers of such party who have a need to know such information and
have agreed in writing to maintain the confidentiality of the same or, in the
case of any such disclosure to the U.S. government, if such party has taken all
reasonable steps to maintain the confidentiality of the same. Notwithstanding
the foregoing, either party may disclose such information (i) by judicial or
administrative process or by other requirements of law, (ii) if the same
hereafter is in the public domain through no fault of such party, or (iii) if
the same is later acquired by such party from another source and the other party
is not aware that such source is under an obligation to another Person to keep
such information confidential.
ARTICLE VI. INFRINGEMENT.
Section 6.01. If L-3 determines that a person or entity is infringing on
or unlawfully using CMI Intellectual
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Property, L-3 shall notify CMI. CMI, in its sole discretion, may take all
necessary action, including, without limitation, filing suit and enjoining the
alleged infringement, at CMI's sole expense; and CMI, as a result thereof, shall
retain all damages and other compensation received as a result of taking such
actions against such infringement. L-3 shall not take any action in connection
with such infringement or unlawful use (including without limitation any action
to settle or compromise any such claim, action or proceeding).
Section 6.02. If CMI determines that a person or entity is infringing on
or unlawfully using L-3 Intellectual Property, CMI shall notify L-3. L-3, in its
sole discretion, may take all necessary action, including, without limitation,
filing suit and enjoining the alleged infringement, at L-3's sole expense; and
L-3, as a result thereof, shall retain all damages and other compensation
received as a result of taking such actions against such infringement. CMI shall
not take any action in connection with such infringement or unlawful use
(including without limitation any action to settle or compromise any such claim,
action or proceeding).
ARTICLE VII. INDEMNITY.
Section 7.01. L-3 agrees to indemnify and hold CMI, its Affiliates and
their respective officers, directors, employees and agents, harmless from and
against any damages, liabilities, losses and expenses arising out of any claim
by any third party, including, without limitation, reasonable attorneys' fees
and amounts paid in settlement of any claim, of any kind or nature whatsoever,
which may be sustained or suffered as a result of any use by L-3 of CMI
Intellectual Property.
Section 7.02. CMI agrees to indemnify and hold L-3, its Affiliates and
their respective officers, directors, employees and agents, harmless from and
against any damages, liabilities, losses and expenses arising out of any claim
by any third party, including, without limitation, reasonable attorneys' fees
and amounts paid in settlement of any claim, of any kind or nature whatsoever,
which may be sustained or suffered as a result of any use by CMI of L-3
Intellectual Property.
ARTICLE VIII. TERM AND TERMINATION.
Section 8.01. This Agreement shall commence on the Closing Date and shall
continue for a period of one year thereafter unless sooner terminated as
provided herein (the "Term").
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Section 8.02. This Agreement may be terminated by any party with respect
to the other party upon written notice to the other party if the other party
fails to perform or otherwise breaches in any material respect an obligation
under this Agreement; provided, however, that such party failing to perform or
otherwise breaching shall have 30 days from the date notice of intention to
terminate is received to cure the failure to perform or breach of an obligation.
Section 8.03. This Agreement shall terminate automatically without action
by either party if any party shall cease or threaten to cease paying its debts
when due in the ordinary course or to carry on its business, become insolvent,
propose a compromise or arrangement with its creditors or otherwise take
advantage of any law for the relief of debtors, a receiver is appointed for any
of the other party's assets or any step or proceeding is taken to have the other
party declared bankrupt or be liquidated, dissolved, wound up or reorganized.
Section 8.04. Termination under this Section 8 will be effected by notice
given by the terminating party to the other party, except with respect to a
situation described in Section 8.03 where no notice shall be required.
Section 8.05. Any termination of this Agreement shall not affect any of
the rights of either party hereto which shall have arisen prior to such
termination.
Section 8.06. Upon termination or expiration of this Agreement, (a) each
party's rights with respect to use of the other party's Intellectual Property in
any way shall be as if this Agreement had not been entered into, and (b) each
party shall cease using the other party's Intellectual Property immediately in
any way.
ARTICLE IX. MISCELLANEOUS.
Section 9.01. Entire Agreement. This Agreement, together with the Purchase
Agreement, constitutes the entire agreement and understanding between and among
the parties with respect to the subject matter hereof and shall supersede any
prior agreements and understandings among the parties with respect to such
subject matter.
Section 9.02. Counterparts. This Agreement may be executed with
counterpart signature pages or in one or more counterparts, all of which shall
be one and the same Agreement, and shall become effective when one or more
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counterparts have been signed by each of the parties and delivered to all the
parties.
Section 9.03. Notices. All notices, consents, requests, waivers or other
communications required or permitted under this Agreement (each a "Notice")
shall be in writing and shall be sufficiently given (a) if hand delivered or
sent by telecopy, (b) if sent by nationally recognized overnight courier, or (c)
if sent by registered or certified mail, postage prepaid, return receipt
requested, and in each case addressed as follows:
If to L-3:
L-3 Communications Corporation
600 Third Avenue
New York, NY 10016
Attention: Christopher C. Cambria, Esq.
with a copy to:
Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, NY 10166
Attention: James P. Gerkis, Esq.
If to CMI:
California Microwave, Inc.
555 Twin Dolphin Drive
Redwood City, California 94065
Attn: George L. Spillane
with a copy to:
Richard W. Canady, Esq.
Howard, Rice, Nemerovski, Canady,
Falk & Rabkin
A Professional Corporation
Three Embarcadero Center, 7th Floor
San Francisco, California 94111
or such other address as shall be furnished by any of the parties in a Notice.
Any Notice shall be deemed given upon receipt.
Section 9.04. Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish the other party's right to demand strict performance thereafter of
that or any other provision hereof.
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Section 9.05. Amendments. This Agreement may be amended, supplemented or
waived only by a subsequent writing signed by each of the parties.
Section 9.06. Assignment. This Agreement may not be assigned by any party
without the consent of the other parties.
Section 9.07. Successors and Assigns. All terms and conditions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the successors and permitted assigns of the parties.
Section 9.08. Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary of such party or
by any entity that becomes a Subsidiary of such party on and after the Closing
Date.
Section 9.09. Third Party Beneficiaries. Except with respect to
indemnified parties referred to in Article VII, each party intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
Section 9.10. Specific Performance. Each of the parties hereto
acknowledges that there is no adequate remedy at law for failure by such parties
to comply with the provisions of this Agreement and that such failure would
cause immediate harm that would not be adequately compensable in damages, and
therefore agree that in the event of a breach or threatened breach of any
provision of this Agreement by either party, the other party, may, in addition
to all other remedies, immediately obtain and enforce injunctive relief
prohibiting the breach or compelling specific performance without the
requirement of posting a bond or other security, in addition to all other
remedies available to the parties hereto under this Agreement.
Section 9.11. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER.
Section 9.12. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to
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which it has been held invalid or unenforceable, shall remain in full force and
effect and in no way be affected, impaired or invalidated thereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
L-3 COMMUNICATIONS CORPORATION
By:
--------------------------------
Name:
Title:
CALIFORNIA MICROWAVE, INC.
By:
--------------------------------
Name:
Title:
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EXHIBIT B
TECHNOLOGY LICENSE AGREEMENT
TECHNOLOGY LICENSE AGREEMENT dated as of ___________, 1998 (this
"Agreement"), between L-3 Communications Corporation, a Delaware corporation
("Licensor"), and California Microwave, Inc., a Delaware corporation
("Licensee").
RECITALS
WHEREAS, Licensor and Licensee have entered into that certain Asset
Purchase Agreement dated as of December 19, 1997 (the "Asset Purchase
Agreement"), in connection with the sale and purchase of certain assets of the
Satellite Transmission System Division of Licensee (the "STS Division"), which
sale and purchase has closed or is closing as of the date hereof (the "Closing
Date") simultaneously with the execution and delivery of this Agreement; and
WHEREAS, Licensor wishes to grant to Licensee a license to the Software,
the Patent Application and the USC (each as defined below), on the terms and
conditions hereof; and
WHEREAS, Licensee wishes to acquire a license from Licensor to the
Software, the Patent Application and the USC on the terms and conditions hereof;
NOW, THEREFORE, in consideration of the mutual agreements, undertakings
and covenants herein and therein, the receipt and sufficiency of which hereby
are acknowledged, the parties hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. General. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Field of Use" shall mean use in satellite earth stations contracted for
by the United States Government.
"Patent Application" shall mean U.S. patent application serial number No.
08/815,593 filed March 12, 1997 entitled "Wireless Communications System Having
Fixed and Dynamically Assigned Links" and any United States
<PAGE>
patents issued pursuant to such patent application, including any additions,
divisions, reissues, continuations or continuations in part, renewals and
extensions thereof.
"Person" shall mean any natural person, firm, partnership, association,
corporation, company, trust, business trust, governmental authority or other
entity.
"Software" shall mean the current version of the GMACS software (GMACS 16)
and related know-how, including source code, object code and associated
documentation as distributed by Licensee to its customers on or prior to the
Closing Date, and the current version of any software and related know-how,
including source code, object code and associated documentation, incorporated in
the USC as distributed by Licensee to its customers on or prior to the Closing
Date.
"Subsidiary" shall mean each corporation or other Person in which Licensee
owns or controls, directly or indirectly, capital stock or other equity
interests representing at least 50% of the outstanding voting stock or other
equity interests.
"USC" shall mean the Universal Systems Controller product as distributed
by Licensee to its customers on or prior to the Closing Date, but excluding any
and all software incorporated therein.
ARTICLE II. LICENSE
Section 2.01. Subject to the terms and conditions of this Agreement,
Licensor hereby grants to Licensee a non-exclusive, worldwide, perpetual, fully
paid-up, nonterminable right and license under any and all patents, copyrights,
trade secrets, know-how, and any and all other intellectual property and
proprietary rights (i) to copy, support and use the Software within Licensee and
its Subsidiaries only (as well as new versions thereof created pursuant to
Article IV) in the Field of Use, as well as any documentation relating thereto,
and (ii) except for the Software as incorporated in the USC, to make, have made,
use, sell, license, lease or otherwise transfer the USC (as well as improvements
thereto made under Article IV) in the Field of Use. In addition to the
foregoing, and subject to the terms and conditions of this Agreement, Licensor
hereby grants to licensee a non-exclusive, worldwide, perpetual, fully paid-up,
nonterminable, right and license within the Field of Use under any and all
patents, copyrights, trade secrets, know-how, and any and all other intellectual
property and proprietary rights (x) to sublicense third parties to use object
code versions of the Software and documentation concerning the use thereof, and
(y) to
<PAGE>
sublicense the source code for the Software for internal use by sublicensee and
to the extent necessary to enable Licensee or its sublicensee to fulfill its
contractual obligations to the U.S. Government in accordance with ordinary and
reasonable U.S. Government contracting practices, subject, inter alia, to the
restrictions of Article III hereof. Any sublicensee must impose such terms and
conditions as Licensor may reasonably specify for protecting its rights in and
to the Software, the USC and the Patent Application and shall not be in conflict
with this Agreement. Any such sublicense shall be personal to and
non-transferable by, the sublicensee.
Section 2.02. Pursuant to the license hereunder, and subject, inter alia,
to Article III hereof, Licensee, as well as any third party working for or on
behalf thereof or permitted sublicensee, may use the Software on any computers,
at any location, by any number of users, and on any number of computers at any
time.
Section 2.03. Subject to the terms and conditions of this Agreement,
(including but not limited to Section 2.05 hereof) Licensor hereby grants to
Licensee a non-exclusive, perpetual, fully paid-up, non-terminable right and
license under the Patent Application to make, have made, use, sell, license,
lease or otherwise transfer products covered thereby.
Section 2.04. Licensee shall make no use of the Software or the USC,
except as expressly permitted by the licenses granted under this Agreement.
Section 2.05. None of the rights and licenses granted hereunder to
Licensee shall be used in contravention of or to avoid full compliance with the
provisions of Section 5.1(f) of the Asset Purchase Agreement.
Section 2.06. Licensor extends no right or license under any of its
intellectual property or in or to any of its products, services or assets except
to the extent as expressly set forth in (a) this Agreement, (b) the
Cross-License Agreement of even date herewith between Licensor and Licensee, and
(c) the Trademark License Agreement of even date herewith between Licensor and
Licensee.
Section 2.07. If Licensee determines that a person or entity is infringing
or unlawfully using any intellectual property relating to the Software, the USC
or the Patent Application, Licensee shall notify Licensor. Licensor, in its sole
discretion, may take all necessary action, including, without limitation, filing
suit and enjoining the alleged infringement, at Licensor's sole expense; and
Licensor, as a result thereof, shall retain all
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damages and other compensation received as a result of taking such actions
against such infringement. Licensee shall not take any action in connection with
such infringement or unlawful use (including without limitation any action to
settle or compromise any such claim, action or proceeding).
ARTICLE III. NONDISCLOSURE
Licensee shall maintain the source code for the Software confidential, and
shall not disclose such source code to any third party except (i) for third
parties performing services on behalf of Licensee who have a need to know such
source code in order to perform such services and have agreed in writing to
maintain the same confidential, (ii) for contractors with respect to which
Licensee is acting as subcontractor who have a need to know such source code in
order to perform services for the U.S. Government and have agreed in writing to
maintain the confidentiality of the same, (iii) for the U.S. Government, as may
be required by U.S. government procurement regulations so long as Licensee takes
all reasonable steps to maintain the confidentiality of the same or (iv) as may
be required under software escrow arrangements required by such contractors or
the U.S. Government so long as Licensee takes all reasonable steps to maintain
the confidentiality of the same.
ARTICLE IV. RIGHT TO MODIFY THE SOFTWARE AND USC
Subject to the terms and conditions of this Agreement, Licensee shall have
the right within the Field of Use, in its sole discretion, either by itself or
by a third party, to make improvements to the USC, and to create new versions of
the Software. Any such improvements to the USC and any such new versions of the
Software made by Licensee after the execution of this Agreement shall be owned
exclusively by Licensee, and Licensor shall have no right therein.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
Neither party makes any representations or warranties under this
Agreement, whether express or implied, except for those representations and
warranties made in the Asset Purchase Agreement which are incorporated herein by
reference in their entirety.
ARTICLE VI. GMACS AND USC TRADEMARKS
Licensee acknowledges that Licensor is the sole owner of the GMACS and USC
trademarks throughout the world and shall make no use thereof or of any
trademark, trade name, service mark or other designation confusingly similar
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thereto anywhere in the world, except as expressly provided in the Trademark
License Agreement entered into between Licensor and Licensee concurrently
herewith.
ARTICLE VII. INDEPENDENT CONTRACTORS
The parties hereto are acting as independent contractors in connection
with this Agreement and nothing herein shall be deemed to cause this Agreement
to create an agency, partnership or joint venture between the parties.
ARTICLE VIII. INDEMNIFICATION
Licensee acknowledges that the Software, the USC and the invention that is
the subject of the Patent Application were designed and developed by its STS
Division prior to the Closing Date. Licensee agrees to indemnify and hold
Licensor, its Affiliates and their respective officers, directors, employees and
agents, harmless from and against any damages, liabilities, losses and expenses,
(including, without limitation, reasonable attorneys' fees) and amounts paid in
settlement of any claim, of any kind or nature whatsoever, which may be
sustained or suffered as a result of any cause of action, claim, demand, suit or
proceeding asserted by Licensee or any third party that relates to or arises
from any manufacture, use, sale, lease, license or other transfer by Licensee,
any Affiliate or sublicensee of Licensee or any transferee from Licensee, such
Affiliate or such sublicensee, of the USC, the Software or any product or method
relating to the Patent Application (including, without limitation, processing,
packaging, distribution, or advertising of any thereof).
ARTICLE IX. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement and understanding between
and among the parties with respect to the subject matter hereof and shall
supersede any prior agreements and understandings, whether written or oral,
among the parties with respect to such subject matter.
ARTICLE X. COUNTERPARTS
This Agreement may be executed with counterpart signature pages or in one
or more counterparts, all of which shall be one and the same Agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to all the parties.
ARTICLE XI. NOTICES
All notices, consents, requests, waivers or other communications required
or permitted under this Agreement
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(each a "Notice") shall be in writing and shall be sufficiently given (a) if
hand delivered or sent by telecopy, (b) if sent by nationally recognized
overnight courier, or (c) if sent by registered or certified mail, postage
prepaid, return receipt requested, and in each case addressed as follows:
If to Licensor:
L-3 Communications Corporation
600 Third Avenue
New York, NY 10016
Attention: Christopher C. Cambria, Esq.
with a copy to:
Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, NY 10166
Attention: James P. Gerkis, Esq.
If to Licensee:
California Microwave, Inc.
555 Twin Dolphin Drive
Redwood City, California 94065
Attn: George L. Spillane
with a copy to:
Richard W. Canady, Esq.
Howard, Rice, Nemerovski, Canady,
Falk & Rabkin
A Professional Corporation
Three Embarcadero Center, 7th Floor
San Francisco, California 94111
or such other address as shall be furnished by any of the parties in a Notice.
Any Notice shall be deemed given upon receipt.
ARTICLE XII. WAIVERS
The failure of any party to require strict performance by any other party
of any provision in this Agreement will not waive or diminish the first party's
right to demand strict performance thereafter of that or any other provision
hereof.
ARTICLE XIII. AMENDMENTS
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This Agreement may be amended, supplemented or waived only by a subsequent
writing signed by each of the parties.
ARTICLE XIV. HEADINGS
Headings used in this Agreement are for reference purposes only and shall
not be deemed a part of this Agreement.
ARTICLE XV. SUCCESSORS AND ASSIGNS
All terms and conditions of this Agreement shall be binding upon and inure
to the benefit of and be enforceable by the successors and assigns of the
parties.
ARTICLE XVI. THIRD PARTY BENEFICIARIES
Each party intends that this Agreement shall not benefit or create any
right or cause of action in or on behalf of any person other than the parties
hereto.
ARTICLE XVII. SPECIFIC PERFORMANCE
Each of the parties hereto acknowledges that there is no adequate remedy
at law for failure by such parties to comply with the provisions of this
Agreement and that such failure would cause immediate harm that would not be
adequately compensable in damages, and therefore agree that, in the event of a
breach or threatened breach of any provision of this Agreement by either party,
the other party, may, in addition to all other remedies, immediately obtain and
enforce injunctive relief prohibiting the breach or compelling specific
performance without the requirement of posting a bond or other security, in
addition to all other remedies available to the parties hereto under this
Agreement.
ARTICLE XVIII. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER.
ARTICLE XIX. SEVERABILITY
If any provision of this Agreement or the application thereof to any
person or circumstance is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as to
which it has been held
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invalid or unenforceable, shall remain in full force and effect and in no way be
affected, impaired or invalidated thereby.
ARTICLE XX. ASSIGNMENT
Licensee may not assign this Agreement or any of the licenses granted
hereby without the prior written consent of Licensor; provided, however, that,
in case of any partial assignment of this Agreement relating solely to GMACS or
the USC, such consent shall not be unreasonably withheld. Licensor may assign
this Agreement to any person in Licensor's sole discretion.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
L-3 COMMUNICATIONS CORPORATION
By:
--------------------------------
Name:
Title:
CALIFORNIA MICROWAVE, INC.
By:
--------------------------------
Name:
Title:
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EXHIBIT C
TRADEMARK LICENSE AGREEMENT
Trademark License Agreement dated as of _________, 1998 (this
"Agreement"), between L-3 Communications Corporation, a Delaware corporation
("Licensor"), and California Microwave, Inc., a Delaware corporation
("Licensee").
RECITALS
WHEREAS, Licensee and Licensor have entered into that certain Asset
Purchase Agreement dated as of December 19, 1997 (the "Purchase Agreement"), in
connection with the sale and purchase of certain assets of the Satellite
Transmission System Division of Licensor (the "STS Division"), which sale and
purchase has closed or is closing as of the date hereof (the "Closing Date")
simultaneously with the execution and delivery of this Agreement;
WHEREAS, the STS Division has for many years used the trademark GMACS in
connection with the GMACS Product (as defined below);
WHEREAS, the STS Division has for many years used the trademark USC in
connection with the USC Product (as defined below);
WHEREAS, the Government Electronics Division of Licensee has distributed
the GMACS Product and the USC Product for use in satellite earth stations
contracted for by the United States Government (the "CMI Market");
WHEREAS, Licensee wishes to use the mark GMACS within the CMI Market from
and after the Closing Date for a reasonable period of time to permit a
transition to a replacement mark which does not include the formative GMACS; and
WHEREAS, Licensee wishes to use the mark USC within the CMI Market from
and after the Closing Date for a reasonable period of time to permit a
transition to a replacement mark which does not include the formative USC;
NOW, THEREFORE, in consideration of the mutual agreements, undertakings
and covenants herein and therein, and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereby
agree as follows:
<PAGE>
ARTICLE I. DEFINITIONS
Section 1.01. General. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Affiliate" shall have the meaning set forth in the Purchase Agreement.
"Agreement" shall have the meaning set forth in the first paragraph
hereof.
"Closing Date" shall have the meaning specified in the recitals to this
Agreement.
"CMI Market" shall have the meaning set forth in the recitals to this
Agreement.
"GMACS Product" shall mean the current version of GMACS (GMACS 16)
software as distributed by Licensee to its customers on or before the Closing
Date.
"Notice" shall have the meaning specified in Section 10.03.
"Purchase Agreement" shall have the meaning specified in the recitals to
this Agreement.
"STS Division" shall have the meaning specified in the recitals to this
Agreement.
"Trademarks" shall mean the GMACS and USC trademarks.
"USC Product" shall mean the Universal Systems Controller product as
distributed by Licensee to its customers on or before the Closing Date.
ARTICLE II. LICENSE
Section 2.01. Licensor hereby grants to Licensee, on the terms and
conditions set forth herein, a non-exclusive, worldwide, fully-paid-up license
(a) to use the trademark GMACS in connection with the promotion and distribution
of the GMACS Product, and (b) to use the trademark USC in connection with the
promotion and distribution of the USC Product.
Section 2.02. Licensee and its Affiliates shall not use, and shall not
permit the use of any Trademark outside the CMI Market.
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Section 2.03. Licensee shall only use the Trademarks in connection with
products adhering to Licensor's quality standards, which may be modified by
Licensor from time to time in its sole discretion. Licensee shall only use the
Trademarks in a manner as approved by Licensor, which may be modified by
Licensor from time to time in its sole discretion. Licensee recognizes the high
reputation of the GMACS Product and the USC Product and that it is essential to
Licensor's interests that Licensor's quality standards be maintained at all
times.
Section 2.04. Licensee will use the Trademarks strictly in compliance with
applicable legal requirements and will use such markings in connection therewith
as may be required for such compliance.
Section 2.05. Licensor may terminate this Agreement due to a material
breach by Licensee. For purposes of this Agreement, "material breach" by
Licensee shall include but shall not be limited to (a) any failure to observe
Licensor's quality standards, and (b) any use of the Trademarks other than a use
approved by Licensor.
Section 2.06. (a) Within a reasonable period of time following the Closing
Date (and in any event by thirty (30) days thereafter), Licensee will adopt a
mark not including the formative GMACS or any word or symbol confusingly similar
thereto to replace the GMACS mark. Notwithstanding the foregoing, neither
Licensee nor any Affiliate thereof shall use or permit the use of the GMACS mark
or of any trademark, service mark or trade name including the formative GMACS or
any word or symbol confusingly similar thereto anywhere in the world after the
date that is 180 days after the Closing Date.
(b) Within a reasonable period of time following the Closing Date,
(and in any event by thirty (30) days thereafter), Licensee will adopt a mark
not including the formative USC or any word or symbol confusingly similar
thereto to replace the USC mark. Notwithstanding the foregoing, neither Licensee
nor any Affiliate thereof shall use or permit the use of the USC mark or of any
trademark, service mark or trade name including the formative USC or any word or
symbol confusingly similar thereto anywhere in the world after the date that is
180 days after the Closing Date.
Section 2.07. The parties agree that, subject to the rights of Licensee
hereunder, the GMACS and USC trademarks are and shall be owned exclusively by
Licensor and Licensee will execute and deliver such instruments of title as
Licensor may request to confirm such ownership by Licensor. Any and all use of
the Trademarks by Licensee shall inure to the benefit of Licensor.
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Section 2.08. None of the rights and licenses granted hereunder to
Licensee shall be used in contravention of or to avoid full compliance with the
provisions of Section 5.1(f) of the Purchase Agreement.
Section 2.09. If Licensee determines that a person or entity is infringing
or unlawfully using the GMACS mark, the USC mark or any trademark, service mark
or trade name confusingly similar thereto, Licensee shall notify Licensor.
Licensor, in its sole discretion, may take all necessary action, including,
without limitation, filing suit and enjoining the alleged infringement, at
Licensor's sole expense; and Licensor, as a result thereof, shall retain all
damages and other compensation received as a result of taking such actions
against such infringement. Licensee shall not take any action in connection with
such infringement or unlawful use (including without limitation any action to
settle or compromise any such claim, action or proceeding).
Section 2.10. Neither party makes any representations or warranties under
this Agreement (it being understood and agreed that any representations and
warranties relating to the subject matter of this Agreement are made in the
Purchase Agreement).
ARTICLE III. INDEMNIFICATION
Licensee acknowledges that the GMACS Product and the USC Product were
designed and developed by its STS Division prior to the Closing Date. Licensee
agrees to indemnify and hold Licensor, and its officers, directors, affiliates,
employees and agents, harmless from and against any damages, liabilities, losses
and expenses, (including, without limitation, reasonable attorneys' fees) and
amounts paid in settlement of any claim, of any kind or nature whatsoever, which
may be sustained or suffered as a result of any use by Licensee of the
Trademarks (including, without limitation, whether by manufacturing, processing,
packaging, distribution, sale or advertising)
ARTICLE IV. MISCELLANEOUS
Section 4.01. Entire Agreement. This Agreement, together with the Purchase
Agreement, constitutes the entire agreement and understanding between and among
the parties with respect to the subject matter hereof and shall supersede any
prior agreements and understandings among the parties with respect to such
subject matter.
Section 4.02. Counterparts. This Agreement may be executed with
counterpart signature pages or in one or more counterparts, all of which shall
be one and the same Agreement, and shall become effective when one or more
counterparts have
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been signed by each of the parties and delivered to all the parties.
Section 4.03. Notices. All notices, consents, requests, waivers or other
communications required or permitted under this Agreement (each a "Notice")
shall be in writing and shall be sufficiently given (a) if hand delivered or
sent by telecopy, (b) if sent by nationally recognized overnight courier, or (c)
if sent by registered or certified mail, postage prepaid, return receipt
requested, and in each case addressed as follows:
If to Licensor:
L-3 Communications Corporation
600 Third Avenue
New York, NY 10016
Attention: Christopher C. Cambria, Esq.
with a copy to:
Whitman Breed Abbott & Morgan LLP
200 Park Avenue
New York, NY 10166
Attention: James P. Gerkis, Esq.
If to Licensee:
California Microwave, Inc.
555 Twin Dolphin Drive
Redwood City, California 94065
Attn: George L. Spillane
with a copy to:
Richard W. Canady, Esq.
Howard, Rice, Nemerovski, Canady,
Falk & Rabkin
A Professional Corporation
Three Embarcadero Center, 7th Floor
San Francisco, California 94111
or such other address as shall be furnished by any of the parties in a Notice.
Any Notice shall be deemed given upon receipt.
Section 4.04. Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not waive
or diminish the other party's right to demand strict performance thereafter of
that or any other provision hereof.
Section 4.05. Amendments. This Agreement may be amended, supplemented or
waived only by a subsequent writing signed by each of the parties.
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Section 4.06. Successors and Assigns. All terms and conditions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the successors and permitted assigns of the parties.
Section 4.07. Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary of such party or
by any entity that becomes a Subsidiary of such party on and after the Closing
Date.
Section 4.08. Third Party Beneficiaries. Each party intends that this
Agreement shall not benefit or create any right or cause of action in or on
behalf of any person other than the parties hereto.
Section 4.09. Specific Performance. Each of the parties hereto
acknowledges that there is no adequate remedy at law for failure by such parties
to comply with the provisions of this Agreement and that such failure would
cause immediate harm that would not be adequately compensable in damages, and
therefore agree that in the event of a breach or threatened breach of any
provision of this Agreement by either party, the other party, may, in addition
to all other remedies, immediately obtain and enforce injunctive relief
prohibiting the breach or compelling specific performance without the
requirement of posting a bond or other security, in addition to all other
remedies available to the parties hereto under this Agreement.
Section 4.10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER.
Section 4.11. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and in no way be affected,
impaired or invalidated thereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
L-3 COMMUNICATIONS CORPORATION
By:
--------------------------------
Name:
Title:
CALIFORNIA MICROWAVE, INC.
By:
--------------------------------
Name:
Title:
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EXHIBIT D
STS SUPPLY AGREEMENT
THIS STS SUPPLY AGREEMENT (this "Agreement") is dated ____________ __,
1998 and is entered into between California Microwave, Inc., a Delaware
corporation ("CMI"), and L-3 Communications Corporation, a Delaware corporation
("L-3").
RECITALS
A. CMI and L-3 have entered into an asset purchase agreement dated as of
December 19, 1997 (the "Purchase Agreement") with respect to the acquisition by
L-3 from CMI of certain assets of the business of designing, integrating and
installing satellite communications systems in the United States and certain
other countries (such business is the "STS Division").
B. CMI and L-3 each desire to continue at favored customer prices certain
supply arrangements currently in effect between the STS Division of CMI, on
the one hand, and other subsidiaries and divisions of CMI, on the other hand,
after the date of closing (the "Closing Date") of the purchase by L-3 of the
assets of CMI contemplated by the Purchase Agreement.
NOW THEREFORE, as a condition to the closing of the transactions
contemplated by the Purchase Agreement, and in consideration of the mutual
covenants, representations and warranties made herein, and of the mutual
benefits to be derived hereby, the parties hereto agree as follows:
1. Supply of Products by CMI. Upon the terms and subject to the conditions
hereof, for two years from the Closing Date, CMI shall, or shall cause its
subsidiaries (including EF Data Corp. ("EF Data")) to, sell to L-3, and L-3
shall purchase from CMI and/or its subsidiaries the following products and
subassemblies (the "STS Products") needed in operating the STS Division's
business after the Closing Date that CMI or EF Data currently supplies to the
STS Division: satellite communications modems, codecs, transceivers, converters,
Verticom "brick" converter modules (the "Brick Modules"), the ICU-64 Channel
Unit for LYNXX (the "LYNXX"), the PL/5617-1 Modulator card for PROGENY (the
"Card") (the Brick Modules, the LYNXX and the Card are the "Source Products")
and network products. Without limiting the obligation of L-3 to purchase STS
Products under the preceding sentence, the quantities of STS Products to be
purchased by L-3 pursuant to this Section shall be at the sole discretion of L-3
and no minimum quantities of STS Products are required to be purchased
hereunder, Notwithstanding the preceding two sentences, if CMI provides written
notice to L-3 specifying any STS Products subject to this Section that CMI
intends to discontinue making or selling, CMI will be relieved of any obligation
to sell to L-3 any such product as of one year from the date that CMI so
notifies L-3.
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2. Provision of Services by L-3. For two years from the Closing Date, CMI
shall exclusively engage L-3 to provide the following services (the "Services")
to CMI for the benefit of CMI's customers that have requested CMI to arrange for
the procurement of satellite communications system engineering and/or satellite
communications systems integration services for commercial (ie, non-U.S.
government) projects or for foreign governmental authorities projects: system
design, integration, installation and/or program management. Without limiting
the obligation of CMI to purchase the Services under the preceding sentence, the
quantities of Services to be purchased by CMI pursuant to this Section shall be
at the sole discretion of CMI and no minimum quantities of Services are required
to be purchased hereunder. Notwithstanding the preceding two sentences, if L-3
provides written notice to CMI specifying any Services subject to this Section
that L-3 intends to discontinue providing, L-3 will be relieved of any
obligation to provide to CMI any such Services as of one year from the date that
L-3 so notifies CMI.
3. SIVAM Project.
(a) It is the understanding of the parties that in connection with
the SIVAM project proposals, as currently proposed or as may otherwise be
amended (the "SIVAM Proposals"), L-3 shall have exclusive access to and
communication with Raytheon Corporation ("Raytheon"), whether oral or written,
exclusive of CMI or any of its subsidiaries (including, without limitation,
CMI's Microwave Networks division (the "MN Division"), CMI's Microwave Data
Systems division ("Data Systems") and EF Data, with respect to or in connection
with the SIVAM Project including, without limitation, any proposal, discussion,
marketing, negotiation, pricing, settlement, procurement, arrangement or
understanding with respect to the SIVAM Project.
(b) From the Closing Date to December 31, 1998 (the "Supply
Period"), CMI shall, and shall cause its subsidiaries (including EF Data) to,
deliver to L-3 the products specified in the SIVAM Proposals (the "SIVAM
Products") in accordance with the quantities, product specifications and time
period proposed by such divisions in the SIVAM Proposals, and L-3 shall
purchase, during such Supply Period, the SIVAM Products from such divisions or
subsidiaries in accordance with the SIVAM Proposals, provided that:
(i) CMI accepts the terms and conditions of and performs its
duties under, as subcontractor to L-3, the contract or agreement awarded by
Raytheon to L-3 for the SIVAM Project, including, without limitation, payments
made under a vendor trust arrangement generally required by Raytheon; and
(ii) the pricing for each SIVAM Product quoted by CMI
(including EF Data, the MN Division and Data Systems) is competitive with, and
in no event more than 5% above, any proposal made in good faith by a legitimate
party which seeks to sell such SIVAM Product to L-3 and which agrees to perform
the duties and obligations as a subcontractor to L-3 under
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the SIVAM Project with respect to such Product. In the event that L-3 is
permitted to purchase a SIVAM Product from a party other than CMI or EF Data
pursuant to this clause (ii) because that product has not met the conditions set
forth in this clause (ii), L-3 will remain obligated to purchase from CMI all of
the other SIVAM Products so long as those products meet the conditions in this
clause (ii) and clause (i) above and subject to the other terms and conditions
hereof.
As used herein, the term "Product" shall mean a STS Product or a SIVAM
Product.
4. Prices.
(a) Source Products. CMI shall sell (or cause its subsidiaries to
sell) each Source Product to L-3 at the unit price (the "Unit Price") listed for
such Source Products on Schedule 4(a) attached hereto. The prices set forth in
Schedule 4(a) are not subject to increase during the first six months from the
Closing Date. Thereafter, CMI, or its subsidiaries, may increase such prices,
except that in no event shall (i) the Unit Price of any Source Product be less
favorable than the unit price given to other customer for such Source Product in
like quantities and (ii) any such increase in price increase the gross margin
percentage of CMI or its subsidiaries with respect to such Source Product from
its current gross margin percentage thereon. Upon L-3's written request, CMI
will provide L-3 with reasonable access during normal business hours to the
books and records of CMI and its subsidiaries for the sole purpose of
verifying the gross margin percentages with respect to the Source Products.
(b) STS Products. CMI shall sell (or cause its subsidiaries to
sell) the STS Products, other than the Source Products, at prices no less
favorable than the prices given to other customers of such products in like
quantities.
(c) Services. L-3 shall provide the Services to CMI at prices no
less favorable than the prices given to other customers of such Services in like
quantities.
5. Additional Terms and Conditions.
(a) CMI Terms and Conditions. Any sale of the STS Products by CMI or
any of its subsidiaries under this Agreement shall be subject to and governed by
the then-current standard terms and conditions (including as to warranty) of
CMI (or its subsidiaries), which terms and conditions shall be no less
favorable that those given to other customers for the same or similar products.
(b) L-3 Terms and Conditions. Any sale of the Services by L-3 under
this Agreement shall be subject to and governed by the then-current standard
terms and conditions (including as to warranty) of L-3, which terms
-3-
<PAGE>
and conditions shall be no less favorable that those given to other customers
for the same or similar services.
6. Specifications. CMI shall, or cause its subsidiaries to, manufacture
and deliver the STS Products in accordance with the electrical, mechanical,
physical, environmental and other specifications as in effect as of the Closing
Date, or if the STS Product is a non-standard product, then according to the
specifications agreed to in writing by L-3 and CMI from time to time. In the
event an improvement or a technical change in the specifications of the STS
Products is made by CMI, CMI shall be required to provide the STS Products which
meet such improved or changed specifications; provided, however, that no such
improvement or change in specifications shall be made to LYNXX without the prior
written consent of L-3. CMI shall, or cause its subsidiaries to, manufacture and
deliver the SIVAM Products to L-3 in accordance with the specifications therefor
in the SIVAM Proposals.
7. Maintenance of Standards. If CMI fails to maintain the quality,
delivery or performance standards currently applicable to the Products, or fails
to achieve standards of quality or performance specified by CMI with respect to
new variations of the standard Products, then L-3 shall have such remedies as
may be provided in the then-current standard terms and conditions of CMI, and,
if CMI fails to cure any such deficiency in any Product within 60 days after
written notice thereof by L-3, L-3 shall no longer be obligated to purchase such
Product pursuant to this Agreement.
8. Ordering. Each order by L-3 for STS Products (a "Purchase Order") will
specify the STS Products, the quantity, the appropriate specifications
corresponding to such STS Products (if necessary), and the date of delivery,
provided that the number of days from the date of the Purchase Order through the
date of delivery is at least 60 days. Notwithstanding the foregoing, the parties
hereafter may agree in writing to use a blanket purchase agreement with specific
agreed call out schedules in lieu of the foregoing ordering mechanism. Orders by
L-3 for SIVAM Products shall be made in accordance with the SIVAM Proposals.
9. Delivery.
(a) All STS Products will be delivered freight paid F.O.B. (CMI's
(or its subsidiary's) plant).
(b) L-3 reserves the right to inspect the STS Products and to
confirm the quantity of the STS Products within 30 days from the date of
delivery. Any claims for discrepant deliveries shall be reported by L-3 to CMI
in writing within such 30-day period. If L-3 fails to make such a claim within
the time specified, such order will be deemed accepted by L-3. Upon CMI
receiving notice from L-3 of such discrepancy, L-3 will have such remedies as
may be provided in the then-current standard terms and conditions of CMI.
-4-
<PAGE>
(c) CMI undertakes to keep L-3 promptly and regularly informed of
difficulties that CMI expects in meeting L-3's needs for delivery in accordance
with lead time(s) stated in any Purchase Order.
(d) CMI shall deliver the SIVAM Products in accordance with the
SIVAM Proposal.
10. Raw and Packaging Materials. CMI will purchase and supply all raw
materials and packaging materials necessary for the manufacture of the STS
Products. CMI will be responsible for the sampling and testing of all such raw
materials and packaging materials and for ensuring an adequate inventory of such
raw materials and packaging materials to supply the STS Products.
11. Terms of Sale. With respect to any Products or Services sold
hereunder, the selling party will invoice the other party at the time of
delivery or provision. Each invoice will be itemized in reasonable detail. The
non-selling party will pay to the selling party the amount of such invoice
within 60 days of the date of such invoice.
12. Confidentiality. Each party will preserve the confidentiality of the
other party's Confidential Information (defined below), will not use same except
in connection with the performance of its obligations hereunder, and will return
same upon request by the other party. This Section will survive expiration or
earlier termination of this Agreement for a period of three years thereafter.
"Confidential Information" means all proprietary information (including but not
limited to formulas, compilations, data, know-how, specifications, techniques,
inventions, devices, projections, drawings and plans, whether of a technical,
operational, financial or other nature) which hereafter is, or in the past has
been, disclosed in writing and marked as confidential by either party (the
"Disclosing Party") to the other party (the "Receiving Party"), and which is of
such a nature that its value would be impaired if disclosed to third parties,
but shall not include any such information that: (i) becomes part of the public
domain through no fault of the Receiving Party; (ii) at the time of receipt is
known to the Receiving Party as shown by its written records; (iii) becomes
known to the Receiving Party from another source and the Receiving Party is not
aware that such source is under an obligation to another Person to keep such
information confidential; or (iv) is required to be disclosed by the Receiving
Party as a result of judicial or administrative process or by other requirements
of law.
13. Indemnity.
(a) With respect to any Products or Services sold hereunder, the
selling party agrees to indemnify and hold the other party and its affiliates
and their respective officers, directors, employees and agents, harmless from
and against any damages, liabilities, losses, expenses, (including, without
limitation, reasonable attorneys' fees) and amounts paid in settlement of any
claim, of any kind or nature whatsoever, which may be sustained or suffered as a
result of the infringement or alleged infringement of the copyrights or
-5-
<PAGE>
U.S. patents of third parties or the breach by CMI of its represention in the
fourth sentence of Section 3.16 of the Purchase Agreement, and to defend, at its
expense, any actions, claims or suits against purchasing party based upon such
infringement or alleged infringement. If the use of any products furnished
hereunder is enjoined as a result of such a suit, the selling party at its
option, and at no expense to the other party, shall obtain for the other party
the right to use said products, substitute an equivalent product reasonably
acceptable to selling party and extend this indemnity thereto, or accept the
return of products and reimburse the other party the purchase price thereof,
less a charge for reasonable wear and tear. This indemnity does not extend to
any suit based upon any infringement or alleged infringement of any patent or
copyright to the extent due to the combination of any products furnished by the
selling party and other elements not supplied by or on behalf of the selling
party nor does it extend to any products to the extent such products infringe as
a result of the other party's design or formula.
(b) The purchasing party agrees to notify the selling party in
writing of any suit. At its request and at its expense the selling party shall
have the right to control the defense of said suit. Except with the prior
written consent of the purchasing party, no selling party, in the defense of any
such claim or litigation, shall consent to entry of any judgment or enter into
any settlement that provides for injunctive or other nonmonetary relief
affecting the purchasing party or that does not include as an unconditional term
thereof the giving by each claimant or plaintiff to such purchasing party of a
release from all liability with respect to such claim or litigation. In the
event that the purchasing party shall in good faith determine that the conduct
of the defense of any claim subject to indemnification hereunder or any proposed
settlement of any such claim by the selling party might be expected to affect
adversely the purchasing party's tax liability or the ability of the purchasing
party to conduct its business, or that the purchasing party may have available
to it one or more defenses or counterclaims that are inconsistent with one or
more of those that may be available to the selling party in respect of such
claim or any litigation relating thereto, the purchasing party shall have the
right at all times to take over and assume control over the defense, settlement,
negotiations or litigation relating to any such claim at the sole cost of the
selling party, provided that if the purchasing party does so take over and
assume control, the purchasing party shall not settle such claim or litigation
without the written consent of the selling party, such consent not to be
unreasonably withheld. In the event that the selling party does not accept the
defense of any matter as above provided, the purchasing party shall have the
full right to defend against any such claim or demand and shall be entitled to
settle or agree to pay in full such claim or demand. In any event, the selling
party and the purchasing party shall cooperate in the defense of any claim or
litigation subject to this Section and the records of each shall be available to
the other with respect to such defense.
(c) The foregoing Sections 13(a) and (b) state the entire liability
of the selling party for patent or copyright infringement. This Section will
survive the expiration or earlier termination of this Agreement.
-6-
<PAGE>
14. Term. This Agreement shall commence on the date first set forth above
and shall expire on the second anniversary of the Closing Date unless earlier
terminated pursuant to Section 15.
15. Termination.
(a) Either party may terminate this Agreement for any material
breach of this Agreement by the other party if the party seeking to terminate
has specified such breach in writing and such breach has not been cured by the
breaching party within thirty (30) days after receipt of the written notice.
(b) Termination under this Section will be effected by notice given
by the terminating party to the other party.
(c) Any termination of this Agreement will not affect any of the
rights of either party hereto that arose prior to such termination or any
liability resulting from either party's breach of this Agreement.
16. Consequences of Termination. Upon expiration or earlier termination of
this Agreement, each party will promptly return to the other all documents,
samples and other tangible items containing or representing Confidential
Information and all copies thereof, and certify, if requested by the other
party, that it has complied with the terms of this sentence. This Section will
survive expiration or earlier termination of this Agreement.
17. Sales Convey No Right to Manufacture or Copy. The Products and
Services offered for sale hereunder are offered for sale and are sold by each
party subject in every case to the condition that such sale does not convey any
license, expressly or by implication, to manufacture, duplicate or otherwise
copy or reproduce any of the Products or Services, unless expressly provided in
such sale.
18. Export Control Compliance. Each party agrees to comply fully with the
United States Export Control Administration Regulations, the United States
Department of State International Traffic in Arms Regulations and any other
United States government regulations applicable to the export or disclosure of
Products or Services provided hereunder or Confidential Information hereunder
insofar as they may control or limit the sale or use of Products or Services.
Each party also agrees to comply fully with the United States Foreign Corrupt
Practices Act.
19. Force Majeure. Except for either party's payment obligations to the
other party for Products or Services previously delivered or provided hereunder,
failure of either party to perform its obligations under this Agreement
(including but not limited to failure to make sales or deliveries of Products or
Services) shall be excused to the extent that such failure is attributable to
any cause beyond the reasonable control of the defaulting party, including,
without limitation, acts of God, fires, earthquakes, wars, sabotage, accidents,
embargo, riots, labor disputes, actions of any government or
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<PAGE>
governmental agency or failure of same to act where action is required, and the
inability of such party to obtain material from its suppliers or to obtain
equipment or transportation; and the time during which such party may perform
will be extended to coincide with the time performance has been prevented,
hindered or delayed as a result of the foregoing. Should either party wish to
claim relief from its obligations hereunder by reason of this Section, such
party shall give notice to the other party without delay of the occurrence of
the event or circumstances in question.
20. Governing Law. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
State of New York, without giving effect to the conflict of laws rules thereof.
The parties hereby agree that this Agreement shall not be governed by the United
Nations Convention on Contracts for the International Sale of Goods.
21. Assignment. The Agreement shall not be assignable or otherwise
transferable by either party hereto without the prior written consent of the
other party, which consent will not be unreasonably withheld. This Agreement
will bind and inure to the benefit of the successors and permitted assigns of
the parties hereto. References to a party herein also are deemed to be
references to any successor or permitted assign of such party.
22. Notices. All notices, consents, approvals, requests, demands, waivers
and other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by facsimile transmission or telegram.
if to L-3, to
L-3 Communications Corporation
600 Third Avenue
New York, NY 10016
Facsimile: 212/805-5494
Attn: Christopher C. Cambria
if to CMI, to
California Microwave, Inc.
555 Twin Dolphin Drive
Redwood City, California 94065
Facsimile:650/596-6682
Attn: George L. Spillane
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
-8-
<PAGE>
All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (w) if by personal delivery on the day
after such delivery, (x) if by certified or registered mail, on the seventh
business day after the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day delivered, (z) if by facsimile or telegram, on the next day
following the day on which such facsimile or telegram was sent, provided that a
copy is also sent by certified or registered mail.
23. Certain Definitions. All capitalized terms used herein and not defined
in this Section shall have the meanings assigned to them herein. When used
herein, the following terms shall have the meaning specified below:
"include" and "including" shall be construed as if followed by the
phrase "without being limited to",
"Person" means an individual, a corporation, a joint venture, a
partnership, a firm, an association, a limited liability company, a business
trust or any other legal entity or any governmental authority or
instrumentality.
24. General.
(a) It is agreed that each of parties hereto is acting as an
independent contractor and nothing contained in this Agreement shall be
construed to constitute either as a partner, agent or employee of the other.
Neither party is authorized to act for or bind the other except as specifically
provided herein.
(b) The failure of a party at any time to require performance by the
other party of any provision hereof shall in no way affect the right of the
party thereafter to enforce same against the other party, nor shall waiver by
either party of the breach of any provision hereof be taken or held to be a
waiver of any succeeding breach of such provision or as a waiver of the
provision itself or as a waiver of a breach of any other provision.
(c) If any term or provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, such
provisions will be narrowed (or deleted, if necessary) to the minimum extent
necessary to make it and the rest of this Agreement enforceable,
(d) This Agreement or any provision hereof may not be changed,
waived, discharged or terminated orally, but only by a statement in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
(e) This Agreement and the Purchase Agreement constitute the entire
agreement between the parties relating to the subject matter hereof and
supersede all prior and contemporaneous agreements and understandings of
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<PAGE>
the parties relating thereto. The terms of this Agreement may not be modified
except by a writing signed by both of the parties.
(f) This Agreement may be executed with counterpart signature pages
or in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument,
(g) The agreements that comprise this Agreement, the Purchase
Agreement and any terms and conditions of either party that apply to a sale of
products or services hereunder shall have the following order of priority in the
event of a conflict between any of them: (i) the Purchase Agreement, (ii) this
Agreement and (iii) the terms and conditions of the selling party then in effect
with respect to such sale,
(h) The headings contained in this Agreement are inserted for
reference only and shall not be used to aid in the construction hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
L-3 Communications Corporation
By:
----------------------------------
Name:
Title:
California Microwave, Inc.
By:
----------------------------------
Name:
Title:
-10-
<PAGE>
SOURCE PRODUCTS PRICE LIST
(Schedule 4a)
Description STS/PN Quantity Pricing
- ----------- ------ -------- -------
ICU 64 Channel Unit 01070-00714 Any $5,500.00
EF Data
Modulator, Progeny, XP 01070-A71224-1 Any $5,500.00
EF DATA Not-to-exceed
Ku-Band Modulator
"Brick" 01070-A68551-1 1-9 (A)
VERTICOM 10-24
25-49
50
C-Band U/C 70Mhz
"Brick" 01070-A69532-1 1-9 (A)
VERTICOM 10-24
25-49
50
(A) To be purchased by L-3 directly from Verticom with EF Data's consent and
with EF Data agreeing to arrange with Verticom for L-3 to make such direct
purchases.
-11-
<PAGE>
STS-RELATED SCHEDULES TO ASSET PURCHASE AGREEMENT
SCHEDULE 1.2
EXCLUDED ASSETS
1. All assets associated with foreign offices of Seller in Singapore and China,
other than the bank accounts referred to in Section 2.7(b) of the Agreement.
2. California Microwave Foreign Sales Corporation.
3. Ku-Band and C-Band V90 and V901 converters, EQ 90 equalizer, ARC and Tiger
redundancy switches, Verticom, and any intellectual property relating thereto
(these products were transferred from the STS division to EFData Corp. several
months ago and are included in this schedule for the sake of clarity).
4. Employment Agreement dated September 22, 1995 between Seller and Roger
Parsons.
5. Severance Agreement dated April 3, 1997 between Seller and Brian Maloney.
6. Severance Agreement dated May 20, 1997 between Seller and Bruce Strean.
7. Severance Agreement dated May 20, 1997 between Seller and Michael Pinto.
SCHEDULE 2.4(a)
RETENTION INCENTIVE AGREEMENTS
1. Retention Incentive Agreement dated as of July 1, 1997 between Seller and
Brian Maloney.
2. Retention Incentive Agreement dated as of July 1, 1997 between Seller and
Bruce Strean.
3. Retention Incentive Agreement dated as of July 1, 1997 between Seller and
Michael Pinto.
4. Seller has also entered into Retention Incentive Agreements with the
following employees effective as of June 30, 1997: Gene Kelly; Al Nahal; Bill
Kinsella; Tom Coyle; Marty Coughlan; Bob Snider; Frank Longo; William Callanan;
Roy Shumacker; Alan Henderson; Nick Vidal; Jim Martinolich; Kevin Lawrence; Tim
Duffy; William Laziza; Frank Paladino;
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<PAGE>
Gloria Clark-Anderson; Glenn Righter; Fred Hauck; Peter Mackey; Chris Koehler;
Jim Feely; Robert Bernard; Steve Urda; Richard Badalament; and John Rusinak.
SCHEDULE 3.2(b)
OUALIFICATIONS TO DO BUSINESS, GOOD STANDING
1. Seller is a Delaware corporation in good standing under Delaware law.
2. Seller is qualified to do business in the following states: Arizona,
California, Delaware, Georgia, Maryland, Massachusetts, New Jersey, New York,
Texas and Virginia.
SCHEDULE 3.3
CONFLICTS; APPROVALS
1. Violations of Organizational Documents
None.
2. Violation of Contracts
If the consent to assignment to Buyer of the contracts listed on Schedule
3.11(c) is not obtained before the Closing, then Seller will be in breach of
the provisions in such contracts relating to the assignment thereof by Seller.
3. Government Approvals
See attachment regarding FCC requirements.
Hart-Scott-Rodino filing.
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<PAGE>
Attachment to Schedule 3.3
California Microwave. Inc. -- Satellite Transmission Systems division
("CMT-STS") authorizations (prior FCC approval required for transfer of
Experimental and Fixed Satellite licenses):
- --------------------------------------------------------------------------------
Call Sign/File No. Service Location Licensee
- --------------------------------------------------------------------------------
E891037 Fixed Satellite Haupauge, NY CMI-STS
- --------------------------------------------------------------------------------
E891136 Fixed Satellite Haupauge, NY CMI-STS
- --------------------------------------------------------------------------------
KA2XMT Experimental Haupauge, NY CMI-STS
- --------------------------------------------------------------------------------
KE2XFB Experimental Haupauge, NY CMI-STS
- --------------------------------------------------------------------------------
KA-387 Fixed Satellite Melbourne, FL CMT-STS
- --------------------------------------------------------------------------------
KA2XUA Experimental Haupauge, NY CMI-STS
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 3.4
SEPTEMBER BALANCE SHEET
See attached.
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<PAGE>
California Microwave Inc. --
Satellite Transmission Systems Division
@ September 27, 1997
<TABLE>
<CAPTION>
Adjusted
September Balance Adjustments September Balance
<S> <C> <C> <C>
Cash (519,933.68) (519,933.68) 0.00
Accts rec - billed trade 15,033,644.34 15,033,644.34
Accts rec - unbilled trade 431,857.30 431,857.30
Accts rec trade - interco 102,207.88 102,207.88
Employee/other receivables 218,725.80 218,725.80
Allowance - bad debt (506,946.26) (506,946.26)
-------------- ------------- --------------
Current receivables 19,189,489.07 0.00 19,189,489.07
Stockroom 3,371,200.88 3,371,200.88
Demo inventory 0.00
WIP/Products 11,259,225.49 11,259,225.49
Progress Payments (3,123,764.77) (3,123,764.77)
0.00 0.00
Finished goods 0.00 0.00
Inventory reserves (2,408,233.41) (2,408,233.41)
-------------- ------------- --------------
Inventory 9,098,428.19 0.00 9,098,428.19
Deferred tax assets - current 0.00
Prepaid/other current assets 27,424.74 27,424.74
-------------- ------------- --------------
Total current assets 27,795,408.32 (519,933.68) 28,315,342.00
Property, plant & equipment 21,500,173.56 21,500,173.56
Less accum deprec (14,181,556.36) (14,181,556.36)
-------------- ------------- --------------
Net property plant & equipment 7,318,617.20 0.00 7,318,617.20
Net interco corp current - STS 5,518,912.79 5,518,912.79 0.00
Net interco corp prior years - STS (25,675,014.53) (25,675,014.53) 0.00
Inter-division rec (pay) (12,567.82) (12,567.82) 0.00
Intangibles 0.00 0.00
Long term receivables 0.00 0.00
Deposits/other long term assets 19,221.30 19,221.30
-------------- ------------- --------------
Total assets 14,964,577.26 (20,688,603.24) 35,653,180.50
</TABLE>
Page 1 of 2
<PAGE>
<TABLE>
<S> <C> <C> <C>
Accounts payable (3,664,232.04) (3,664,232.04)
A/P trade - interco (1,449,138.30) (1,449,138.30)
Accrued payroll & payroll taxes:
Accrued payroll 0.00 0.00
Accrued payroll taxes (283,675.69) (283,675.69)
Vacation accrual (556,130.16) (556,130.16)
MIP/EIP accrual 0.00 0.00
401k match (127,985.00) (127,985.00)
Accrued profit sharing (45,000.00) (45,000.00)
Other payroll related (88,189.40) (88,189.40)
Other current accrued liabilities:
Accrued interest (17,462.31) (17,462.31)
Advance payments 0.00 0.00
Accrued restructuring expenses (55,226.53) (55,226.53)
Other current accrued liabilities: (1,879,060.97) (1,879,060.97)
Reserves:
Warranty reserves (758,000.00) (758,000.00)
Contract costs reserves 0.00 0.00
Other current reserves 0.00 0.00
Current port long term debt 0.00 0.00
-------------- ------------- --------------
Total current liabilities (8,924,100.40) 0.00 (8,924,100.40)
Long term debt (1,630,000.00) (1,630,000.00)
Other long term obligations 0.00
-------------- ------------- --------------
Total liabilities (10,554,100.40) 0.00 (10,554,100.40)
Paid in capital @ par 0.00 0.00
Add'l paid in capital 0.00 0.00
Prior year retained earnings (6,023,558.38) (6,023,558.38) 0.00
Current yr earnings 1,613,081.52 1,613,081.52 0.00
-------------- ------------- --------------
Total liab & equity (14,964,577.26) (4,410,476.86) (10,554,100.40)
-------------- ------------- --------------
-------------- --------------
NET ASSETS (Assets less Liabilities) ($0.00) $25,099,080.10
============== ==============
</TABLE>
Page 2 of 2
<PAGE>
SCHEDULE 3.5
LIABILITIES
1. In connection with a sales agreement entered into between Seller and a
classified U.S. government entity on September 8, 1988, Seller received a
letter dated April 25, 1997 from the federal government making conflicting
claims regarding an overpayment. The letter claims an overpayment of
approximately $39,000 and an overpayment of $1,026,993. Seller believes that no
overpayment was made and is currently presenting accounting records to the
federal government to substantiate its position.
2. Patrick & Co. claimed, by letter dated September 18, 1997, that Seller pay
it a commission of 2% (equalling approximately $290,000) on the total value of
the Contract between the Government of the Islamic Republic of Pakistan and
California Microwave-Satellite Transmission Systems dated March 17, 1996,
concerning the supply of satellite earth station equipment. Patrick & Co.
asserts that it arranged for the customer's financing of the transaction and in
return is entitled to a commission promised by Seller. Seller believes that it
did not promise a commission and that Patrick & Co. did not successfully
arrange the customer financing.
3. Nu Vision Manufacturing claimed $143,702.37 against Seller by letter dated
December 31, 1996. This claim arose with respect to Blanket Purchase Order No.
138326, dated January 11, 1995. Seller believes that the claim has no merit. In
June 1997, Nu Vision lowered its demand to approximately $70,000, and Seller,
at that time, offered to settle for $10,000 in order to clear the matter.
Seller has not received any communications from Nu Vision Manufacturing or its
counsel since the June, 1997 meeting.
4. In connection with Job Number 6367 in the Sudan, all work has been
terminated effective December 3, 1997, due to an Executive Order of President
Clinton imposing an embargo against Sudan. Seller has withdrawn all of its
personel in the Sudan. Consequently, there is no further activity under the
contract. $1,000,000 with respect to this contract was written off in October,
1997.
5. In connection with Job Number 6495 with Romsat, Romsat still has not
obtained the necessary financing to purchase the remaining equipment under the
relevant contract. If Romsat does not obtain such financing, Seller may have to
write off $175,000 of accounts receivable and dispose of the remaining $1.2
million in inventory earmarked for the Romsat project.
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<PAGE>
SCHEDULE 3.6(a)
TAXES
1. Income tax returns have not yet been filed in Malaysia for fiscal years 1996
and 1997 and in Singapore for fiscal years 1997. Seller obtained an extension
of the due date for both filings in Malaysia to September 1997. Seller is
working with its accountants, Ernst & Young, to bring the filings up to date.
Seller does not believe that it owes any income tax in either jurisdiction.
SCHEDULE 3.7
ABSENCE OF CHANGES
1. Schedule 3.7
In October, 1997, Seller decreased the opening backlog for fiscal year
1998 by $3,617,440. Most of the reduction in backlog is attributable to the
following three accounts:
The orders with respect to Alphastar (Job 1026) and TeeCom (Alphastar's
parent company) (Job 6438) booked on March 21, 1997 and April 11, 1997,
respectively, will be reduced by approximately $2.4 million and $341,000,
respectively, due to the declaration of bankruptcy by those companies.
The order with respect to Onatel (Job 6280) booked on May 12, 1993 will
be reduced by approximately $240,000. The customer has stated it does not need
the product and Seller is unwilling to risk its personnel in a country engaged
in a civil war.
2. Schedule 3.7(a)
See attachment. Attached financial data presented in thousands of dollars.
-5-
<PAGE>
ATTACHMENT TO SCHEDULE 3.7(a)
California Microwave, Inc. -
Satellite Transmission Systems Division
Forecast - FY98 as of Nov. 8, 1997
------ -------- -------- -------- --------
Amounts are in Thousands FY98 FY98 FY98 FY98 FY98
Actual Forecast Forecast Forecast Forecast
Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 Total
------ -------- -------- -------- --------
------ -------- -------- -------- --------
Bookings 10,363 25,500 21,900 27,237 85,000
------ -------- -------- -------- --------
------ -------- -------- -------- --------
Backlog 37,143 48,698 53,098 57,354 57,354
------ -------- -------- -------- --------
Sales 10,574 13,945 17,500 22,981 65,000
Total Cost of Sales 9,298 13,702 14,475 19,006 56,481
------ -------- -------- -------- --------
Gross Margin 1,276 243 3,025 3,975 8,519
------ -------- -------- -------- --------
R&D 278 374 370 378 1,400
Marketing Dept 1,065 1,144 1,185 1,306 4,700
Administration 976 949 1,020 1,055 4,000
------ -------- -------- -------- --------
Total Expenses 2,319 2,467 2,575 2,739 10,100
------ -------- -------- -------- --------
------ -------- -------- -------- --------
Contribution (1,043) (2,224) 450 1,236 (1,581)
------ -------- -------- -------- --------
<PAGE>
SCHEDULE 3.8
LITIGATION
1. No suits instituted by or against CMI with respect to the Business or Assets.
2. Reference is made to the descriptions of the claims described in Schedule
3.5.
-6-
<PAGE>
SCHEDULE 3.9(a)
COMPLIANCE WITH LAWS
1. None.
SCHEDULE 3.9(b)
GOVERNMENTAL APPROVALS AND OTHER CONSENTS
1. Hart-Scott-Rodino filing
2. Reference is made to Schedule 3.3 for FCC licenses of Seller with respect to
the Assets and Business.
3. U.S. government approvals to novate contracts referred to in Item 3 of
Schedule 3.9(c).
SCHEDULE 3.9(c)
GOVERNMENT CONTRACTS
1. Contract dated March 17, 1996 between the Government of the Islamic Republic
of Pakistan and California Microwave-Satellite Transmission Systems ("CM-STS").
2. Contract dated July 29, 1993 between CMI-STS and La Empresa Estatald
Telecomunicaciones Cuantia (Ecuador)
3. U.S. Government Contracts:
a. Contract No.: DAABO7-97-C-A517
Program: GGCL (Government to Government Communications Link)
Award Date: 9/30/97
b. Contract No.: (Basic Contract No. is classified)
Program: CTF (Commercial Terminal Family)
Award Date: 9/14/93
Indefinite Quantity/Indefinite Delivery Contract wth 5 option years
c. Open Delivery Orders:
No. Award Date
29 8/29/97
d. The following job numbers indicate additional U.S. Government contracts
that are classified: 7202, 7226, 7229, 7231, 7233, 7234, 7236, 7237, 7238
and 7240.
-7-
<PAGE>
4. NATO
Contract No: CO-6139-SAT
Program: NATO Broadbanding
Award Date: 12/21/93
SCHEDULE 3.10
ASSET EXCEPTIONS
1. The real property leased by Seller at 125 Kennedy Drive, Hauppauge, NY 11788
referenced in Schedule 3.18(b) and certain related personal property is subject
to a lien and security interest in favor of The Bank of Tokyo Trust Company, as
trustee, and the Bank of Tokyo-Mitsubishi, Ltd., San Francisco Branch, and
Union Bank of California, N.A., as letter of credit bank, pursuant to an
Indenture of Trust dated as of November 1, 1987 between the Trustee and the
Suffolk County Industrial Development Agency, as issuer and a Mortgage and
Security Agreement of even date therewith and related documents.
2. The assets of Seller are also subject to a lien in favor of BankAmerica
Business Credit, Inc., as lender, under a Loan and Security Agreement dated
June 30, 1997.
3. [deleted]
4. Certain copy machines, a postage meter and a truck used in the Business are
leased by the Seller.
SCHEDULE 3.11(a)
CONTRACTS
ORAL CONTRACTS: none.
1. CUSTOMER AGREEMENTS
See attached list entitled "Open Jobs Listing as of December 15, 1997".
2. VENDOR PURCHASE ORDERS
See attachment.
3. DISTRIBUTOR AGREEMENTS
See attachment.
-8-
<PAGE>
4. REPRESENTATIVE/CONSULTANT AGREEMENTS
See attachment.
5. NON-DISCLOSURE/CONFIDENTIALITY AGREEMENTS
See attachment.
6. OEM AGREEMENT
OEM Agreement dated April 27, 1995, by and between Satellite Transmissions
Systems, Inc. and Harris Corporation.
7. VENDOR AGREEMENTS
a. Original Equipment Manufacturers Agreement dated May 1, 1997 between
Leitch Incorporated and California Microwave, Satellite Transmission Systems
b. Original Manufacturing Purchase Agreement dated August 15, 1996 between
Satellite Transmission Systems, Inc. and Sal-Ma Instrument Corporation
c. New Volume End User Agreement No. AMJ88 dated May 25, 1997 between
Hewlett-Packard and STS
d. Purchase Agreement dated March 15, 1995 between Andrew Corporation and
California Microwave, Inc. ("CMI")
e. Value Added Reseller Agreement for Television Products Agreement dated
June 3, 1996 between Tektronix, Inc. and Satellite Transmission Systems, Inc.
f. Product Sales Agreement dated May 21, 1997 between California Microwave
and Time Electronics
g. Sales Distribution Agreement dated July 1, 1994 between
Te1ecommunications Techniques Corporation and Satellite Transmission Systems,
Inc.
h. Product Sales Agreement dated February 28, 1997 between California
Microwave and TTI Inc.
i. Product Sales Agreement dated May 21, 1997 between California Microwave
and TTI, Incorporated
j. Total amounts due under purchase orders for any purchasers with respect
to which STS currently owes more than $100,000. See Attachment A.
-9-
<PAGE>
8. LICENSE AGREEMENTS
a. Statement of Work for Secure Interworking Function CM-STS Inmarsat-B
MES (Revision 3) dated March 13, 1997 between CM-STS and ICTI.
b. Lynxx Software Royalty Agreement dated September 22, 1997 between
CM-STS, SPACEHAB, Inc. and Crosslink, Inc., including a License Agreement dated
September 22, 1997 from CM-STS to SPACEHAB, Inc. and a License Agreement dated
September 22, 1997 from SPACEHAB, Inc. to CM-STS.
c. Graphical Monitor and Control Software License Agreement (Seller has
entered into this agreement with every customer in connection with the sale of
satellite earth station networking monitoring and control devices).
d. Licensing Agreement dated July 19, 1995 between International Mobile
Satellite Organization and Mobile Satellite Products Corporation.
9. EMPLOYMENT-RELATED AGREEMENTS
a. Employment Agreement dated September 22, 1995 between Seller and Roger
Parsons.
b. Severance Agreement dated July 1, 1997 between Seller and Brian
Maloney.
c. Severance Agreement dated May 20, 1997 between Seller and Bruce Strean.
d. Severance Agreement dated May 20, 1997 between Seller and Michael
Pinto.
e. Retention Incentive Agreement dated as of July 1, 1997 between Seller
and Brian Maloney.
f. Retention Incentive Agreement dated as of July 1, 1997 between Seller
and Bruce Strean.
g. Retention Incentive Agreement dated as of July 1, 1997 between Seller
and Michael Pinto.
h. Seller has also entered into Retention Incentive Agreements with the
following employees effective as of June 30, 1997: Gene Kelly; Al Nahal; Bill
Kinsella; Tom Coyle; Marty Coughlan; Bob Snider; Frank Longo; William
Callanian; Roy Shumacker; Alan Henderson; Nick Vidal; Jim Martinolich; Kevin
Lawrence; Tim Duffy; William Laziza; Frank Paladino; Gloria Clark-Anderson;
Glenn Righter; Fred Hauck; Peter
-10-
<PAGE>
Mackey; Chris Koehler; Jim Feely; Robert Bernard; Steve Urda; Richard
Badalament; and John Rusinak.
i. Every employee of Seller whose work is related to the Business or the
Assets has signed a Confidentiality agreement upon commencing employment with
Seller.
10. OTHER AGREEMENTS
a. Reference is made to the ABN AMRO Agreement, BankAmerica agreement and
Bank of Tokyo Mortgage Agreement and related agreements identified in Schedule
3.10.
b. Lease dated November 7, 1996 between SIMRAM Realty Corp. and Seller
with respect to warehouse on 65 Commerce Street, Hauppage, NY 11788.
c. Guarantee dated January 17, 1995 pursuant to which California
Microwave, Inc. guaranteed the obligations of STS with respect to the Purchase
Agreement dated December 21, 1994 between AT&T International (Saudi Arabia) and
STS, as amended on November 19, 1995.
d. Cooperation and Project Funding Agreement dated June 15, 1994 between
the Israel-United States Binational Industrial Research and Development ("BIRD")
Foundation, Binational Industrial Research and Development Foundation, Tadiran
Ltd. Communications Systems Division and Satellite Transmissions Systems, Inc.
-11-
<PAGE>
ATTACHMENT A TO SCHEDULE 3.11(a)
OPEN PURCHASE ORDERS EXCEEDING $1OO,OOO
See attachment.
<PAGE>
Open Commitments for Suppliers over $100,OOO
- --------------------------------------------------------------------------------
SUPPLIER ESTIMATED
- --------------------------------------------------------------------------------
OPEN COMMITMENTS
- --------------------------------------------------------------------------------
12/10/97
- --------------------------------------------------------------------------------
Andrew 226,382
- --------------------------------------------------------------------------------
CPI/Satcom 282,225
- --------------------------------------------------------------------------------
EF DATA 877,412
- --------------------------------------------------------------------------------
GE American 396,000
- --------------------------------------------------------------------------------
Hughes Networks 318,000
- --------------------------------------------------------------------------------
Microsource 605,000
- --------------------------------------------------------------------------------
Nera 1,644,998
- --------------------------------------------------------------------------------
Netrix 123,808
- --------------------------------------------------------------------------------
Sierra Com 266,400
- --------------------------------------------------------------------------------
Siemens 812,870
- --------------------------------------------------------------------------------
TOTAL 5,553,095
================================================================================
Page 1
<PAGE>
<TABLE>
<CAPTION>
STS OPEN JOB LISTING AS OF DECEMBER 15, 1997
====================================================================================================================================
*
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACT CUSTOMER REQ * CONTR.
- ------------------------------------------------------------------------------------------------------------------------------------
JOB # CUSTOMER/COUNTRY PROGRAM/DESCRIPTION $ VALUE DIR CA CONTRACT NO. GCE LD SHIP DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
SYSTEMS/DOMESTIC
- ------------------------------------------------------------------------------------------------------------------------------------
1034 GE SPACENET KU BAND DIGITAL VIDEO E/S $60,305 TC PB L.O.I. 10/16/97 12/15/97
- ------------------------------------------------------------------------------------------------------------------------------------
1061 MFS NETWORK TECH. 6.1M & 2 TRANSP. $1,701,458 TC CM LOI 10/15/96
- ------------------------------------------------------------------------------------------------------------------------------------
1073 AMERICAN MOB SAT GMACS TRAINING $9,795 TC CM 9097-0 9/18/96
- ------------------------------------------------------------------------------------------------------------------------------------
1074 RCN 3.7M EARTH STATION $190,771 TC CM RCN INTERNATIONAL 8/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
1079 HNS/FORD DOMESTIC-CANADIAN SPLIT $263,529 TC PB 541842 10/15/97
- ------------------------------------------------------------------------------------------------------------------------------------
1080 AT&T LENOX LNA SYSTEM W/INSTALLATION $98,780 TC PB WV-8-67479 10/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
1081 BT NORTH PROJECT PLANET $992,081 TC PB FAX SEPT 12 1997 5/29/97
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SYSTEMS/DOMESTIC - SPARES
- ------------------------------------------------------------------------------------------------------------------------------------
1755 RAYTHEON MISC. SPARE PARTS $132,474 8770TL7537 3/12/98
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
R&D
- ------------------------------------------------------------------------------------------------------------------------------------
SEE P/A FOR
DETAILS ON
AUTHORIZED
PROGRAM/BUDGET
4000 VARIOUS JC MP REQUIREMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SCAMP
- ------------------------------------------------------------------------------------------------------------------------------------
SEE P/A FOR
DETAILS ON
AUTHORIZED
PROGRAM/BUDGET
4500-4800 INVENTORY JC MP REQUIREMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
GCE INVENTORY (5200-5299)
- ------------------------------------------------------------------------------------------------------------------------------------
SEE P/A FOR
DETAILS ON
AUTHORIZED
PROGRAM/BUDGET
5200-5299 STS INVENTORY JC MP REQUIREMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY CONFIDENTIAL
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
GCE
- ------------------------------------------------------------------------------------------------------------------------------------
54046 TELECOM INTL PROGENY UNITS $105,280 GCA MP VMT-180 9/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
54276 TELECOM MALAYSIA EQUALIZER $39,525 GCA MP 010245 11/18/97
- ------------------------------------------------------------------------------------------------------------------------------------
54316 TSC ITELESAT CORP. PROGENY XP 63,083 GCA MP TSC-97/030 10/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
*
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACT CUSTOMER REQ * CONTR.
- ------------------------------------------------------------------------------------------------------------------------------------
JOB # CUSTOMER/COUNTRY PROGRAM/DESCRIPTION $ VALUE DIR CA CONTRACT NO. GCE LD SHIP DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
54476 HARRIS/TV RECORD PROGENY UNITS $150,335 GCA MP VPK7010504 12/6/97
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
X-SAT SYSTEMS (5900-5999)
- ------------------------------------------------------------------------------------------------------------------------------------
5997 STS (2) X-SATS $0 GCA CK N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
5998 STS X-SAT INV. RELEASE $0 GCA CK N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SYSTEMS/FOREIGN COUNTRY
- ------------------------------------------------------------------------------------------------------------------------------------
6300 MOROCCO ONPT 9M EUTELSAT E/S $2,156,733 TC RF 214-3-6-583 10/1/93
- ------------------------------------------------------------------------------------------------------------------------------------
6302 ETISALAT/UAE INMARSAT EARTH STAT. $1,732,292 TC RF CD/178H/92/STS * * 3/94
- ------------------------------------------------------------------------------------------------------------------------------------
6308 SINGAPORE TELEC V90s & MISC. EQUIPMENT $16,523,144 TC JG N35/450244424 * * SHIPPED
- ------------------------------------------------------------------------------------------------------------------------------------
6313 EMETEL/ECUADOR DOMSAT $13,447,526 TC CM TBD * SHIPPED
- ------------------------------------------------------------------------------------------------------------------------------------
6320 THORN/ENGLAND MADLEY UPGRADE (1,2,3) $2,069,745 JG 633245 1/96
- ------------------------------------------------------------------------------------------------------------------------------------
6327 EMETEL/ECUADOR DIGITALIZATION OF GALAPAGOS $949,004 TC CM LPA * SHIPPED
E/S
- ------------------------------------------------------------------------------------------------------------------------------------
6338 AT&T ELSALVADOR GCE EQUIPMENT $1,370,817 TC CM LTR DTD 8/26/94 * 9/94
- ------------------------------------------------------------------------------------------------------------------------------------
6347 SINGAPORE TELCOM HBO VIDEO UPGRADE $3,554,121 TC JG N35/45027895 * * SHIPPED
- ------------------------------------------------------------------------------------------------------------------------------------
6364 BRITISH TELECOM REMOTE M&C $148,059 PM PB 650603 * 9/97
- ------------------------------------------------------------------------------------------------------------------------------------
6368 CAPE VERDE TELECOM SATELLITE E/S EQUIPMENT $1,251,920 TC JG CONTRACT 7/95
- ------------------------------------------------------------------------------------------------------------------------------------
6369 TELEFONICA/SPAIN EARTH STATION $2,057,075 TC CM 38432195 8/95
- ------------------------------------------------------------------------------------------------------------------------------------
6370 TELEFONICA/SPAIN TRANSPORTABLE $599,508 TC CM 40483/95 10/95
- ------------------------------------------------------------------------------------------------------------------------------------
6371 EMBRATEL KU-BAND & REMOTES $5,995,892 TC CM DRT-018/97Y 6/97
- ------------------------------------------------------------------------------------------------------------------------------------
6399 IMPSAT/ARGENTINA IMPSAT ARGENTINA $866,029 TC CM 41440 * 6/95
- ------------------------------------------------------------------------------------------------------------------------------------
6400 SAUDI TEP - 6 ENG/PUBS/D&D $29,476,551 TC RF CONTRACT 12/91 * * 9/97
- ------------------------------------------------------------------------------------------------------------------------------------
6401 SAUDI TEP - 6 RIYADH NO.1 $0 TC RF CONTRACT 12/91 * * 9/97
- ------------------------------------------------------------------------------------------------------------------------------------
6402 SAUDI TEP - 6 INTELSAT GCE $0 TC RF CONTRACT 12/91 * * 9/97
- ------------------------------------------------------------------------------------------------------------------------------------
6403 SAUDI TEP - 6 ADDITIONAL APPS $0 TC RF CONTRACT 12/91 * * 9/97
- ------------------------------------------------------------------------------------------------------------------------------------
6404 SAUDI TEP - 6 ARABSAT $0 TC RF CONTRACT 12/91 * * 9/97
- ------------------------------------------------------------------------------------------------------------------------------------
6405 SAUDI TEP - 6 INMARSAT $0 TC RF CONTRACT 12/91 * * 9/97
- ------------------------------------------------------------------------------------------------------------------------------------
6406 SAUDI TEP - 6 INMARSAT $0 TC RF CONTRACT 12/91 * * 9/97
- ------------------------------------------------------------------------------------------------------------------------------------
6407 SAUDI TEP - 6 INSTALL TEST O & M $6,244,528 TC RF CONTRACT 12/91 * * 9/97
- ------------------------------------------------------------------------------------------------------------------------------------
6408 SAUDI TEP - 6 DCME $11,250,000 TC RF CONTRACT 12/91 * * 9/97
- ------------------------------------------------------------------------------------------------------------------------------------
6411 IMPSAT/ECUADOR ECUADOR F3 STATION $237,288 TC CM 004-95 * TBD
- ------------------------------------------------------------------------------------------------------------------------------------
6422 POSTS & TELE DALIN- EQUIPMENT & SERVICES $549,830 JG LITC-HY961015 12/10/96
CHINA
- ------------------------------------------------------------------------------------------------------------------------------------
6423 POSTS & TELE EQUIPMENT & SERVICES $879,998 JG P96-8174 12/10/96
MONGOLIA
- ------------------------------------------------------------------------------------------------------------------------------------
6428 CSC-SHINAWATRA RF UPLINK & C BAND $3,095,452 JG CONTRACT DTD 12-96 * 4/97
- ------------------------------------------------------------------------------------------------------------------------------------
6429 SPACE COMM. CORP. DATA DIST. E/S $568,692 JG 10694 * 6/10/97
- ------------------------------------------------------------------------------------------------------------------------------------
6430 REUTERS SA GENEVA EARTH STATION $1,331,002 TC PB CHP1006(AMEND 2) * * 7/15/97
- ------------------------------------------------------------------------------------------------------------------------------------
6434 IMPSAT - COLUMBIA 7.2 KU-BAND $327,121 TC CM 019-97 4/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
6436 IMPSAT - ARGENTINA UP/DOWN CONVERTERS $81,480 TC CM 50188 & 50152 6/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
6437 SAMSUNG AMERICA MBC VIDEO NETWORK $847,021 TC JG CK70021 5/20/97
- ------------------------------------------------------------------------------------------------------------------------------------
6439 CNTPA - BEIJING, 20M, 7TH IDR, KUBAND $300,683 JG 97QFKE41B1703-5U * * 9/10/97
CHINA
- ------------------------------------------------------------------------------------------------------------------------------------
6452 OTE-GREECE F3 STATION $1,168,603 TC CM 7525 9/95
- ------------------------------------------------------------------------------------------------------------------------------------
6463 TIME TEL/MALAYSIA EARTH STATIONS-9M $3,626,605 TC JG P95/8/164 SHIPPED
- ------------------------------------------------------------------------------------------------------------------------------------
6471 STAR TV/HONG KONG KU&C BAND EXT VIDEO $2,380,779 TC JG CONTRACT 4/96
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
*
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACT CUSTOMER REQ * CONTR.
- ------------------------------------------------------------------------------------------------------------------------------------
JOB # CUSTOMER/COUNTRY PROGRAM/DESCRIPTION $ VALUE DIR CA CONTRACT NO. GCE LD SHIP DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
6472 IMPSAT/ARGENTINA IMPSAT ARGENTINA $543,524 TC CM 41440 4/96
- ------------------------------------------------------------------------------------------------------------------------------------
6473 BEZEQ STANDARD A EARTH STA. $1,647,933 TC PB 07/93/060/0 * * 6/96
- ------------------------------------------------------------------------------------------------------------------------------------
6474 OTE GREECE STANDARD A EARTH STA. $2,247,212 TC CM 7560 8/30/96
- ------------------------------------------------------------------------------------------------------------------------------------
6475 ITS SDN BHD ITS/RETAKEL CONTRACTS $732,126 TC JG 10525 OPEN
- ------------------------------------------------------------------------------------------------------------------------------------
6481 TELEFONICA/SPAIN DBS U/C SUBSYSTEM $228,352 TC CM 78720/97 TBD
- ------------------------------------------------------------------------------------------------------------------------------------
6485 GOV'T OF PAKISTAN PHASE II SATCOM NETWORK $14,500,000 TC RF NLC-3841B 9/98
- ------------------------------------------------------------------------------------------------------------------------------------
6486 IMPSAT HPA 600W $39,855 TC CM 42359 3/96
- ------------------------------------------------------------------------------------------------------------------------------------
6488 EMPRESA ESTATAL DE DOMSAT EXPANSION NET. $4,948,693 TC CM TBD 6/20/96
- ------------------------------------------------------------------------------------------------------------------------------------
6491 LOCKHEED MARTIN CHINA STAR-1 TT&C STA. $2,821,534 PM RF GGMS53502 4/15/97
- ------------------------------------------------------------------------------------------------------------------------------------
6495 ROMSAT/ROMANIA 11M E/S HUB AND REMOTES $3,136,343 TC JG CONTRACT 8/30/96
- ------------------------------------------------------------------------------------------------------------------------------------
6496 EMBRATEL SWITCH COMB. SYSTEM $498,716 TC CM 33530486/0001-29 10/25/96
- ------------------------------------------------------------------------------------------------------------------------------------
6498 O'CONNOR'S SINGAPORE BKT-6F & BKT-7F UPGRADE $622,983 JG 22S/70370 11/22/96
- ------------------------------------------------------------------------------------------------------------------------------------
6499 CHAINA NAT.POSTAL & CHINA MPT-DOMSAT $5,296,943 JG 96QFKE/41D1904US 12/97
TELEC.
- ------------------------------------------------------------------------------------------------------------------------------------
7300 LINK COMMUNICATION REMOTE VSAT & HUB STA. $521,842 TC JG LC-P0970406REV06 9/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
7302 TODAY'S TRADING UPLINK/DOWNLINK $191,450 TC JG 3825 AND 3826 11/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
7303 TELEFONICA V901 U/C'S $62,317 TC CM 675054 1/15/98
- ------------------------------------------------------------------------------------------------------------------------------------
7304 HGS FORD PERFORMA SPARES $87,273 pb 540093 2/2/98
- ------------------------------------------------------------------------------------------------------------------------------------
7305 IMPSAT-ARGENTINA TIGER ASSEMBLY $168,598 CM 50480 2/28/98
- ------------------------------------------------------------------------------------------------------------------------------------
7306 SARAH VISION KU-BAND TV UPLINK E/S $1,486,651 TC RF SARA/PRS/7097 6/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
7307 REUTERS LTD TLI GMACS UPGRADE $7,800 PB 5500105183 12/24/97
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CONSIGNMENT
- ------------------------------------------------------------------------------------------------------------------------------------
8000 VARIOUS DEMOS, LEASES, ETC. ALL - N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
REPAIRS
- ------------------------------------------------------------------------------------------------------------------------------------
8200-8799 NON-WARRANTY REPAIRS N/A SU N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
8800-8899 NON-WARRANTY REPAIRS N/A SU N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
8900-8999 NON-WARRANTY FIELD SVC N/A SU N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
9000-9899 WARRANTY REPAIRS N/A SU N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
9900-9999 WARRANTY FIELD SERVICE N/A SU N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL SPARES
- ------------------------------------------------------------------------------------------------------------------------------------
6532 ACUMEN DEQ-703 $4,950 TC PD SA040/97 4/14/98
- ------------------------------------------------------------------------------------------------------------------------------------
65216 VSNL CRYSTAL OSCILLATORS $5,885 TC PD VSN/HQ/COM/IMP 12/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
65256 PHILCOMSAT OSCILLATOR $20,250 TC PD 26897 1/21/98
- ------------------------------------------------------------------------------------------------------------------------------------
65266 ARMENIAN TEL. MISC. SPARE PARTS $25,983 TC PD USL 004 2/15/98
- ------------------------------------------------------------------------------------------------------------------------------------
65276 TELESAT MISC. SPARE PARTS $191,948 TC PD TSE/97/038 2/16/98
- ------------------------------------------------------------------------------------------------------------------------------------
65296 HARIFF CRYSTALS $24,419 TC PD 105/TELKOM/1X/97 1/22/98
- ------------------------------------------------------------------------------------------------------------------------------------
65316 ACUMEN MISC. SPARE PARTS $15,843 TC PD SA039/97 3/14/98
- ------------------------------------------------------------------------------------------------------------------------------------
6968 PAKISTAN SPARES/MAINT. $438,571 TC PD NLC-3841-A 8/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT USA
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
*
- ------------------------------------------------------------------------------------------------------------------------------------
CONTRACT CUSTOMER REQ * CONTR.
- ------------------------------------------------------------------------------------------------------------------------------------
JOB # CUSTOMER/COUNTRY PROGRAM/DESCRIPTION $ VALUE DIR CA CONTRACT NO. GCE LD SHIP DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
7121 BDM SPACE SEGMENT $1,774,172 RF 02S20015 10/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
7147 NACISA BRD BNDING OF SATCOM $11,003,779 RF CO-6139-SAT 4/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
7202 DOD ENGINEERING SERVICES $50,000 RF CLASSIFIED 9/30/96
- ------------------------------------------------------------------------------------------------------------------------------------
7208 NATO BROADBANDING SPARE PTS $1,031,637 RF CO-6139-SAT 9/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
7226 DOD REPAIR SERVICES $0 RF CLASSIFIED 1/7/98
- ------------------------------------------------------------------------------------------------------------------------------------
7229 DOD CT-9C CONVERSION KIT $9,526 RF CLASSIFIED 7/25/97
- ------------------------------------------------------------------------------------------------------------------------------------
7231 DOD CT-3K REDUNDANT SYSTEM $36,630 RF CLASSIFIED 9/11/97
- ------------------------------------------------------------------------------------------------------------------------------------
7233 DOD MISC. EQUIPMENT $80,027 RF MALONE1997-1700 7/18/97
- ------------------------------------------------------------------------------------------------------------------------------------
7234 DOD DEHYDRATORS $7,086 RF CLASSIFIED 10/4/97
- ------------------------------------------------------------------------------------------------------------------------------------
7238 DOD CT-7C TERMINALS $857,014 RF DO 29 12/15/97
- ------------------------------------------------------------------------------------------------------------------------------------
7239 DFAF COLUMBUS CTR GGCL TERMINAL $1,565,337 RF DAAB0797CA517GCL 2/28/98
- ------------------------------------------------------------------------------------------------------------------------------------
7240 DOD ENGINEERING SERVICES $50,000 RF CLASSIFIED 9/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT SPARES
- ------------------------------------------------------------------------------------------------------------------------------------
7704 U.S. GOV'T CONTRACT OSCILLATOR 100 MHZ $4,360 PD MDA907-97-M-Q626 9/25/97
- ------------------------------------------------------------------------------------------------------------------------------------
7714 CMI/GCS MISC. SPARE PARTS $36,500 PD 7090 10/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
7715 CMI/GCS UNIVERSAL SYSTEMS CONTR. $16,000 PD 7117 12/17/97
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
MOBILESAT
- ------------------------------------------------------------------------------------------------------------------------------------
22228 O'GARA 10-32 VDC OPTION (DC-1) $112,150 GCA MP OSN238 6/20/97
- ------------------------------------------------------------------------------------------------------------------------------------
22250 PT IDAH/INDONESIA LYNXX $27,600 GCA MP 024/VI/IBM/97 7/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
22257 UNIMESA LYNXX CABLE ASSY $300 GCA MP 2466/1997 8/29/97
- ------------------------------------------------------------------------------------------------------------------------------------
22275 REMOTE SAT. SYS. 10-32 VDC OPTION (DC01) $109,336 GCA MP P7060A 12/19/97
- ------------------------------------------------------------------------------------------------------------------------------------
22278 73 COMM. TOKO VAST P DIPITAL $17,850 GCA MP PB26 11/21/97
- ------------------------------------------------------------------------------------------------------------------------------------
22279 FROTRONICS LYNXX $20,700 GCA MP 97-447 10/17/97
- ------------------------------------------------------------------------------------------------------------------------------------
22280 OMNES LYNXX & RAMK-50 $20,670 GCA MP 14204060PM 11/13/97
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Prepared by: A.Conte
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CM-SATELITE TRANSMISSION SYSTEMS DIVISION
SYSTEMS
REPRESENTATIVE/CONSULTANT AGREEMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Territory Name/Address Contact Name/Tel. # Eff. Exp. Status Exclusive(E) Compensation
Date Date Nonexclusive(NE)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Belgium Vigitec Alex Dekoninck 1/1/97 1/1/98 Complete. N/E Territory 5% of Sale
Rue de la Gremouillette 2C T:32-2-240-9370
1130 Bruxelles F:32-2-216-0127
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil LINKSAT Eldad Eitelberg 5/31/97 5/31/98 Complete. N/E Project 5% of Sale
Sistemas de Comunicacao T: +55-11-886- Specific
Ltda. 1577/78/79
Rua Coronel Oscar Porto F: +55-11-886-
813Conj 101-102 1589
Sao Paulo, Brazil 04003-002
- ------------------------------------------------------------------------------------------------------------------------------------
Bulgaria Racom, LTD Nedju Todorov 7/1/97 7/1/98 Complete. N/E Territory 5% of Sale
Ljulio PO Box 87, T:011-359-2-270446
Sofia, 1336 Bulgaria
- ------------------------------------------------------------------------------------------------------------------------------------
China DATACOM ENTERPRISES Tsui Yuk Kar 10/1/97 10/1/98 Complete. N/E Territory 7% of Sale
8/F On Lee Building T: +85-2-2384-3686
545 Nathan Road F: +85-2-2384-1102
Kowloon, Hong Kong
- ------------------------------------------------------------------------------------------------------------------------------------
Colombia CONSULTORIA Y SERVICIOS Carlos A. Moreno 1/1/97 1/1/98 Complete. N/E Project 5% of Sale
TECNICOS Gomez Specific
Calle 122 No. 8A-18 Of.203 T: +571-620-3978
Bogota, Colombia F: +571-620-1760
- ------------------------------------------------------------------------------------------------------------------------------------
Costa WORLD COM Valentin R. 1/1/97 1/1/98 Complete. E Project 12% of Sale
Rica La Sabana, Edif. No. 3 Hornvilleur Specific
2 do. piso T: +506-220-3024
San Jose, Costa Rica F: +506-220-3186
- ------------------------------------------------------------------------------------------------------------------------------------
Costa THE CHARLES GROUP, INC. Charles F. Scott 4/1/97 4/1/98 Complete. N/E Project 10% of Sale
Rica USA F: 1-508-480-8798 Specific
218 Boston Road V: 1-508-485-6959
Southborough, MA 01772
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1
12/9/97
* = Agreement has expired - needs to be reviewed.
COMPANY CONFIDENTIAL
<PAGE>
CM-SATELLITE TRANSMISSION SYSTEMS DIVISION
SYSTEMS
REPRESENTATIVE/CONSULTANT AGREEMENT
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Territory Name/Address Contact Name/Tel. # Eff. Exp. Status
Date Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ecuador DIGITEC CIA, LTDA Jaime Jaramillo 11/1/96 11/1/97 Sent out extension
Calle El Heraldo T: +593-2-430-373/374 letter, awaiting fully
121 y El Dia F: +593-2-443-782 executed copy.
Quito, Ecuador
- -----------------------------------------------------------------------------------------------------------------------
Egypt ARAB ENGINEERING & DIST. Ihab Lebeta 1/1/97 1/1/98 Complete.
21 El Saray El Kobra Street T: 20-2-354-4028/356-0791
Garden City Cairo, Egypt F: 20-2-355-8120
- -----------------------------------------------------------------------------------------------------------------------
India GAURAV EXPORTS Gaurav Shawhney 4/11/97 4/11/98 Complete.
34 Link Rd T: +91-11-683-5536
Lajpat Nagar III F: +91-11-326-3278
New Delhi, 110024 India
- -----------------------------------------------------------------------------------------------------------------------
Israel LINKCOM Elie Levy 1/1/95 Open* Sent agreement out
14 Hayetzira St. T: +972-3-752-1425 to be signed, 9/25.
Ramat-Gan F: +972-3-575-4031
Israel 52521
- -----------------------------------------------------------------------------------------------------------------------
Jordan MAY ELECTRICAL ENG. Walid M. Yousef 12/13/95 12/13/97 Need to verify if we
P.O. Box 815406 Haia Tal are renewing?
Amman, Jordan T: +962-6-672-640
F: +962-6-686-026
- -----------------------------------------------------------------------------------------------------------------------
Korea SAMSUNG CORP. J.H. Lee 8/1/97 8/1/98 Complete.
250, Tae-Pyung-Ro, 2 Ga, Y.S. Ryu
Chungku T: 82-2-751-3382
Seoul, Korea
- -----------------------------------------------------------------------------------------------------------------------
Lebanon & TASSOCO S.A.R.L. T/F: +961-1-203531 11/1/97 11/1/98 Complete.
Syria Transorient Bank Bldg. /203745/203572
5th Fl., President Sarkis Ave.
Ashrafieh - Beirut, Lebanon
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------------------------
Territory Exclusive(E) Compensation
Nonexclusive(NE)
- ---------------------------------------------
Ecuador E Territory 5% of Sale
- ---------------------------------------------
Egypt E Territory 5% of Sale
- ---------------------------------------------
India E Project Specific 7% of Sale
- ---------------------------------------------
Israel N/E Territiory 5% of Sale
- ---------------------------------------------
Jordan E Project Specific 5% of Sale
- ---------------------------------------------
Korea E-Territory/ 6% of Sale
Lynxx/Progeny
N/E- Korean Military
- ---------------------------------------------
Lebanon & N/E Territory 5% of Sale
Syria
- ---------------------------------------------
Page 2
12/9/97
* = Agreement has expired - needs to be reviewed.
COMPANY CONFIDENTIAL
<PAGE>
CM-SATELLITE TRANSMISSION SYSTEMS DIVISION
SYSTEMS
REPRESENTATIVE/CONSULTANT AGREEMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Territory Name/Address Contact Name/Tel. # Eff. Exp. Status Exclusive(E)
Date Date Nonexclusive(NE)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Malaysia KRIS HEAVY ENGR. & CONST. T: +603-282-3950/3895 2/1/97 2/1/98 Complete. E Project Specific
No. 24-3 Jalan l/82B F: +603-282-3902
Bangsar Utama
59000 Kuala Lumpur, Malaysia
- ------------------------------------------------------------------------------------------------------------------------------------
Pakistan TECHMAN INT'L CORP. Dr. M. Mahmud Awan 1/1/97 1/1/98 Complete. E Territory
Techman Center Rt 20 T: +508-248-3211
Charlton City, Mass 01508-0727 F: +508-248-3113
- ------------------------------------------------------------------------------------------------------------------------------------
Romania TELESPEED OPS, INC. Eugene Pascal 10/1/96 10/1/97 Sent extension letter E Project Specific
61-32 165th Street T: 718-460-4403 to be
Flushing. N.Y. 11365 F: 718-460-0697 signed.(10/1/97)
- ------------------------------------------------------------------------------------------------------------------------------------
Saudi Arabia ABDULLAH BUGSHAN Abdullah Bugshan 7/17/94 7/17/98 Complete. E Project Specific
Bugham Building T: +966-1-478-7711
Airport St. F: +966-1-477-4225
P.O. Box 80
- ------------------------------------------------------------------------------------------------------------------------------------
Sudan JABROKE ENG. LTD Dr. A Kaboash 7/6/97 7/1/98 Complete. E Project Specific
19 Great Newport St. T: +0171-499-8773
London, England WC2H7JE F: +0171-408-0749
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan TRANSCONTINENT ENTERPRISE Jason Lee 4/1/96 4/1/97 Sent extension letter E Project Specific
CO. T: +886-2-6279260 to be signed.
F: +886-2-7996910
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand TELESAT CORP. CO. T: +66-2-682-6111 1/15/97 1/15/98 Complete, Need to N/E Project Specific
900/9 SVOA Tower F: +66-2-682-6300 verify if we are
RAMA III Rd. Bangpongpang, renewing?
Yannawa, Bangkok 10120, Thailand
- ------------------------------------------------------------------------------------------------------------------------------------
Turkey HABERLESME Onder Guven 10/1/96 10/1/97 Sent extension letter E Territory
TELEKOMUNIKASYON T: +90-4-440-9647 to be signed.
Rafet Canitez Caddesi F: +90-4-440-9749
Akin 1 Apt. 2/63
06450 Oran
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------
Territory Compensation
- --------------------------
Malaysia 5% of Sale
- --------------------------
Pakistan 10% of Sale
- --------------------------
Romania 3% of Sale
- --------------------------
Saudi Arabia
- --------------------------
Sudan 5% of Sale
- --------------------------
Taiwan 5% of Sale
- --------------------------
Thailand 5% of Sale
- --------------------------
Turkey 5% of Sale
- --------------------------
Page 3
12/9/97
* = Agreement has expired - needs to be reviewed.
COMPANY CONFIDENTIAL
<PAGE>
CM-SATELLITE TRANSMISSION SYSTEMS DIVISION
PRODUCTS
DISTRIBUTOR/REPRESENTATIVE AGREEMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Territory Name/Address Contact Name/Tel. # Eff. Exp. (E)Exclusive Products
Date Date (NE)Nonexclusive
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Argentina TECHNOLOGY GROUP Alejandro Russo 7/1/97 7/1/98 E- Progeny VSLXIB
Gral Guido 2343 T: 54-1-747-6911 N/E- Lynxx
(1643) BeccarBuanos Aires, F: Same
Argentina
- ------------------------------------------------------------------------------------------------------------------
Australia COMSYST (AUSTRALIA) Neville Lee 1/10/96 12/31/97 NE VSLXIB
PTY LTD T: + 61-2-878-1188
10 Byfield Street F: + 61-2-878-5622
North Ryde NSW, Australia
- ------------------------------------------------------------------------------------------------------------------
California COLLINS MARINE CORP. Essie Collins 7/1/94 Open N/E VSLXIB
1017 Grandview Drive Mike Johnson
San Francisco, CA 94080 T: 1-415-588-9806
T: 1-415-588-9802
F: 1-4I5-588-9303
- ------------------------------------------------------------------------------------------------------------------
California REMOTE SATELLITE Rob Rosen 1/15/96 12/31/97 N/E VSLXIB
USA SYSTEMS T: 1 + 415-256-8199
INTERNATIONAL F: 1 + 415-256-8198
1010 Lootens Place #17
San Rafael, CA 94901
- ------------------------------------------------------------------------------------------------------------------
Canada TD COMMUNICATIONS Bob Patterson 10/13/94 Open* N/E VSLXIB
1007H-5th Avenue, NE Victor Robins
Calgary, Alberta Dean White
Canada T2E 6W1 Larry Grieve
T: 1+403-274-4663
F: 1+403-274-4666
- ------------------------------------------------------------------------------------------------------------------
France TD COM Patrick Gibassier 3/26/93 Open* N/E VSLXIB
3 Avenue des Erables Monique Faudrerre
Zac De La Butte Gayen Pierre Bous
94440 Santeny, France T: 4044-5600
F: 4044-5603
1-403-735-6063
- ------------------------------------------------------------------------------------------------------------------
Germany ELNA GmbH Jan Evers Bernhard von 3/1/94 Open* N/E VSLXIB
2084 Rellingen bei Hamburg Dobro Wolski
Siemenstrasse 35 Klaas Schlenkermann
Germany Uwe Lamprecht
T: +49-4101-301251
F: +49-4101-301214
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------------------------------------
Territory Status Compensation
- ----------------------------------------------------
Argentina Complete Representative
10% Commission
- ----------------------------------------------------
Australia Complete 20% Discount
- ----------------------------------------------------
California Need to terminate 20% Discount
(HOLD) Clear up
balance.
- ----------------------------------------------------
California Sent Application for 20% Discount
USA Renewal 4/97, Sales Rep
to verify status of
application. On Hold.
- ----------------------------------------------------
Canada Sent Application for 20% Discount
Renewal 4/97. Sales Rep
to verify status of
application.
- ----------------------------------------------------
France Sent Application for 20% Discount
Renewal, 4/97, Sales Rep
to verify status of
application.
- ----------------------------------------------------
Germany Sent Application for 20% Discount
Renewal, 4/97. Sales Rep
to verify status of
application.
- ----------------------------------------------------
VSLXIB = Mobiles at LYNXX INVARSAT-8 Transportable Satellite Terminals and
Accessories.
* = Agreement has expired - needs to be reviewed.
Page 1
12/9/97
COMPANY CONFIDENTIAL
<PAGE>
CM-SATELLITE TRANSMISSION SYSTEMS DIVISION
PRODUCTS
DISTRIBUTOR/REPRESENTATIVE AGREEMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Territory Name/Address Contact Name/Tel. # Eff. Exp. (E)Exclusive Products
Date Date (NE)Nonexclusive
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Houston, TX ABLE COMMUNICATIONS Ed Mallet 6/22/95 12/31/96 N/E VSLXIB
USA CO. Mark Bujnock
6214 W. Broadway T: 1 + 713-435-9800
Pearland, TX 77581 F: 1 + 713.485-8230
- -------------------------------------------------------------------------------------------------------------------
Houston, TX FROTRONICS, INC. Jack Frost 3/26/93 Open N/E VSLXIB
USA 6142 S. Loop E. Brian Patrick
Houston, TX 77087 T: 1 + 713-644-6445
F: 1 + 713-644-2134
- -------------------------------------------------------------------------------------------------------------------
Hungary, AURIMPEX Theo Bash 8/10/95 12/31/96 N/E VSLXIB
Romania, TECHNOLOGIES INC. T: +361-252-3444
Ukraine 1148 Budapest F: +361-252-0159
Fogarasi ut 14, Hungary
- -------------------------------------------------------------------------------------------------------------------
Indonesia Pt. Indah Bangun Mandiri Yulianto Djunaidi 9/1/97 9/1/98 Complete. VSLXIB
Jl. Duren Barat 4 No. 25 F- 62-21-568-7721
Tomang Barat - Jakarta
11470
- -------------------------------------------------------------------------------------------------------------------
Israel TELELINK J. Hertz 3/1/97 3/1/98 N/E VSLXIB
Werkstraat 15 (T) 92-6-627-3474
B-2018 Antuerp (F) 972-6-627-3475
Belgium
- -------------------------------------------------------------------------------------------------------------------
Japan KTI CO LTD.2-1-23, S. Higashi S. Katsuma 8/15/94 Open N/E VSLXIB
NakameguroMeguro- T: + 81-3-3794-8285
KuTokyo 153 Japan F: + 81-3-3794-8293
- -------------------------------------------------------------------------------------------------------------------
Korea SAMSUNG CORP. J.H. Lee 8/1/97 8/1/98 E/Lynxx/Progeny E-Territory/
250, Tae-Pyung-Ro, 2 Ga, Y.S. Ryu Lynxx/Proge
Chungku T: 82-2-751-3382 ny N/E-
Seoul, Korea Korean
Military
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------------------------------------
Territory Status Compensation
- ----------------------------------------------------
Houston, TX Awaiting for agreement to 20% Discount
USA be signed, 9/28.
- ----------------------------------------------------
Houston, TX Awaiting for agreement to 20% Discount
USA be signed, 9/28.
- ----------------------------------------------------
Hungary, Sent Application for 20% Discount
Romania, Renewal, 4/97. Sales Rep
Ukraine to verify status of
application.
- ----------------------------------------------------
Indonesia N/E Lynxx 20% Discount
- ----------------------------------------------------
Israel Complete 10% of Sale
- ----------------------------------------------------
Japan Sent Application for 20% Discount
Renewal, 4/97. Sales Rep
to verify status of
application. On Hold.
- ----------------------------------------------------
Korea Complete. 6% of Sale
- ----------------------------------------------------
VSLXIB = Mobiles at LYNXX INVARSAT-8 Transportable Satellite Terminals and
Accessories.
* = Agreement has expired - needs to be reviewed.
Page 2
12/9/97
COMPANY CONFIDENTIAL
<PAGE>
CM-SATELLITE TRANSMISSION SYSTEMS DIVISION
PRODUCTS
DISTRIBUTOR/REPRESENTATIVE AGREEMENTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Territory Name/Address Contact Name/Tel. # Eff. Exp. (E)Exclusive
Date Date (NE)Nonexclusive
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Malaysia, FEDERAL TELECOM SDN C Stan 4/20/95 12/31/96 N/E
Bangladesh BHD Lot 2, Jalan T: + 603-7560255
222, Section 51A F: + 603-7568868
46100 Petaling Jaya
Selangor Derul Ehsan
Malaysia
- ---------------------------------------------------------------------------------------------------------------
New York & O'GARA SATELLITE Jack Lemmerman 11/10/95 12/31/96 N/E
Ohio NETWORKS T: 516-586-5100
1 Brandywine Drive F: 516-586-5531
Deer Park, N.Y. 11729
- ---------------------------------------------------------------------------------------------------------------
New Zealand RADIOLA CORP. LTD. Richard Thompson 9/6/95 12/31/96 N/E
Wineera Drive T: + 64-4-237-0139
Private Bag 30911 F: + 64-4-237-1267
Porirua City, New Zealand
- ---------------------------------------------------------------------------------------------------------------
Peru LIMATEL Luis Felipe Yanes 11/1/96 11/1/97 N/E
Conquistadores 396 Oficina T: + 441-1310/440-2745
#305 Lima 27 F: + 511-441-0230
Peru
- ---------------------------------------------------------------------------------------------------------------
Plano, TX AOS, INC. Sue Robinson 8/10/93 Open* N/E
USA 2420 Westridge Howard Robinson
Plano,TX 75075 T: 1 + 214-424-9227
F: 1 + 214-386-5712
- ---------------------------------------------------------------------------------------------------------------
Saudi Arabia EEMCO Tarek Stouhy 12/13/93 Open* N/E
P.O. Box 3750 Jamil Habib Jaffal
Riyadh 11481 Saudi Arabia T: + 966-1-4771650
F: + 966-1-4785140
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Territory Products Status Compensation
- ------------------------------------------------------------------
<S> <C> <C> <C>
Malaysia, VSLXIB Sent Application for 20% Discount
Bangladesh Renewal, 4/97. Sales Rep
to verify status of
application. On Hold.
- ------------------------------------------------------------------
New York& VSLXIB Sent Application for 20% Discount
Ohio Renewal, 4/97. Sales Rep
to verify status of
application. On hold.
- ------------------------------------------------------------------
New Zealand VSLXIB On Hold. 20% Discount
- ------------------------------------------------------------------
Peru VSLXIB HG to verify if we are 10% of Sale
renewing?
- ------------------------------------------------------------------
Plano, TX VSLXIB Awaiting for agreement 20% Discount
USA to be signed, 9/28.
- ------------------------------------------------------------------
Saudi Arabia VSLXIB Sent Application for 20% Discount
Renewal, 4/97. Sales
Rep to verify status
of application.
- ------------------------------------------------------------------
</TABLE>
VSLXIB = Mobiles at LYNXX INVARSAT-8 Transportable Satellite Terminals and
Accessories
* = Agreement has expired - needs to be reviewed
COMPANY CONFIDENTIAL Page 3
12/9/97
<PAGE>
CM-SATELLITE TRANSMISSION SYSTEMS DIVISION
PRODUCTS
DISTRIBUTOR/REPRESENTATIVE AGREEMENTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Territory Name/Address Contact Name/Tel. # Eff. Exp. (E)Exclusive
Date Date (NE)Nonexclusive
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
South Africa NAVIGATION SCIENCE Fred Joubert 4/6/95 12/31/96 ETerritory
CORP. T: 1 + 818-991-9794
31127 Via. Co1linas F: 1 + 818-991-9896
Suite 807
West Lake Village, CA
- ---------------------------------------------------------------------------------------------------------------
South Africa PERTEC (PTY) LTD. Peter How, 8/17/94 Open* N/E
Zimbabwe P.0. Box 232, L. Hawkins
Halway House Peter Bruce
1685 Johannesburg, T: + 27-11-805-1996
South Africa F: + 27-11-805-2632
- ---------------------------------------------------------------------------------------------------------------
Thailand UNIMESA Preecha Jira 3/1/93 Open N/E
2540 Sukhumvit Road Uthai Mangtrisan
Bangna, Bangkok 10260 T: +66-2-398-9489
Thailand F: +66-2-398-9488
- ---------------------------------------------------------------------------------------------------------------
United RE UK LTD. Mike Faban 10/9/96 10/9/98 N/E
Kingdom Alberto House T: +897-3-1119
Hogwood Lane, F: +897-3-1190
Finchamstead Berkshire
RG4O 4RF
- ---------------------------------------------------------------------------------------------------------------
United 7E COMMUNICATIONS LTD. Peter Beardow 3/24/93 Open* N/E
Kingdom Technology Transfer Ctr T: + 44-1-344-872737
Silwood Park Buckhurst F: + 44-1-344-872276
Road, Ascot Berks,
SL5 7PW England
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Territory Products Status Compensation
- ------------------------------------------------------------------
<S> <C> <C> <C>
South Africa VSLXIB/ Awaiting for fully 10% of Sale
Progeny executed copy, 7/20.
Sales Rep to verify status?
- ------------------------------------------------------------------
South Africa VSLXIB Sent Application for 20% Discount
Zimbabwe Renewal, 4/97, Sales Rep
to verify status of
application.
- ------------------------------------------------------------------
Thailand VSLXIB Sent Application for 20% Discount
Renewal, 4/97. Sales Rep
to verify status of
application. On Hold.
- ------------------------------------------------------------------
United Progeny Complete OEM/Reseller
Kingdom Discount
- ------------------------------------------------------------------
United VSLXIB Sent Application for 20% Discount
Kingdom Renewal, 4/97. Sales Rep
to verify status of
application. On Hold.
- ------------------------------------------------------------------
</TABLE>
VSLXIB = Mobiles at LYNXX INVARSAT-8 Transportable Satellite Terminals and
Accessories
* = Agreement has expired - needs to be reviewed
COMPANY CONFIDENTIAL Page 4
12/9/97
<PAGE>
CM-SATELLITE TRANSMISSION SYSTEMS DIVISION
SYSTEMS
REPRESENTATIVE/CONSULTANT AGREEMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Territory Name/Address Contact Name/Tel. # Eff. Exp. (E)Exclusive
Date Date (NE)Nonexclusive
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Venezuela EPROTEL, S.A. Yolanda Anez de Pacs 10/15/96 10/15/97 N/E
Av. Circunvalacion Del Sol T: + 985 51 44
Centro Professional Santa F: + 9860390
Paula Torre B, piso 4, Ofe.
407-412 Urb Santa Paula
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Territory Products Status Compensation
- ------------------------------------------------------------------
<S> <C> <C> <C>
Venezuela VSLXIB HG to verify if we are 20% - 35%
renewing? Discount
- ------------------------------------------------------------------
</TABLE>
VSLXIB = Mobiles at LYNXX INVARSAT-8 Transportable Satellite Terminals and
Accessories
* = Agreement has expired - needs to be reviewed
COMPANY CONFIDENTIAL Page 5
12/9/97
<PAGE>
NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CORPORATION ENTERED IN BRIEF DESCRIPTION OF
AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Academy of Broadcasting Science MUTUAL BUSINESS 10/97-10/2000
Ministry of Radio, Film & TV
- -----------------------------------------------------------------------------------------------------
Advent Communciations DIGITAL NEWS GATHERING SYSTEM/ 3/95-3/98
TV SATELLITE LINKS
- -----------------------------------------------------------------------------------------------------
Ansarom Servicill S.R.L. ETG DIST. OF DIGITAL COMPRESSED 7/96-7/99
TV
- -----------------------------------------------------------------------------------------------------
Ark Telecommunciations, Inc. MARKETING STRATEGIES 7/94-12/94
- -----------------------------------------------------------------------------------------------------
Ark/Pacific Century/STS CORPORATE ACCESS 3/95-3/98
- -----------------------------------------------------------------------------------------------------
ASCOR Electronics, Inc. C, X, KU-BAND SATELLITE PRODUCTS 5/94-5/97
- -----------------------------------------------------------------------------------------------------
At&t Morristown NJ MARKETING PROGRAMS 10/92-10/95
- -----------------------------------------------------------------------------------------------------
At&t Basking Ridge, NJ TELECOMMUNICATIONS FOR 9/93-9/96
INTERNATIONAL TRAVELERS
- -----------------------------------------------------------------------------------------------------
At&t New York City ECHO CANCELLING TECHNOLOGY 11/93-11/96
- -----------------------------------------------------------------------------------------------------
Binariang Satellite Sys. MEASAT KUALA LUMPUR 8/95-8/97
- -----------------------------------------------------------------------------------------------------
Booze, Allen & Hamilton GOV'T PROJECT 3/96-8/2000
- -----------------------------------------------------------------------------------------------------
"BT" British Telecom Plc. GMACS 16&32 RC&M SYSTEMS 9/97-9/99
- -----------------------------------------------------------------------------------------------------
Capitol broadcasting Co. Inc. KA-BAND COMUNNICATIONS 8/97-8/2002
- -----------------------------------------------------------------------------------------------------
Coherent Com. Sys. Corp. MARKETING STRATEGIES 10/95-/10/97
- -----------------------------------------------------------------------------------------------------
Columbia Communications Corporation TDRS-4 INTERNATIONAL SAT COMM 7/93-7/95
- -----------------------------------------------------------------------------------------------------
COMSAT Systems Divison RF TERMINALS & COMPONENTS FAASAT 10/92-10/97
- -----------------------------------------------------------------------------------------------------
Consultare Technology Group, Inc. POLSAT PROJECT 2/96-2/99
- -----------------------------------------------------------------------------------------------------
Crosslink, Inc. MARKETING STRATEGIES 8/96-8/99
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 1
COMPANY CONFIDENTIAL 12/10/97
<PAGE>
NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CORPORATION ENTERED IN BRIEF DESCRIPTION OF
AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Curlerul National S.A. Broadcasting WORK ASSOCIATED WITH PROPOSAL 4/95-4/98
Dpt. NO. P95-7276
- -----------------------------------------------------------------------------------------------------
DAYTON /TRANSCO Inc. TRANSPORTABLE RADARSAT 3/94-3/97
TERMINAL
- -----------------------------------------------------------------------------------------------------
Designsat DIGITAL VOICE SYSTEMS 7/93-7/96
TELECOMMUNICATIONS
- -----------------------------------------------------------------------------------------------------
Tom Durston Consulting EVALUATION OF LYNXX 6/96-6/99
- -----------------------------------------------------------------------------------------------------
ECI Telecom Inc. TECHNICAL & SOFTWARE 8/93-8/95
INFORMATION
- -----------------------------------------------------------------------------------------------------
Electric-Magnetic Processess, Inc. RFP SUPPORT 11/91-11/94
- -----------------------------------------------------------------------------------------------------
GE American Communciations, Inc. GLOBAL KA-BAND SATELLITE SYSTEM 2/97-2/2000
- -----------------------------------------------------------------------------------------------------
GE American Communciations, Inc. BROADCAST CENTER 5/97-5/99
- -----------------------------------------------------------------------------------------------------
GEC-Marconi MUTUAL BUSINESS OPPORTUNITIES 11/96-11/99
- -----------------------------------------------------------------------------------------------------
Gilat Satellite Networks, Ltd. (GSN) EVALUATING TECHNICAL CAPABILITIES 9/96-9/98
- -----------------------------------------------------------------------------------------------------
GLOBAL SAT NETWORK (GSN) INFRASTRUCTURE DEVELOPMENT 8/96-2001
PROJECT
- -----------------------------------------------------------------------------------------------------
Glocom Inc. INMARSAT "B" CHANNEL UNITS 4/96-4/99
- -----------------------------------------------------------------------------------------------------
GTE Government Systems Corp. ENGINEERING & TECHNICAL INFO GTE 1/94-1/97
DIGITAL SWITCH
- -----------------------------------------------------------------------------------------------------
GTE Government Systems Corp. TRI-BAND SATELLITE TERMINAL 10/95-10/98
OPPORTUNITIES
- -----------------------------------------------------------------------------------------------------
Harris Corporation, Farinon Division DIGITAL TV EXCITER PRODUCT 11/93-11/96
- -----------------------------------------------------------------------------------------------------
HSC MUTUAL BUSINESS OPPORTUNITES 9/96-9/2001
- -----------------------------------------------------------------------------------------------------
Hughes Aircraft Company PHASE III OF ROYAL THAI AIR 4/93-5/93
DEFENSE SYSTEMS
- -----------------------------------------------------------------------------------------------------
Hyundai POLSPACE PROJECT 9/96-9/99
- -----------------------------------------------------------------------------------------------------
IBM MOBILE SATELLITE SERVICES 10/91-10/93
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 2
COMPANY CONFIDENTIAL 12/10/97
<PAGE>
NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CORPORATION ENTERED IN BRIEF DESCRIPTION OF
AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
INET INC. CBRN-E PROJECT 8/91-8/94
- -----------------------------------------------------------------------------------------------------
INFONET Services Corporation GOVERNMENT PROCUREMENT 8/92-8/94
- -----------------------------------------------------------------------------------------------------
TITAL BROADBAND 10/96-10/98
ING (U.S.) Capital Corporation COMMUNICATIONS
- -----------------------------------------------------------------------------------------------------
INMARSAT PACKET DATA SYSTEM
(INMARSAT) SATELLITE BASE STATION PROGRAM 9/97-9/2002
- -----------------------------------------------------------------------------------------------------
PC DEMAND ASSIGNMENT MULTIPLE
Innovative Communciations Tech, Inc. ACCESS (PC-DAMA) 3/93-3/96
- -----------------------------------------------------------------------------------------------------
TRANSPORTABLE RADARSAT
IOTEK, Inc. TERMINAL 1/94-1/97
- -----------------------------------------------------------------------------------------------------
CELLULAR TELEPHONE NETWORK
Katel, Tk Tel, Ltd. WITH INTERNATIONAL GATEWAY 7/93-7/96
- -----------------------------------------------------------------------------------------------------
Kokusa Telcom KTI'S USE OF LYNXX 2/97-2/2000
- -----------------------------------------------------------------------------------------------------
MOBIL COMMUNICATIONS SATELLITE
Lockheed Martin PROJECT 6/96-6/99
- -----------------------------------------------------------------------------------------------------
Lockheed Martin ELLIPSO PROGRAM 9/97-9/98
- -----------------------------------------------------------------------------------------------------
UNIVERSAL MODEM & STAR-T AND
Magnavox Electronic Sys. (MESC) LMST TERMINALS 6/94-6/96
- -----------------------------------------------------------------------------------------------------
MCI Telecommunciations Corp. MUTUAL BUSINESS 5/95-5/97
- -----------------------------------------------------------------------------------------------------
Motorola Inc. MUTUAL BUSINESS 11/97-11/2001
- -----------------------------------------------------------------------------------------------------
Netcom Solutions COMESAN NETWORK PROJECT 9/96-9/98
- -----------------------------------------------------------------------------------------------------
News Datacom BUSINESS OPPORTUNITIES 11/95-11/2000
- -----------------------------------------------------------------------------------------------------
NIAC VNPT TELSTRA PROJECT 1/95-1/98
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 3
COMPANY CONFIDENTIAL 12/10/97
<PAGE>
NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CORPORATION ENTERED IN BRIEF DESCRIPTION OF
AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Nuera/PCSI MUTUAL BUSINESS INTERESTS 5/96-5/99
- -----------------------------------------------------------------------------------------------------
Omni Communications MUTUAL BUSINESS 1/96-1/99
- -----------------------------------------------------------------------------------------------------
Orion Atlantic L.P. V-SAT NETWORK PRODUCTS 6/94-6/99
- -----------------------------------------------------------------------------------------------------
Pacific Century Telecommunications TELECOM EQUIPMENT 2/95-2/00
- -----------------------------------------------------------------------------------------------------
VOICE FAX DATA COMPRESSION
Pacific Communications Sciences MULTIPLEXING WIRELESS COMM 7/92-7/97
- -----------------------------------------------------------------------------------------------------
PCSI MUTUAL BUSINESS INTERESTS 5/96-5/99
- -----------------------------------------------------------------------------------------------------
Philips Broadcast Television Sys. Co. MUTUAL BUSINESS INTERESTS 8/97-8/98
- -----------------------------------------------------------------------------------------------------
Qualcomm MUTUAL BUSINESS 8/96-8/99
- -----------------------------------------------------------------------------------------------------
Qualcomm MUTUAL BUSINESS 9/97-9/2002
- -----------------------------------------------------------------------------------------------------
Raytheon Service Co. FAA SATELLITE TELECOM SYSTEMS 12/92-12/95
- -----------------------------------------------------------------------------------------------------
INMARSAT & MOBILE SATELLITE
RDC/CARCOM/VIASAT PRODUCTS 4/94-4/97
- -----------------------------------------------------------------------------------------------------
Re America MUTUAL BUSINESS 12/96-12/98
- -----------------------------------------------------------------------------------------------------
RF Microsystems, Inc. C, X, KU-BAND PRODUCTS 5/94-5/97
- -----------------------------------------------------------------------------------------------------
SOURCES FOR FINANCING
Robert G.Cusac AERONAUTICAL TELECOM NETWORK 4/94-4/97
- -----------------------------------------------------------------------------------------------------
Rockwell MSAT LAND EARTH STATION 8/94-8/95
- -----------------------------------------------------------------------------------------------------
Samsung POTENTIAL SOURCES FOR SATELLITE
E/S 12/92-12/95
- -----------------------------------------------------------------------------------------------------
Satellite Technology Management Inc. VARIOUS SATELLITE INFO. 6/94-6/97
- -----------------------------------------------------------------------------------------------------
Satlantic, Inc. TRANSPORTABLE RADARSAT
TERMINAL 1/94-1/97
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 4
COMPANY CONFIDENTIAL 12/10/97
<PAGE>
NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CORPORATION ENTERED IN BRIEF DESCRIPTION OF
AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Scitex Corporation Ltd/Israel PRESS POINT SYSTEM 5/95-5/98
- -----------------------------------------------------------------------------------------------------
Scientific Atlanta, Inc./WestingHouse ELLIPSO PROGRAM 3/94-3/95
- -----------------------------------------------------------------------------------------------------
Siemens JOINT COMMAND PROJECT
ECUADOREAN ARMED FORCES 3/94-3/97
- -----------------------------------------------------------------------------------------------------
PROCESSING OF SIGNALS PRIOR TO
Snell & Wilcox Limited COMPRESSION 1/95-1/97
- -----------------------------------------------------------------------------------------------------
Stanford Telecommunications, Inc. IDAC PRODUCTS 12/92-12/95
- -----------------------------------------------------------------------------------------------------
ACM MODULE SEE MOA PARA 12
Storke Industries PROPRIETARY INFO. 7/94-7/96
- -----------------------------------------------------------------------------------------------------
Summa Four, Inc. MUTUAL OPPORTUNITIES 1/97-1/99
- -----------------------------------------------------------------------------------------------------
Sumitomo Corporation of America POTENTIAL SOURCES FOR E/S SUPPLY 7/92-7/95
- -----------------------------------------------------------------------------------------------------
SATELLITE & TERRESTRIAL CELLULAR
Systar Telecommunications SYSTEM 6/92- 6/95
- -----------------------------------------------------------------------------------------------------
Tadiran DIGITAL TV SATELLITE LINKS 11/93-11/96
- -----------------------------------------------------------------------------------------------------
Tandberg Television AS DIGITAL TV VENTURES 2/95-2/98
- -----------------------------------------------------------------------------------------------------
Telecom New Zealand BUSINESS OPPORTUNITIES 7/95- 7/2000
- -----------------------------------------------------------------------------------------------------
The Software Group BUSINESS OPPORTUNITIES 7/96-7/99
- -----------------------------------------------------------------------------------------------------
The Trustforte Corporation PROSPECTIVE BUSINESS 6/94-6/99
- -----------------------------------------------------------------------------------------------------
Thomson-CSF ODYSSEY PROJECT 2/92-2002
- -----------------------------------------------------------------------------------------------------
Thomson-CSF MOBILE & TACTICAL STATIONS 12/91-12/96
- -----------------------------------------------------------------------------------------------------
TIERNAN COMMUNICATIONS, INC. GMACS PROGRAM 4/97-4/2002
- -----------------------------------------------------------------------------------------------------
Titan Capital Corporation UZBEKISTAN (R.LEVIN) 4/94-4/97
- -----------------------------------------------------------------------------------------------------
SATELLITE COMMUNICATIONS IN
TK Tel Ltd. FORMER SOVIET UNION 7/94-7/97
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 5
COMPANY CONFIDENTIAL 12/10/97
<PAGE>
NON DISCLOSURE / CONFIDENTIALITY AGREEMENT LISTING
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
CORPORATION ENTERED IN BRIEF DESCRIPTION OF
AGREEMENT WITH STS PROGRAM / PRODUCT VALIDITY PERIOD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Confidentiality Agreement Meeting of
TK Tel/STS 5/16/95 5/95-5/98
- -----------------------------------------------------------------------------------------------------
TRW TRW'S ODYSSEY PROGRAM 3/96-3/99
- -----------------------------------------------------------------------------------------------------
VertiCom KU BAND CONVERTER MODULES 4/95-4/98
- -----------------------------------------------------------------------------------------------------
VIASAT MUTUAL BUSINESS RELATIONS 9/93-9/98
- -----------------------------------------------------------------------------------------------------
VIASAT'S STARWIRE & DAME
VIASAT SATELLITE NETWORK SYSTEMS 3/97-3/98
- -----------------------------------------------------------------------------------------------------
VIASAT SIVAN PROJECT 6/97-6/2000
- -----------------------------------------------------------------------------------------------------
Vitacom Corporation MUTUAL BUSINESS RELATIONS 11/93-11/95
- -----------------------------------------------------------------------------------------------------
MOBILE SATELLITE SERVICES
Westinghouse Electric Corporation COMMUNICATIONS (MSS CGS) 12/91-12/92
- -----------------------------------------------------------------------------------------------------
</TABLE>
Page 6
COMPANY CONFIDENTIAL 12/10/97
<PAGE>
Reference: Article 3.11(XV)
CUSTOMER OPTION IN CONNECTION WITH BACKLOG
Additional Contract
Customer Contract No. Contract Value Option Value
-------- ------------ -------------- -------------------
1. U.S. Army DAAB07-97-C-A517 $1,565,337 $275,856
<PAGE>
SATELLITE TRANSMISSION SYSTEMS
OUTSTANDING PROPOSALS
>$100,000 As of 12/10/97
Proposal Prop Value
Number Customer Country Prop Description ($MIL)
================================================================================
8557 Sichuan China 4 IDR St. $1.50
8567 ONPT Africa 3 SNG's $1.50
(Proposal)
8570 Telgua Guatemala Std. B $1.20
(E&S list)
8603 MNG TV Turkey SNG Network $1.17
8578 Measat Malaysia STD F3 $1.00
(E&S List)
8419 Samsung Korea KBS Video Distribution $0.90
8620 AT&T USA IF AMPS for Coram $0.75
8519 Panchao TV Taiwan Progeny XP $0.74
8432 Hungarian TV Hungary Video Network $0.64
8490 Digicom Romania Printing Network $0.62
8447 Q.Tel Qatar MCPC Network $0.59
8618 Digicom Romania Digital Video Distribution
8178 Impsat Mexico Mexico 7.2 Meter Ku Station $0.53
8615 Loral Skynet USA Move 8M antenna equipment $0.50
8349 Emetel Ecuador IDR $0.50
8480 Rosnet Russia Internet Services $0.50
8594 Samsung Korea Internet Uplink $0.50
8533 St. Kitts Hotel St. Kitts Internet Connection $0.50
8589 Impsat Ecuador C-Sat E/S $0.46
COMPANY PRIVATE
1.
<PAGE>
SATELLITE TRANSMISSION SYSTEMS
OUTSTANDING PROPOSALS
> $100,000 As of 12/10/97
<TABLE>
<CAPTION>
Proposal Prop Value
Number Customer Country Prop Description ($MIL)
==============================================================================================
<S> <C> <C> <C> <C>
8483 EFRAT Israel Phones Upgrade $0.40
8542 Transcontent Enterprise Taiwan 3 Flyaway $0.40
8601 Impsat Colombia 6.1M CSAT $0.35
8388 Emetel Ecuador Two site additional 4 sites $0.35
8562 Samsung Korea TVRO $0.30
8448 Impsat Argentina 9 Meter C band $0.27
8387 PTT Netherlands Netherlands Std. F2 $0.26
8294 Impsat Mexico 6.1M C-Band CSAT $0.25
8572 Telefonica Spain Upconverter $0.25
8424 ACCR Santo Domingo Std. F1 $0.24
8537 Impsat Brazil Progeny XP $0.21
8616 TVD USA L Band/70 mkg down converters $0.20
8493 Impsat Argentina Ku Band Dual 1:8 Tiger cab w/GCE $0.17
8471 Ford USA UPS & Back up power $0.16
8325 Us-Net Costa Rica Network $0.15
8363 Reuters USA E/S Terminal $0.15
8364 Reuters USA E/S Terminal $0.15
8466 PTT Telecom Netherlands GMACS Upgrade $0.15
8407 HNS USA Site upgrade-Scamp system upgrade. $0.14
</TABLE>
COMPANY PRIVATE
2.
<PAGE>
SATELLITE TRANSMISSION SYSTEMS
OUTSTANDING PROPOSALS
> $100,000
<TABLE>
<CAPTION>
Proposal Prop Value
Number Customer Country Prop Description ($MIL)
============================================================================================
<S> <C> <C> <C> <C>
5804 Raytheon USA Sivam C-Band Network $25.00
(Proposal)
8497 Govt Pakistan Pakistan Mob Cellular $10.40
(Proposal)
8241 Belgium Army Belgium Flyaway hubs and Naval terminal $10.00
8507 Capitol Broadcasting USA CBC Ka Band Feederlinks $10.00
8408 Northrop Grumman USA Voice Data Network-Upside $9.80
7976 Raytheon Argentina SIVYCEA Network $8.00
8614 Northrop Grumman USA ATC Network
(Equipment & Service List) $6.60
8310 Bezeq Israel Inmarsat $4.00
9035 TV Globo Brazil Progeny $3.50
8456 Guatel Guatemala Rural Telephony Network $3.20
(Proposal)
8420 BTC Bulgaria Std. A $3.00
8129 Mo PTT Saudi Multiple change proposals. $2.50
8210 Gruner & Jahr Germany SCPC Network $2.50
8453 O'Connors MOD Singapore DAMA Network $2.00
8441 Measat Singapore DTH $2.00
8440 HBO (Singtel) Singapore Digital TV $1.70
8392 AT&T USA ETAM E/S Antenna I upgrade. $1.60
8455 Saudi Gov't Saudi Saudi Network $1.60
8576 TeleAmazonas Ecuador 2 MCPC $1.50
(E&S list)
</TABLE>
COMPANY PRIVATE
3.
<PAGE>
SATELLITE TRANSMISSION SYSTEMS
OUTSTANDING PROPOSALS
> $100,000
Proposal Prop Value
Number Customer Country Prop Description ($MIL)
================================================================================
8581 BTC Bulgaria Down Converter $0.13
8587 BEZEQ Israel Modem Rack $0.13
8598 OTE Greece Antenna $0.13
8554 Linkom Israel C-BAND Hub Station $0.13
7504 AT&T USA FAA Video Hub Upgrade $0.11
8509 Star TV Hong Kong Transportable Antenna Clearwater $0.10
8411 AT&T USA Roaring Creek GCE UAS Rack $0.10
8350 Emetel Ecuador Phones $0.10
-------
$129.00
COMPANY PRIVATE
4.
<PAGE>
SCHEDULE 3.11(c)
DEFAULTS AND CONSENTS UNDER CONTRACTS
1. DEFAULTS: None.
2. ENFORCEABILITY: None.
3. CONSENTS: CMI must obtain consent of the other party to each of the contracts
listed under items 3(i), (ii), (iii), (iv), (v), (vi), (vii) and (viii) in this
Schedule 3.11(c) prior to assignment thereof:
(i) CUSTOMER AGREEMENTS:
[The number in parentheses after each of the following contracts is the job
number, which correlates to the job numbers in the customer contract chart in
Schedule 3.11(a).]
a. Purchase Order dated February 17, 1996, Hughes Network Systems for
GMISCC GMARS Conversion upgrade (1022)
b. Purchase Order (date illegible), Hughes Network Systems for Chrysler
Addon (1023)
c. Purchase Order dated January 22, 1997, for MCI Telecommunications Corp.
(1024)
d. Purchase Order dated October 10, 1997, for AT&T Corporation (1032).
e. Subcontract Agreement dated February 26, 1996, by and between CMI-STS
and MFS Network Technologies, Inc. (1061)
f. Standard Contract Terms and Conditions dated December 2, 1996, between
Red Corporativa Nacional de Telecomunicaciones RCN S.A. and CMI--STS (Columbia)
(1074)
g. Purchase Order dated August 13, 1997, Hughes Network Systems for UPC
Upgrade- Ford Dearborn (1079)
h. Purchase Order dated August 18, 1997, for AT&T Corporation (1080).
i. Contract dated October 16, 1997 between BT North America and CM-STS
(1081).
j. Purchase Order dated [illegible) 15, 1996, O'Connor's Singapore PTE
Ltd. for Drop and Insert Interface Cards for SDM-8000 Modem Upgrade (6308)
-13-
<PAGE>
k. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE
Ltd. for design, manufacture, supply, installation, testing & commissioning on a
semi-turnkey basis of an Intelsat STD-A Antenna & its associated equipment at
Seletar Earth Station (6308)
l. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE
Ltd. for Recomm Maintenance Parts (6308)
m. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE
Ltd. for design, manufacture, supply, installation, testing & commissioning on a
semi-turnkey basis of an Intelsat STD-A Antenna & its associated equipment at
Seletar Earth Station (6308)
n. Amended Purchase Order dated May 17, 1994, Singapore Telecommunications
PTE Ltd. for two Intelsat STD-A Antennas & their buildings at Seletar Earth
Station (6308)
o. Domsat Project Agreement dated September 17, 1993 between Empresa
Estatald Telecomunicaciones Cuantia and CMI-STS (6313).
p. Purchase Order dated December 4, 1995, Thorn Security Limited,
Communications and Telecontrol Systems (6320)
q. Purchase Order dated January 1, 1994, Thorn Security Limited,
Communications and Telecontrol Systems (6320)
r. Purchase Order dated November 20, 1995, Thorn Security Limited,
Communications and Telecontrol Systems (6320)
s. Purchase Order dated August 22, 1995, Thorn Security Limited,
Communications and Telecontrol Systems (6320)
t. Purchase Order dated January 31, 1994, Thorn Security Limited,
Communications and Telecontrol Systems (5 revisions) (6320)
u. Contract dated May 23, 1996 between Empresa Estatald Telecomunicaciones
Cuantia and CMI-STS (6327).
v. Contract 650603 for Goonhilly 5 Remote Control & Monitoring REF
NVN4/434 dated July 8, 1997, between British Telecommunications plc and CMI-STS
(6364)
w. Contract No. 03/CVT/96 for the Provision of Domestic Satellite Link
dated July 2, 1996, Between Cabo Verde Telecom S.A.R.L. of the Republic of Cape
Verde and CMI-STS (6368)
-14-
<PAGE>
x. Purchase Order dated March 10, 1995, Telephonica Sistemas de Satelites
(Argentina) (6370)
y. Contract Provisions for Inner Mongolia Satellite Earth Stations Project
dated October 16, 1996, between Inner Mongolia Machinery Import and Export Corp.
and CMI-STS, Contract No.:96MMDS--041--017IL (6423)
z. Purchase Order dated June 10, 1997, Mitsubishi Corpration (6429)
aa. Purchase Order dated June 10, 1997, Mitsubishi Corpration for on-site
services (6429)
ab. Purchase Order dated July 28, 1997, Mitsubishi Corpration (6429)
ac. Contract Provisions for BTA 20m C Band Station Project dated May __,
1997, between China National Postal and Telecommunications Appliances
Corporation and CMI-STS, contract Number 97QFKE/4IB1704US (6439)
ad. Contract Provisions for BTA Ku Band Station Project dated May __,
1997, between China National Postal and Telecommunications Appliances
Corporation and CMI-STS, contract Number 97QFKE/4IB1703US (6439)
ae. Contract Provisions for BTA 7th Expansion Project dated May __, 1997,
between China National Postal and Telecommunications Appliances Corporation and
CMI-STS, contract Number 97QFKE/4IB1705US (6439)
af. Agreement dated March 3, 1996, between BEZEQ, The Isreal
Telecommunications Corp., Ltd. and STS (6473) Purchase Order dated August 23,
1996, O'Connor's Singapore Pte Ltd. (6498)
ag. Purchase Order dated July 16, 1997, AT&T (7301)
ah. Purchase Order dated August 8, 1997, AT&T (7301)
ai. Contract dated July 2, 1997 between Hughes Network Systems and
CMI-STS.
aj. Cooperation and Project Funding Agreement dated June 15, 1994 between
the Israel United States Binational Industrial Research and Development
Foundation and Tadiran Ltd., Communication Systems Division and Satellite
Transmission Systems Inc.
ak. Contract between the Government of the Islamic Republic of Pakistan
and California Microwave, Inc. Satellite
-15-
<PAGE>
Transmission Systems dated March 17, 1996, concerning the supply of satellite
earth station equipment.
al. California Microwave Satellite Transmission Systems Division
Conditions of Sale dated December 23, 1996 with CS Communications Company
Limited.
am. Purchase Orders dated March 7, 1997 to July 7, 1997 between Samsung
America, Inc. and CMI-TTS pursuant to purchase orders issued by Samsung
America, Inc. to CMI-TTS and accepted by STS.
an. Master Purchase Agreement for hardware, equipment and associated
software between Reuters SA and California Microwave, Inc.-STS. The contract
was signed by CM-TTS on April 23, 1997 and by Reuters on May 6, 1977.
ao. Standard contract terms and conditions dated May 22, 1996 between
Romsat S.A. and CMI-STS.
ap. Contract dated July 29, 1993 between CMI-STS and La Empresa Estatald
Telecomunicaciones Cuantia (Ecuador).
aq. Contract Provisions dated September 6, 1996 for DONSAT project
between China National Postal and Telecommunications Appliances Corporation and
CMI-STS.
ar. Contract documents dated November 29, 1996 between Satellite
Television Asian Region Limited and CMI-STS for supply and installation of
Kuban Video Uplink Upgrade for Video Broadcast Service.
as. Agreement between CMI-STS and Singapore Telecommunications Pte Ltd.
pursuant to a series of purchase orders issued by Singapore Telecom to CMI-STS
dated September 7, 1994, August 16, 1994, August 18, 1994, August 13, 1994.
at. Purchase Agreement dated December 21, 1994 between AT&T International
(Saudi Arabia) and Satellite Transmission Systems, Inc., as amended on November
19, 1995.
au. Agreement dated December 19, 1994 between the Sudan Telecommunications
Company Limited and Satellite Transmission Systems, Inc.
av. Licensing Agreement dated July 19, 1995 between International Mobile
Satellite Organization and Mobile Satellite Products Corporation.
-16-
<PAGE>
(ii) U.S. GOVERNMENT CONTRACTS The U.S. government contracts listed under
Schedule 3.9(c) will need to be novated.
(iii) OEM AGREEMENT:
a. OEM Agreement dated April 27, 1995, by and between Satellite
Transmissions Systems, Inc. and Harris Corporation.
(iv) VENDOR AGREEMENTS
a. Purchase Agreement dated March 15, 1995 between Andrew Corporation and
California Microwave, Inc. ("CMI")
b. New Volume End User Agreement No. AMJ88 dated May 25, 1997 between
Hewlett-Packard and STS
c. Original Equipment Manufacturers Agreement dated May 1, 1997 between
Leitch Incorporated and California Microwave, Satellite Transmission Systems
d. Product Sales Agreement dated May 21, 1997 between California Microwave
and Time Electronics
e. Sales Distribution Agreement dated July 1, 1994 between
Telecommunications Techniques Corporation and satellite Transmission Systems,
Inc.
f. Product Sales Agreement dated February 28, 1997 between California
Microwave and TTI Inc.
g. Product Sales Agreement dated May 21, 1997 between California Microwave
and TTI, Incorporated
(v) NON-DISCLOSURE/CONFIDENTIALITY AGREEMENTS:
a. Confidentiality Agreement dated August 12, 1997, between STS and
Capital Broadcasting Co., Inc.
b. Non-disclosure Agreement dated May 9, 1997, between CMI-STS and GE
American Communications, Inc.
c. Letter Agreement dated October 25, 1996, between STS and ING (U.S.)
Capital Corporation
d. Mutual None-disclosure Agreement dated March 15, 1995, between STS and
Pacific Communication Sciences Inc.
e. Confidential Disclosure Agreement dated August 8, 1997, between CMI-STS
and Philips Broadcast Television Systems Company.
-17-
<PAGE>
f. Agreement dated April 2, 1995, between STS and VertiCom, Inc.
(vi) DISTRIBUTOR/REPRESENTATIVE AGREEMENTS
a. Agreement dated October 9, 1996 between CMI-STS and RE UK Ltd
(vii) LICENSE AGREEMENTS
a. Statement of Work for Secure Interworking Function CM-STS Inmarsat-B
MES (Revision 3) dated March 13, 1997 between CM-STS and ICTI.
b. License Agreement dated September 22, 1997 from SPACEHAB, Inc. to
CM-STS entered into in connection with the Lynxx Software Royalty Agreement
dated September 22, 1997 between CM-STS, SPACEHAB, Inc. and Crosslink, Inc.
(viii) OTHER AGREEMENTS
a. Reference is made to the ABN ANRO Agreement, BankAmerica agreement and
Bank of Tokyo Mortgage Agreement and related agreements identified in Schedule
3.10(a).
b. Lease dated November 7, 1996 between SIMRAM Realty Corp. and Seller
with respect to the warehouse on 65 Commerce Street, Hauppage, NY 11788.
c. Guarantee dated January 17, 1995 pursuant to which California
Microwave, Inc. guaranteed the obligations of STS with respect to the Purchase
Agreement dated December 21, 1994 between AT&T International (Saudi Arabia) and
STS, as amended on November 19, 1995.
SCHEDULE 3.13
INVENTORIES
None.
-18-
<PAGE>
SCHEDULE 3.15
PRODUCT WARRANTIES
1. WARRANTIES: Copy of Form Product Warranty for STS is attached. See attached
sheet specifying customer warranties that last for more than one year. Those
Customer Agreements listed in Schedule 3.11(a) that are not listed in the
attached sheet have a warranty period of one year or less.
2. WARRANTY CLAIMS IN EXCESS OF $50,000: None.
-19-
<PAGE>
CALIFORNIA MICROWAVE SATELLITE TRANSMISSION SYSTEMS
125 Kennedy Drive
Hauppauge, New York 11788
Tel: (516) 272-5600 Fax: (516) 272-5500 ISO 9001 Cert
ATTACHMENT TO SCHEDULE 3.15
WARRANTIES AND REPAIRS
(A) Terms of Warranty - California Microwave, Inc. - Satellite
Transmission Systems Division ("CM-STS") warrants that the Equipment furnished
will be free from defects in design, material and workmanship and will conform
to the contract specifications for a period of one (1) year commencing from the
date the Equipment is accepted under a Provisional or Final Acceptance. If not
accepted, the Warranty Period shall commence thirty (30) days after delivery.
This warranty shall survive acceptance and payment.
At any time within the Warranty Period, CM-STS shall, at its facilities
in Hauppauge, New York, at its option and at its own expense, correct or
replace, within 60 days (if materials are available within a reasonable time),
any part of the Work which is defective in design, materials, or workmanship,
provided Buyer gives CM-STS prompt written notice of such defect and pays all
costs of shipment to CM-STS facility. Shipments by CM-STS of repaired or
replacement equipment to Buyer will be F.O.B. destination, freight prepaid. The
foregoing shall not apply to, and CM-STS shall have no obligation in respect
of, (i) defects in goods caused by improper operation, maintenance or
modification by Buyer or (ii) goods which have been subject to any unauthorized
repair. In this event, Buyer will be charged CM-STS' standard labor rates and
material costs. Any applicable import taxes or duties will be the
responsibility of Buyer.
Should the defective equipment be a fixed part of the earth station,
field warranty service may be necessary. In this case, unless otherwise agreed
upon, CM-STS will begin onsite repairs within five (5) days of receipt of
notice of defective equipment and make every effort to begin repairs within
twenty-four (24) hours of arrival and inspection, pending availability of
vendor material. Buyer shall reimburse CM-STS for all per diem and travel
expenses associated with field warranty service. CM-STS will bear the costs of
materials and labor during the on-site repairs, unless the failure is caused by
Buyer. In this event, Buyer will be charged CM-STS' standard field man/day
rates and material costs.
THIS WARRANTY IS EXCLUSIVE AND IS IN LIEU OF ANY OTHER WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, AND OF ANY
OTHER OBLIGATIONS OR LIABILITY ON CM-STS' PART. UNDER NO CIRCUMSTANCES WILL
CM-STS BE LIABLE FOR ANY LOSS, DAMAGE, EXPENSE OR CONSEQUENTIAL DAMAGES ARISING
IN CONNECTION WITH USE, OR INABILITY TO USE, THE EQUIPMENT, SERVICES OR
DOCUMENTATION.
1
<PAGE>
The Warranty Period for a11 work which is repaired or replaced under this
Warranty shall extend until the later of the expiration of the Warranty Period,
or ninety (90) days following the completion of the repair.
(B) Return Procedures - CM-STS products are warranted against defects in
materials and workmanship in accordance with the terms of this Warranty. CM-STS
will, at its option, repair or replace products which prove to be defective
during the warranty period, provided they are returned to CM-STS, and provided
that the preventative maintenance procedures are followed. Repairs necessitated
by misuse are not covered by this warranty. Before any product is returned for
repair and/or adjustment, authorization from CM-STS is required. Instructions
as to how and where the product should be shipped may be obtained from CM-STS
Customer Service Department (516) 272-5600.
The following information, as a minimum, is required:
1) Complete name and address of customer location returning material.
2) Name, position, and telephone number of individual returning
equipment.
3) Name and telephone number of individual to contact in case of
questions regarding material.
4) "Ship to" address for return of repaired material.
5) Whether or not equipment is within warranty.
6) Description, part number and serial number of failed unit. When
reporting failure of HPA components, the EPA serial number is
required.
7) Complete information regarding the nature of the failure.
CM-STS Customer Service Desk will advise customer of a Return
Authorization (RMA) number which should be prominently displayed on the outside
of the container adjacent to address label. (Absence of this number may delay
acceptance or repair.) Products returned to CM-STS for repair must be sent
prepaid. CM-STS reserves the right to reject any warranty claim on any item
that has been tampered with or altered in any way. Returned products should be
carefully packaged in the original container or an equivalent, and unless
otherwise indicated, shipped to:
California Microwave, Inc. -
Satellite Transmission Systems Division
125 Kennedy Drive
Hauppauge, New York 11788
Attention: Customer Service
RMA#_______________________
2
<PAGE>
When any product is returned for examination and inspection, or for any
other reason, the customer and its shipping agency is responsible for all
damage resulting from improper packing, mishandling and loss in transit.
Repairs or replacements required for non-warranty equipment will not be
initiated without prior customer approval and issuance of purchase order to
cover this effort.
This warranty is valid only for CM-STS originally supplied equipment. For
"In Warranty" and "Out of Warranty" equipment, CM-STS assumes no responsibility
whatsoever for operation, maladjustment or failure of equipment which results
from any repair or replacement supplied by third parties without prior approval
from CM-STS.
By returning a product, the owner grants CM-STS permission to open and/or
disassemble the product as required for evaluation. In all cases, CM-STS has
sole responsibility for determining the cause and nature of failure, and the
CM-STS determination shall be final.
If it is found that a CM-STS product has been returned without cause and
is still serviceable, the customer will be notified, the product returned to
the customer and a charge for test and evaluation will be levied.
No customer shall initiate a warranty repair or warranty field service
visit with any CM-STS vendor without prior approval from CM-STS Customer
Service Desk.
Unnecessary expense and loss of time can often be avoided by customer
adherence to the above procedures.
CM-STS request that our international customers advise Customer Service
by FAX of equipment being returned for repair. In turn, Customer Service will
FAX the RMA number and any special instructions to the customer. Upon shipment,
please provide the following information:
1) The airline carrier the equipment was shipped on.
2) The date of shipment.
3) The flight number and airway bill number.
The CM-STS FAX number is (516) 272-5500.
All customs documents should indicate that the equipment is being
returned for repair. All customs duties, taxes, levies and other official costs
paid by CM-STS related to the equipment clearing process will be invoiced back
to the customer. Please enclose a copy of the export form with the equipment.
This will ensure that the documentation field by CM-STS for the return shipment
will carry the same information. Customer Service will FAX shipment information
to the customer when the repaired equipment is returned.
3
<PAGE>
(C) Out of Warranty Repairs - With respect to repairs to equipment
purchased by Buyer after the expiration of the Warranty Period specified above,
CM-STS agrees to provide repair service at Buyer's expense on all equipment
ordered hereunder. Equipment to be repaired under this section shall be
returned by Buyer to CM-STS' facility in Hauppauge, New York (freight prepaid).
Unless otherwise agreed upon, CM-STS will ship the repaired unit which shall
meet the unit's established specifications within thirty (30) days (if
materials are available within a reasonable time) after receipt of the
defective unit. Repaired units will be warranted for ninety (90) days from due
date of shipment.
If equipment returned for repair is determined to be beyond repair,
CM-STS will so notify Buyer and, if agreed to by Buyer, ship a replacement unit
within a reasonable time of such agreement. The Buyer agrees to pay for such
replacement unit, and it shall be warranted for one (1) year from date of
shipment. If requested by the Buyer, CM-STS will take the necessary steps to
dispose of unrepairable equipment.
Transportation costs of equipment for repair will be borne by Buyer and
units shall be adequately packed so as to prevent shipping and transportation
damage. All transportation costs associated with the return of repaired and
replacement equipment will be borne by the Buyer. CM-STS will provide support
and repair service for the equipment supplied over the design life of the
equipment as long as such repair service remains available from the applicable
equipment vendor.
4
<PAGE>
ATTACHMENT TO SCHEDULE 3.15
CM-STS WARRANTY GREATER THAN 1 YEAR
Page No. 1
10/03/97
SITE JOB NO SHIPPED WTY_YRS EXPIRES
AT&T/CAYEY 1018 11/28/95 3 11/28/98
FORD MOTOR 1021 03/18/97 3 03/17/00
STSFL 5275 10/14/94 3 10/13/97
LOCKHEED 53166 06/26/96 3 06/26/99
TELEFONICA 53536 01/07/97 3 01/07/00
TELECOM/MD 5366 08/23/94 3 08/22/97
GOVT/CMIMD 5368 05/24/94 3 05/23/97
GOVT/CMIMD 5370 05/24/94 3 05/23/97
JASMINE/TH 5374 11/18/94 3 11/17/97
CAT/PERU 5375 08/30/94 3 08/29/97
GOI/MOD 5378 07/19/94 3 07/18/97
COMSAT/MD 5381 05/23/94 3 05/22/97
GOVT/CMIMD 5390 08/12/94 3 08/11/97
GOVT/CMIMD 5394 09/14/94 3 09/13/97
GOVT/GSA 5395 09/14/94 3 09/13/97
KELLY/GREE 5399 08/29/95 3 08/28/98
GOI/ISRAEL 5401 10/25/95 3 10/24/98
ETISALAT 5403 12/18/95 3 12/17/98
TIW/CA 5404 10/24/95 3 10/23/98
AT&T/NJ 5405 10/09/95 3 10/08/98
EMTELCUBA 5407 06/28/96 3 06/28/99
POSTS/AFRI 5408 12/01/95 3 11/30/98
BEZEQ/ISRL 5409 01/19/96 3 01/18/99
GOI/ISRAEL 5412 01/19/96 3 01/18/99
SPRINT 5416 12/04/95 3 12/03/98
TELEKOM 5420 12/09/94 3 12/08/97
AT&T/MARR 5421 01/31/95 3 01/30/98
GIO/MOD 5426 03/07/95 3 03/06/98
REUTERS 5427 12/13/94 3 12/12/97
GOVT/CMIMD 5428 02/13/95 3 02/12/98
LOXLY/THAI 5429 05/08/95 3 05/07/98
HYUNDAI/KO 5431 02/02/95 3 02/01/98
CAT/PERU 5434 02/21/95 3 02/20/98
MCI/YACOLT 5435 01/23/95 3 01/22/98
GOI/ISRAEL 5437 04/13/95 3 04/12/98
BHARAT/IND 5441 02/24/95 3 02/23/98
GTE/GOVT 5443 03/10/95 3 03/09/98
BEZEQ/ISRL 5445 05/08/95 3 05/07/98
ECIL/INDIA 5446 06/20/95 3 06/19/98
SAMSUNG/AM 5448 05/15/95 3 05/14/98
COMSAT/MD 5449 05/26/95 3 O5/25/98
LOXLY/THAI 5450 05/15/95 3 05/14/98
TELEGLOBE 5451 04/03/95 3 04/02/98
ANDREWS/TX 5452 03/30/95 3 03/29/98
GOI/MOD 5453 07/20/95 3 07/19/98
GOI/MOD 5454 08/28/95 3 08/27/98
GOVT/GTE 5456 06/09/95 3 06/08/98
MOBILSAT 5462 07/19/95 3 07/18/98
SOFIA/BULG 5465 11/02/95 3 11/01/98
AT&T/MTHS 5467 01/19/96 3 01/18/99
TELEPORT 5468 12/15/95 3 12/14/98
AEI/FC 5469 12/08/95 3 12/07/98
RAYTHEON 5470 12/14/95 3 12/13/98
<PAGE>
ATTACHMENT TO SCHEDULE 3.15
CM-STS WARRANTY GREATER THAN 1 YEAR
Page No. 2
10/03/97
SITE JOB NO SHIPPED WTY_YRS EXPIRES
HONGK/TELE 5471 01/26/96 3 01/25/99
TELEPORT 5474 12/15/95 3 12/14/98
TELE/HONGK 5476 03/27/96 3 03/27/99
TURNKY/SAF 5477 01/16/96 3 01/15/99
REUT/UK 5487 01/19/96 3 01/18/99
DATALINC 5490 02/14/96 3 02/13/99
BEZEQ 6042 10/07/88 2+ 01/19/99
BEZEQ 6077 12/19/89 2+ 01/19/99
BEZEQ 6142 10/07/88 2+ 01/19/99
BEZEQ 6172 06/28/91 2+ 01/19/99
BEZEQ 6205 12/04/92 2+ 01/19/99
BEZEQ 6233 10/18/93 2+ 01/19/99
BEZEQ 6297 10/25/93 2+ 01/19/99
BEIJING II 6301 05/05/94 3 05/05/97
AT&T/PALUA 6307 06/24/94 3 06/24/97
BEZEQ 6312 10/15/93 2+ 01/19/99
THORN/MADL 6320 07/14/94 5 07/13/99
STSFL/ 6337 07/27/94 2 12/31/97
HNKONG/TEL 6351 01/24/95 2 01/24/97
EMBRATEL 6371 06/20/97 2 06/20/99
REUTERS SA 6430 05/08/97 2 05/08/99
SAMSUNG AM 6437 06/17/97 3 06/16/00
I.D.S.C 6439 08/26/97 3 08/25/00
TIME/MALAY 6463 11/10/95 2 11/09/97
SATSYST/VA 6464 08/25/95 2 05/30/98
BEZEQ 6473 / / 2+ 01/19/99
CHINASTAR 6491 12/24/96 2 12/24/98
SINGAPORE 6498 11/21/96 2 12/19/98
HQ AFSOUTH 7180 12/23/94 3 12/15/97
WARRENTON 7221 01/25/97 2 04/20/99
BEZEQ 84004 10/01/93 2+ 01/19/99
<PAGE>
SCHEDULE 3.16(a)
OWNED INTELLECTUAL PROPERTY
1. See attachment.
2. Ownership of GMACS software and related know-how
3. Ownership of Universal System Controller and related know-how.
4. A security interest in the following Intent to Use applications ("ITUs")
listed on the attached Schedule 3.16(a) has been granted to BankAmerica
Business Credit, Inc. ("Bank") pursuant to a Patent and Trademark Security
Agreement dated June 30, 1997 entered into in connection with the Loan and
Security Agreement dated June 30, 1997 between the Bank and Seller: NEWSTREK,
FLEXCAST, FLEXHYBRID, FLEXMESH, FLEXSTAR and FLEXFRAME NETWORK. To the extent
that any ownership interest of Seller in the ITUs is deemed to have been
"assigned" to the Bank for the purpose of federal trademark law as a result of
the assignment pursuant to the Patent and Trademark Security Agreement, there
is a risk that the ITUs may have been invalidated.
-20-
<PAGE>
12-15-97
CALIFORNIA MICROWAVE, INC.
SATELLITE TRANSMISSION SYSTEMS
US TRADEMARK REGISTRATIONS
--------------------------
MARK REGISTRATION NO. DATE REGISTERED
- ---- ---------------- ---------------
STS AND DESIGN 1,409,225 9-16-86
LYNXX 1,849,069 8-9-94
MINILYNXX 1,957,925 2-20-96
PSAT 1,598,265 5-29-90
PROGENY 2,070,201 6-10-97
VIDEOLYNXX 2,098,616 9-23-97
PENDING TRADEMARKS
------------------
NEWSTREK 75/l00,553 5-8-96
FLEXCAST ITU 75/204,102 11-25-96
FLEXHYBRID ITU 75/203,921 11-25-96
FLEXMESH ITU 75/149,594 8-13-96
FLEXSTAR ITU 75/149,585 8-13-96
FLEXFRAME NETWORIC ITU 75/111,438 5-29-96
UNREGISTERED TRADEMARK
----------------------
GMACS CURRENTLY USED AS A TRADEMARK
LYNXXSurfer CURRENTLY USED AS A TRADEMARK
PATENTS OWNED
-------------
ADAPTIVE FM 4,816,770 3-28-89
THRESHOLD EXTENSION
DEMODULATOR
PATENT PENDING
--------------
WIRELESS COMMUNICATIONS APPLICATION FILE DATE: 3-12-97
SYSTEM HAVING FIXED AND
DYNAMICALLY ASSIGNED
LINKS (FLEXFRAME NETWORK TM)
<PAGE>
SCHEDULE 3.16(b)
INTELLECTUAL PROPERTY LICENSES
1. Statement of Work for Secure Interworking Function CM-STS Inmarsat-B MES
(Revision 3) dated March 13, 1997 between CM-STS and ICTI (Non-exclusive license
to CM-STS regarding technology for use in the Lynxx Inmarsat B Transportable
Earth Stations).
2. Lynxx Software Royalty Agreement dated September 22, 1997 between CM-STS,
SPACEHAB, Inc. and Crosslink, Inc., including a License Agreement dated
September 22, 1997 from CM-STS to SPACEHAB, Inc. and a License Agreement dated
September 22, 1997 from SPACEHAB, Inc. to CM-STS (Cross-license regarding
technology relating to the Lynxx Inmarsat B Transportable Earth Stations)
3. Licensing Agreement dated July 19, 1995 between International Mobile
Satellite Organization and Mobile Satellite Products Corporation (Non-exclusive
trademark license to Seller regarding use of the Inmarsat trademark on certain
of its products).
4. Cooperation and Project Funding Agreement dated June 15, 1994 between the
Israel-United States Binational Industrial Research and Development ("BIRD")
Foundation, Binational Industrial Research and Development Foundation, Tadiran
Ltd. Communications Systems Division and Satellite Transmissions Systems, Inc.
(CM-STS jointly developed technology relating to Progeny with funds from the
BIRD Foundation. CM-STS is repaying the BIRD Foundation by making payments
based on a percentage of gross sales of Progeny units.)
5. Graphical Monitor and Control Software License Agreement (Non-exclusive site
license from CM-STS to customers regarding technology required to control and
monitor satellite earth stations and networks. Seller has entered into this
agreement with every customer to which it sells such equipment).
SCHEDULE 3.16(c)
INFRINGEMENT BY THIRD PARTIES
1. None.
-21-
<PAGE>
SCHEDULE 3.16(d)
CLAIMS BY THIRD PARTIES
1. None.
SCHEDULE 3.17
INSURANCE POLICIES
1. See attachment.
-22-
<PAGE>
SCHEDULE 3.18(a)
OWNED REAL PROPERTY
1. The property located at 50 Engineers Road, Hauppauge, NY 11788 was purchased
by STS, Inc. in October, 1988. This property is used as for integration,
assembly, testing and shipping of products.
SCHEDULE 3.18(b)
LEASES
1. The property located at 125 Kennedy Drive, Hauppauge, NY 11788 is subject to
the lease from the Suffolk County Industrial Development Agency.
2. Seller leases a warehouse at 65 Commerce Drive, Hauppauge, NY 11788 pursuant
to a lease dated November 7, 1996 between SIMRAM Realty Corp., as lessor, and
CM-STS, as lessee. The term of the lease is eighteen months beginning on
November 15, 1996 and ending on May 14, 1998. STS may renew for an additional
term of six months. Annual basic rent is $52,807.50 in monthly installments of
$4,400.62, and additional rent (for heat and electric) is $11,735 annually in
monthly installments of $977.92. During any renewal term, annual basic rent
increases to $4,645.10 per month. Seller has determined to vacate this
warehouse on January 14, 1997 and has obtained the landlord's consent to do so.
SCHEDULE 3.18(c)
REAL PROPERTY TITLE MATTERS
1. Matters disclosed in the attached Policy of Title Insurance (policy no.
5-986928) issued January 12, 1989 with respect to the 50 Engineers Road
property.
2. The following matters disclosed in the attached Title commitment (title no.
S-67949 & A) issued on December 7, 1982, with respect to the 125 Kennedy Drive
property: Items 4, 5 and 9 of Schedule B, and Survey Reading.
3. Any restrictions encumbering the Owned Real Property or Leased Real Property
that are shown in the Survey of Property dated July 16, 1982 prepared by Teas,
Barrett, Lanzisera & Fink with respect to the 125 Kennedy Drive property.
-23-
<PAGE>
4. Reference is made to the lien and security interests identified under Item 1
of Schedule 3.10(a).
-24-
<PAGE>
================================================================================
[COPY]
POLICY OF TITLE INSURANCE
No. S-986928
SECURITY TITLE AND GUARANTY COMPANY
In Consideration of the payment of its charges for the examination of title and
its premium for insurance, insures the within named insured against all loss or
damage not exceeding the amount of insurance stated herein and in addition the
costs and expenses of defending the title, estate or interest insured, which
the insured shall sustain by reason of any defect or defects of title affecting
the premises described in Schedule A or affecting the interest of the insured
therein as herein set forth, or by reason of unmarketability of the title of
the insured to or in the premises, or by reason of liens or incumbrances
affecting title at the date hereof which has now gained or which may hereafter
gain priority over the interest insured hereby, or by reason of a lack of
access to and from the premises, excepting all loss and damage by reason of the
estates, interests, defects, objections, liens, incumbrances and other matters
set forth in Schedule B, or by the conditions of this policy hereby
incorporated into this contract, the loss and the amount to be ascertained in
the manner provided in said conditions and to be payable upon compliance by the
insured with the stipulations of said conditions, and not otherwise.
In Witness Whereof, SECURITY TITLE AND GUARANTY COMPANY has caused this policy
to be signed and sealed on its date of issue set forth herein.
[SECURITY TITLE AND GUARANTY COMPANY
CORPORATE SEAL
1928
NEW YORK]
/s/ Steven [illegible] /s/ [illegible]
- ---------------------- ----------------------
Authorized Signature President
================================================================================
<PAGE>
Name of Insured Policy No: 8-986928
Satellite Transmissions Amount of Insurance $ 2,060,000.00
Systems, Inc.
Date of Issue January 12, 1989
The estate of Interest fee simple vested in the insured by means of
insured by this policy is
a deed made by Herbert Bernstein and Leon Bernstein to the insured dated
January 12, 1989 and recorded in the Suffolk County Clerk's Office.
SCHEDULE B
The following estates, interests, defects, objections to title, liens and
encumbrances and other matters are excepted from the coverage of this policy:
1. Defects and encumbrances arising or becoming a lien after the date of this
policy, except as herein provided.
2. Consequences of the exercise and enforcement or attempted enforcement of any
governmental, war or police powers over the premises.
3. Any laws, requisitions or ordinances (including, but not limited to,
zoning, building, and environmental protection) as to the use, occupancy,
subdivision or improvement of the premises adopted or imposed by any
governmental body, or the effect of any noncompliance with any violation
thereof.
4. Judgements against the insured or[ILLEGIBLE], interests, defense,
objections, liens or incumbrances [ILLEGIBLE], suffered, assumed or agreed
to, by or with the privicy of the insured.
5. This is any property beyond the lines of the premises, or to areas within
as rights or easements in any abutting streets, roads, avenues.
[ILLEGIBLE]
6. This is any private property, whether the [ILLEGIBLE] be attached to or used
in connection with said premises or otherwise.
7. Survey by Teas & Steinbrenner dated July 18, 1968 shows a one story brick
and stone building. No variations. Subject to any changes in the state of
facts which an accurate survey would show from July 18, 1966. (As to Parcel
II)
8. 1988/89 Town and School Taxes - Open.
9. Rights of tenants or persons in possession.
10. Covenants and restrictions in Liber 6277 Cp 520.
11. Water agreement in Liber 6080 Cp 137.
12. Electric agreement in Liber 0345 Cp 457.
13. Any state of facts which an accurate survey might show. (As to Parcel I)
14. Any state of facts an inspection of the premises may disclose. (As to Parcel
I)
15. In the absence of a guaranteed survey, the exact location, distance and
dimensions of the premises described in Schedule A are not insured. (As to
Parcel I)
<PAGE>
Policy No. 8-986920
SCHEDULE A
The premises in which the insured has the estate or interest covered by this
policy
PARCEL I
All that certain plot, piece or parcel of land, situate, lying and being
in Hauppauge Town of Smithtown, County of Suffolk and State of New York, and
designated as part of lot 36 on map entitled "Map of Vanderbilt Industrial Park
Section 3" filed in the Suffolk County Clerk's Office on September 13, 1966 as
Map No. 4716 bounded and described as follows:
BEGINNING at a point on the southerly line of Engineers Road distant
870.73 feet measured westerly along the southerly line of Engineers Road from
the westerly end of a curve connecting the southerly line of Engineers Road
with the westerly line of Old Willets Path (Willets Old Path) (Capebs Path);
RUNNING THENCE South 5 degrees 38 minutes 18 seconds West, 502.46 feet;
THENCE North 81 degrees 46 minutes 10 seconds West, 23.01 feet;
THENCE North 5 degrees 38 minutes 18 seconds East, 501.33 feet to the
southerly line of Engineers Road;
THENCE South 84 degrees 21 minutes 42 seconds East along the southerly
line of Engineers Road 25.00 feet to the point or place of BEGINNING.
<PAGE>
Policy No. 8-986920
SCHEDULE A
The premises in which the insured has the estate or interest covered by this
policy
PARCEL II
All that plot, piece or parcel of land, situate, lying and being in
Hauppauge, Town of Smithtown, County of Suffolk and State of New York, and
known and designated as part of lot 36 on map entitled "Map of Vanderbilt
Industrial Park, Section 3" filed in the Suffolk County Clerk's office on
9-13-66 as Map No. 4716, bounded and described as follows:
BEGINNING at a point on the southerly side of Engineers Road, distant
895.73 feet westerly when measured along the southerly side of Engineers Road
from the extreme westerly end of the curve connecting the southerly side of
Engineers Road with the westerly side of Old Willets Path (Willets Old Path).
RUNNING THENCE South 05 degrees 38 minutes 18 seconds West 501.33 feet;
THENCE North 81 degrees 46 minutes 10 seconds West 200.21 feet;
THENCE North 05 degrees 38 minutes 18 seconds East 492.28 feet to the
southerly side of Engineers Road;
THENCE South 84 degrees 21 minutes 42 seconds East along the southerly
side of Engineers Road 200.00 feet to the point or place of BEGINNING.
<PAGE>
SURVEY MAP OMITTED
<PAGE>
SURVEY MAP OMITTED
<PAGE>
125 Kennedy Drive
Title no S-679494 & A
Premises:- Hauppauge - Town of Smithtown
&
Purchaser Borrower Satellite Transmissions Systems, Inc. and/or
Suffolk County Industrial Development Agency.
CERTIFICATE AND REPORT OF TITLE
[logo]
SECURITY TITLE AND GUARANTY COMPANY
Mtge.: Rosenman, Colin, Freund, Lewis & Cohen, Esqs
Certifies to 575 Madison Avenue, New York, N.Y. 10022
Fee: Wasserman, Chinitz, Geffner, Green & Wolf, Esq
131 Jericho Turnpike, Jericho, N.Y. 11753
that in consideration of the fees, due and payable upon the delivery of this
certificate, it has examined the title to the premises described in Schedule A
herein, in accordance with its usual procedure and agrees to issue its standard
form of Fee & Mortgage policy in the sum of Fee: $4,200,000, Mtge: $4,200,000,
insuring such interest and the marketability thereof excepting all loss or
damage by reason of the estates, interests, defects, objections, liens,
incumbrances and other matters set forth in this certificate which are not
disposed of to its satisfaction prior to the closing of title or issuance of
the policy.
Such policy will be issued for the amount set forth herein, upon payment of the
Company's fees and after the transaction has been closed and the closing
instruments have been duly recorded and approved by this Company.
This certificate is subject to any question or objection as a result of a
continuation of the title to the date of closing or which may be brought to the
attention of this company between the date hereof and the date of closing or if
there be no closing, between the date hereof and the issuance of the policy.
This certificate shall be null and void (1) if the Company's fees therefor are
not paid (2) if the applicant, his attorney or agent makes any untrue statement
with respect to any material fact or suppresses or fails to disclose any
material fact or if any untrue answers are given to this company to material
inquiries before the issuance of this certificate (3) in any event, upon the
delivery of the policy. Any claim arising by reason of the issuance of this
certificate shall be restricted to the terms and conditions of the standard
policy of insurance.
In case of insurance of title or interest or lien acquired prior to the
delivery of this certificate, the Company assumes no liability except under the
policy when issued.
The land which is the subject of this transaction, lies in District 0800
Section 185.00 Block 02.00 Lot 030.000 and 031.000
Town of Smithtown on the Map of the County of Suffolk
Dated: 8/18/82 9 a.m. /s/ [Illegible}
--------------------
Authorized Signature
Redated and Recertified:
--------------------
12-7-82 Closer
If you have any questions regarding this
report please communicate with /s/ [Illegible}
--------------------
(516) 727-0600 Title Officer
<PAGE>
TITLE NO. S-679494 & A
NOTE
Commencing January 1, 1977, the recording officer of Suffolk County is
prohibited from recording, or accepting for recording, any conveyance of realty
unless the map designations on the property maps of the real property tax
service agency of such county, are contained in the body of, or endorsed on,
such conveyance. (Real Property Law, Sec. 333 as amended by Ch. 172, Laws,
1976.)
The word "conveyance" is defined very broadly by Real Property Law, Sec.
290(3) and includes the great majority of instruments offered for recording.
The premises described in this title report are currently designated on
the real property tax service agency map as:
Dist.: 0800 Sec.: 185.00 Blk.: 02.00 Lot(s): 030.000
031.000
This data is provided for your information and must be endorsed on the
instrument to be recorded rather than be contained in the body of said
instrument.
<PAGE>
Title No. S-679494
THIS COMPANY CERTIFIES that a good and marketable title to the premises
described in Schedule A, subject to the liens, incumbrances and other matters,
if any, set forth in this certificate may be conveyed/mortgaged by
V.I.P ASSOCIATES, a co-partnership,
which acquired title from Vanton Corp., by deed dated September 13, 1982 and
recorded September 27, 1982 in Liber 9247 Cp 273.
RECEIPT: Suffolk County Industrial
Development Agency
SCHEDULE B in which are set forth the additional matters which will appear in
the policy as exceptions from coverage, unless disposed of to the Company's
satisfaction prior to the closing or delivery of the policy;
by /s/ [Illegible] dated 12/7/82
- ------------------------
Disposition
See Within 1. Taxes, tax liens, tax sales, water rates, sewer
rents and assessments set forth in schedule
herein.
2. Mortgages returned herein (None). Detailed
statement within.
Omit
For Policy 3. Survey exceptions set forth herein.
4. Rights of tenants or persons in possession.
5. Covenants, conditions, easements, leases,
agreements of record, etc., more fully set forth
in Schedule herein:--
(a) Suffolk County Water Authority Easement in
Liber 6080 cp 137. (affects streets only)
6. Closing deed should contain a recital as to the
mortgagor's source of title, as certified herein.
[Illegible] 7. Any state of facts a personal inspection of the
premises in Schedule A would disclose,
[Illegible] 8. Title herein is certified as found of record and
not in Vanderbilt Associates as stated on the
application.
[Illegible] 9. The exact courses and distances of the
premises described in Schedule A cannot be
insured in the absence of a satisfactory survey
guaranteed to this Company.
[Illegible] 10. NOTE: The survey of Teas, Barrett, Lanzisera and
Frink, dated 7/6/82 cannot be read into this
report as same is not guaranteed to this
title company.
Continued ....
NOTE: If the subject transaction is one involving a
sale subject to the mortgage(s) returned in item number
2 above, and since many lenders now have the mortgage
instrument state that the debt will become due and
payable at the option of the mortgagee upon any
transfer of title, it is recommended that the applicant
examine the mortgage document(s) as well as the note(s)
or bond(s) and any agreement modifying said
mortgage(s), or make inquiry of the mortgagee of the
current terms of such instruments especially with
respect to acceleration of the maturity date in case of
sale. Upon request, we will obtain and furnish a copy
of the recorded mortgage(s) for cost.
<PAGE>
S-679494
Schedule B continued....
11. The articles of partnership of V.I.P. Associates or changes thereto
must be submitted to this Company for consideration prior to
closing,
12. Require proof that the party or parties executing the deed on behalf
of V.I.P. Associates, a co-partnership, have full power and
authority to do same.
13. See letter 11-16-82
<PAGE>
Title No. S-679494
SCHEDULE A
ALL that certain plot, piece or parcel of land, situate, lying and being
at Hauppauge, in the Town of Smithtown, County of Suffolk and State of New
York, known and designated as part of Lot 36 on a certain map entitled, "Map of
Vanderbilt Industrial Park, Section 3" and filed in the Suffolk County Clerk's
Office on September 13, 1966 as Map Number 4716; which said part of Lot 36 is
more particularly bound and described as follows:
BEGINNING at a point on the Northeasterly side of Kennedy Drive distant
700.56 feet Northerly from the Northerly end of a curve which connects the
Easterly side of Kennedy Drive with the Northerly side of Vanderbilt Motor
Pkwy;
RUNNING THENCE along the Northeasterly side of Kennedy Drive in a
Northwesterly direction along a curve to the left having a radius of 360 feet a
length of 266.39 feet to a point;
RUNNING THENCE North 6 degrees 22 minutes 00 seconds East, 471.33 feet to
a point;
RUNNING THENCE North 72 degrees 15 minutes 04 seconds East, 98.03 feet to
a point;
RUNNING THENCE South 84 degrees 21 minutes 42 seconds East, 300 feet to a
point;
RUNNING THENCE South 5 degrees 38 minutes 18 seconds West, 56.68 feet to
a point;
continued....
[Illegible] and interest of in and to any streets and
<PAGE>
continued.... Title No. S-679494 Pg. 2
SCHEDULE A
RUNNING THENCE South 81 degrees 46 minutes 10 seconds East, 200.21 feet
to a point;
RUNNING THENCE South 1 degree 15 minutes 44 seconds West, 131.05 feet to
a point;
RUNNING THENCE South 5 degrees 38 minutes 18 seconds West, 133.90 feet to
a point; and
RUNNING THENCE South 57 degrees 04 minutes 10 seconds West, 478.45 feet
to the Northeasterly side of Kennedy Drive at the point or place of BEGINNING.
/s/ [Illegible]
For conveyancing only, Together with all right, title and interest of,
[Illegible] in and to any streets and [Illegible]
<PAGE>
Title No. S-679494
(Sheet 1 of 2)
TAX SCHEDULE
- ----------------------------
Town of Smithtown
Hauppauge ( Not Inc. ) [Compass Rose] The tax search made herein covers
School District No. 6 only the premises shown on above
Premises Assessed 1981/82 diagram, and no search is made
Assessed to VIP Associates against any part of the street on
P/O Lot 36 Map of Vanderbilt which said premises abut.
Indust Park Section 3
Map No. 4716
Filed 9-13-1966
2.90 Acres
Item No. 22-859251
- ----------------------------
County Suffolk District 0800 City
Section 185.00 Town Smithtown
Block 02.00 Village Hauppauge
Let 031.000 School District No. 6
Assessed Valuation Land $1300 Total $1300
- --------------------------------------------------------------------------------
Disposition RETURNS
- --------------------------------------------------------------------------------
1981/82 Town and School Taxes -- Total $624.58
Omit
1st Half -- $312.29 PAID l2-24-198l
2nd Half -- $312.29 PAID 5-11-1982
82/83 Town & School a lien
12/1/82 /s/ [Illegible]
Escrow taken to pay.
Prior Town and School Taxes Paid.
Premises not in an Incorporated Village.
EXCEPT Premises are in a municipal water district.
/s/ [Illegible]
Water meter and sewer rental charges accruing since the date of the last
<PAGE>
Title No. S-679494
(Sheet 2 of 2)
TAX SCHEDULE
- ----------------------------
Town of Smithtown
Hauppauge ( Not Inc. ) [Compass Rose] The tax search made herein covers
School District No. 6 only the premises shown on above
Premises Assessed 1981/82 diagram, and no search is made
Assessed to VIP Associates against any part of the street on
P/O Lot 36 Map of Vanderbilt which said premises abut.
Indust Park Section 3
Map No. 4716
Filed 9-13-1966
3.50 Acres
Item No. 22-859326
- ----------------------------
County Suffolk District 0800 City
Section 185.00 Town Smithtown
Block 02.00 Village Hauppauge
Let 030.000 School District No. 6
Assessed Valuation Land $1350 Total $1350
- --------------------------------------------------------------------------------
Disposition RETURNS
- --------------------------------------------------------------------------------
1981/82 Town and School Taxes -- Total $648.59
Omit
1st Half -- $324.30 PAID l2-24-198l
2nd Half -- $324.29 PAID 5-11-1982
82/83 Town & School a lien
12/1/82 /s/ [Illegible]
Escrow taken to pay.
Prior Town and School Taxes Paid.
Premises not in an Incorporated Village.
Omit
EXCEPT Premises are in a municipal water district.
/s/ [Illegible]
[Illegible] the date of the last
<PAGE>
Title No. S-679494
SURVEY READING
Survey made by Teas, Barrett, Lanzisera & Frink dated July 6,
For 1982 and redated October 15, 1982 shows a building under Policy
construction. Cobblestone curve along part of the Westerly line of
title. Chain link fence varies slightly from part of the Easterly
line of title.
<PAGE>
SCHEDULE 3.19(a)
ENVIRONMENTAL PERMITS
1. Seller believes that there may be a tank located under the parking lot next
to Building No. 2 at its 50 Engineers Road property that was formerly used to
hold heating oil to heat Building No. 2. If so, Seller does not hold a permit
from Suffolk County with respect to such tank and has not otherwise registered
that tank with Suffolk County.
2. See attachment.
-25-
<PAGE>
ATTACHMENT TO SCHEDULE 3.19
CALIFORNIA MICROWAVE, INC.
SATELLITE TRANSMISSION SYSTEM, INC.
<TABLE>
<CAPTION>
AMOUNT OF EXPIRATION
TYPE OF COVERAGE COVERAGE INSURER POLICY NO. DATE
- ---------------- -------- ------------------ ----
<S> <C> <C> <C>
PROPERTY 28,902,000 Am. Guarantee and Liab. Ins.C 3/1/98
BUSINESS INTERRUPTION 7,893,000 PPR81953335-00
INSTALLATION - Ea. Location 7,500,000
WORLDWIDE TRANSIT - Ea. Shipment 7,500,000 Underwriters at Lloyds 3/1/98
MC1010
DOMETIC GENERAL LIABILITY
Each Occurrence 1,000,000 Am. Guarantee and Liab. Ins.C 3/1/98
General Aggregate 2,000,000 GL08295352-00
Aggregate - Products/Completed Operations 2,000,000
DOMESTIC ERRORS & OMISSIONS CLAIMS MADE Zurich Insurance Co. 3/1/98
Each Claim 1,000,000 EOC8195354-00
Aggregate 2,000,000
FOREIGN NON-ADMITTED GEN. LIAB.
Each Occurrence 1,000,000 Zurich Insurance Co. 3/1/98
General Aggregate 2,000,000 CGL8195351-00
Aggregate - Products/Completed Operations 2,000,000
Automobile Difference in Conditions
Bodily Injury and Property Damage 1,000,000 Zurich Insurance Co. 3/1/98
CGL8195351-00
FOREIGN NON-ADMITTED WORK. COMP./ 1,000,000 Zurich Insurance Co. 3/1/98
EMPLOYERS LIABILITY WC8195353-00
DOMESTIC AUTOMOBILE INSURANCE
Bodily Injury and Property Damage 1,000,000 Zurich Insurance Co. 3/1/98
BAP8210005-00
UMBRELLA INSURANCE
Per Occurrence/Aggregate 25,000,000 TIG 3/1/98
XLB9262686
Errors and Omissions--Claims Made
Per Occurrence/Aggregate 10,000,000
EXCESS LIABILITY
Per Occurrence/Aggregate $10,000,000 Am. Guarantee & Liab. Ins. Co. 3/1/98
excess of EU08526601-01
$25,000,000
NON-OWNED AIRCRAFT LIABILITY
Each Occurrence $5,000,000 Associated Aviation Underwriter 3/1/98
22BN0407488
</TABLE>
Page 1
<PAGE>
<TABLE>
<S> <C> <C> <C>
WORLDWIDE FIDELITY - EMPLOYEE THEFT 1,000,000 Travelers/Aetna 3/1/98
005BY101012469BCA
FIDUCIARY LIABILITY - Each Loss 2,500,000 Travelers/Aetna 3/1/98
- Each Policy Period 005BY101012469BCA
BUSINESS TRAVEL ACCIDENT - Class I 500,000 AIG Life Insurance Company 3/1/98
- Class II 250,000 GTP8044380
WORKERS' COMPENSATION Statutory American Casualty of Reading 7/1/98
Statutory Limits WC184191997
Employers Liab. - Each employee 1,000,000
- Disease Policy Limit 1,000,000
- Accident Each Accident 1,000,000
ANNUAL CUSTOMS BOND 100,000 SEGUROS BOLIVAR 11/22/97
99ECU00001
</TABLE>
Page 2
<PAGE>
CALIFORNIA MICROWAVE, INC.
SINGAPORE
SCHEDULE OF INSURANCE
Coverage Company/Policy No. Term
- --------------------------------------------------------------------------------
Property Insurance American Int'l Group 01-22-97/98
-107-
<PAGE>
CALIFORNIA MICROWAVE, INC.
CHINA
SCHEDULE OF INSURANCE
Coverage Company/Policy No. Term
- --------------------------------------------------------------------------------
General Liability Zurich Insurance Co. 03-01-97/98
-62-
<PAGE>
SCHEDULE 3.21(a)
EMPLOYEE BENEFIT PLANS
1. See attachment. Reference is also made to the employment-related agreements
identified under Item 9 on Schedule 3.11(a).
-26-
<PAGE>
ATTACHMENT TO SCHEDULE 3.21(a)
CM-STS Benefit Package
Group Medical Benefits - 4 Plans Offered by Aetna U.S. Healthcare:
EPO, P0S, PPO, US Healthcare HMO
Group Dental Benefits -2 Plans Offered:
Basic Dental Plan (no cost to employee)
Enhanced Dental Plan
Flexible Spending Accounts - available for Dependent Care & Medical Care
Vision Care Plan - no cost to employee
Employee Assistance Program - no cost to employee
Group Life Insurance - 2x annual salary, no cost to employee
Supplemental Life Insurance - optional - lx, l.5x, 2x or 2.5x
Accidental Death & Dismemberment - 2x annual salary, no cost to employee
Business Travel Accident Insurance - no cost to employee
Dependent Life Insurance - no cost to employee if dependents covered by medical
plan
Short Term Disability - enhanced NYS benefits
Long Term Disability - no cost to employee
Sick Leave
Vacation Leave
Holiday Pay
Tuition Reimbursement
Stock Purchase Plan
401K Tax-Deferred Savings Plan
Deferred Profit Sharing Plan
<PAGE>
SCHEDULE 3.23
SUPPLIERS AND CUSTOMERS
1. See attachments.
-27-
<PAGE>
List of 20 Largest Customers of STS
July 1, 1996 - present
MFS NETWORK TECHNOLOGIES, INC.
LUCENT TECHNOLOGIES INC., RIYADH, SAUDI ARABIA
INNER MONGOLIA MACHINERY IMPORT AND EXPORT CORP.
CSC-SHINAWATRA
MITSUBISHI CORPORATION
REUTERS SA
OTE, GREECE
GOVERNMENT OF ISLAMIC REPUBLIC OF PAKISTAN
LOCKHEED MARTIN ASTRO SPACE COMMERCIAL
ROMSAT S. A./ROMANIA
CHINA NATIONAL POSTAL & TELECOMMUNICATIONS APPLIANCES CORPORATION
SARAH VISION LTD., RIYADH, SAUDI ARABIA
BDM INT'L INC., McLEAN, VIRGINIA
NACISA NATO, BRUSSELLS, BELGIUM
NATO
U.S. ARMY, CECOM, FT. MONMOUTH, NEW JERSEY
THORN SECURITY LIMITED, COMMUNICATIONS AND TELECONTROL SYSTEMS (ENGLAND)
EMETEL/ ECUADOR
SINGAPORE TELCOMMUNICATIONS PTE LTD.
ITS SDN. BHD./TIME TELEKOM, PETALING JAYA, MALAYSIA
home\hhy\customer
<PAGE>
SATELLITE TRANSMISSION SYSTEMS
20 LARGEST SUPPLIERS
BASED ON PAYMENTS MADE
FROM DATE: 07/96 To 12/97
- --------------------------------------------------------------------------------
Company Name City State
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EF Data Corp. Phoenix Arizona
- --------------------------------------------------------------------------------
CPI SATCOM Division Palo Alto California
- --------------------------------------------------------------------------------
VERTEX Dallas Texas
- --------------------------------------------------------------------------------
Siemens Limited Chesire England
- --------------------------------------------------------------------------------
NERAAS Billingstad Norway
- --------------------------------------------------------------------------------
GE American Communications Princeton New Jersey
- --------------------------------------------------------------------------------
Sierra Networks Inc. Buffalo New York
- --------------------------------------------------------------------------------
Apollo Microwaves Ltd. Pointe Claire Quebec
- --------------------------------------------------------------------------------
Andrew Corporation Orland Park Illinois
- --------------------------------------------------------------------------------
Tadiran Scopus Holon Israel
- --------------------------------------------------------------------------------
International Digital Systems Melbourne Florida
- --------------------------------------------------------------------------------
Gulf Communications International Palm Bay Florida
- --------------------------------------------------------------------------------
Hughes Network Systems Baltimore Maryland
- --------------------------------------------------------------------------------
Microage Tempe Arizona
- --------------------------------------------------------------------------------
Miteq Hauppauge New York
- --------------------------------------------------------------------------------
ELB Electronics lnc. Old Bethpage New York
- --------------------------------------------------------------------------------
Surf Tech Mfg. Corp. Bohemia New York
- --------------------------------------------------------------------------------
Communication Techniques Newark New Jersey
- --------------------------------------------------------------------------------
Maxtech Incorporated State College Pennsylvania
- --------------------------------------------------------------------------------
Specialty Microwave Ronkonkoma New York
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10-Dec-97
- --------------------------------------------------------------------------------
<PAGE>
Sole Source Suppliers To STS
- ---------------------------------------------------------------
EF DATA Channel Unit Lynxx
- ---------------------------------------------------------------
Plessey Antenna Panels Lynxx
- ---------------------------------------------------------------
EF DATA Modulators Progeny
- ---------------------------------------------------------------
Tadiran IRD and Encoder Progeny
- ---------------------------------------------------------------
Verticom Brick Progeny
- ---------------------------------------------------------------
HNS TDMA Systems
- ---------------------------------------------------------------
Microsource X Band Converters Systems
- ---------------------------------------------------------------
NERA Mini-M/ACSE Systems
- ---------------------------------------------------------------
Pascall Uplink Controls Systems
- ---------------------------------------------------------------
SAT Corp Satellite Systems
Monitoring
- ---------------------------------------------------------------
Sumitomo/Mitshubishi DCME Systems
- ---------------------------------------------------------------
Technical Comm Corp Encrypters Systems
- ---------------------------------------------------------------
- ---------------------------------------------------------------
12/9/97
- ---------------------------------------------------------------
Page 1
<PAGE>
SCHEDULE 3.24
BACKLOG
1. See attachment.
-28-
<PAGE>
Satellite Transmission Systems, Inc.
11/24/97 10:10 PM BOOKINGS/BACKLOG REPORT JMB Page: 1
<TABLE>
<CAPTION>
JOB JOB OPENING CLOSING
NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1021 5 HUGHES NETWORK SYSTE FORD BASELINE UPGRADE I & II 59,076.10 0.00 0.00 59,076.10
1027 5 AT&T SATELLITE ENGIN BURST DETECTOR UNITS 32,330.00 0.00 0.00 32,330.00
- ------------------------------------------------------------------------------------------------------------------------------------
1031 5 AT&T Tridom VIDEO HUB ADD-ON-NC STATE UNIV 17,642.00 0.00 0.00 17,642.00
1032 5 AT&T CONVERTERS 85,065.00 20,970.00 106,035.00 0.00
1034 5 GE SPACENET SERVICES KU BAND DIGITAL VIDEO E/S 60,305.00 142,445.00 0.00 202,750.00
- ------------------------------------------------------------------------------------------------------------------------------------
1061 5 MFS NETWORK TECHNOLO STATE OF CONN. 6.1M & 2 TRANSP. 0.60 0.00 0.00 0.60
1074 5 RCN INTERNATIONAL F1 NON REDUNDANT 0.00 7,000.00 (7,000.00) 0.00
1079 5 HUGHES NETWORK SYSTE DOMESTIC-CANADIAN SPLIT 313,659.00 0.00 0.00 313,659.00
- ------------------------------------------------------------------------------------------------------------------------------------
1080 5 AT&T SATELLITE ENGIN LNA SYSTEM w/INSTALLATION 98,780.00 0.00 0.00 98,780.00
1081 5 BT NORTH AMERICA INC PROJECT PLANET 992,081.00 0.00 0.00 992,081.00
------------ ---------- --------- ------------
- ------------------------------------------------------------------------------------------------------------------------------------
5 System/Network Domestic Proj. 1,658,938.70 155,415.00 99,035.00 1,716,318.70
53636 10 MULTIMEDIOS AMERICA PROGENY XP EXCITER&PS RECEIVER 0.00 1,029.40 1,029.40 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
53846 10 HARRIS BROADCAST DIV CHEVY TAHOE TRUCK 6,220.00 0.00 0.00 6,220.00
54046 10 TELECOM INTERNATIONA PROGENY UNITS 105,280.00 0.00 0.00 105,280.00
54276 10 TELEKOM MALAYSIA BER EQUALIZER 39,525.00 0.00 0.00 39,525.00
- ------------------------------------------------------------------------------------------------------------------------------------
54306 10 BT CROYDON LPU USC, GMACS KEY & ACCESSORY 45,782.06 0.00 45,782.06 0.00
54316 10 TELESTAT CORPORATION PROGEN EXCITER & PG RECEIVER 63,083.00 0.00 0.00 63,083.00
54326 10 BT CROYDON LPU USC, GMACS KEY & ACCESSORY 31,255.34 0.00 31,255.34 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
54336 10 BT CROYDON LPU USC & GMACS ACCESSORY 24,862.07 0.00 24,021.08 840.99
54346 10 BT CROYDON LPU USC & ACCESSORY 11,893.17 0.00 11,311.17 582.00
54436 10 COMSAT BRASIL LTDA. PROGENY EXCITER & RECEIVER 84,150.00 0.00 0.00 84,150.00
- ------------------------------------------------------------------------------------------------------------------------------------
54456 10 BT CROYDON LPU USC & ACCESSORY 9,971.60 0.00 9,971.60 0.00
54476 10 HARRIS BROADCAST DIV PROGENY UNITS 150,335.00 0.00 0.00 150,335.00
54536 10 BT pic USC & ACCESSORY 0.00 6,585.33 0.00 6,585.33
- ------------------------------------------------------------------------------------------------------------------------------------
54546 10 BT pic GMACS & ACCESSORY 0.00 9,758.20 0.00 9,758.20
54578 10 TECHNOLOGY GROUP PROGENY UNITS 0.00 115,000.00 41,700.00 73,300.00
54606 10 BT pic Remote M&C System 0.00 17,660.79 0.00 17,660.79
- ------------------------------------------------------------------------------------------------------------------------------------
------------ ---------- --------- ------------
10 GCE Direct Order 572,357.24 147,974.92 163,011.85 557,320.31
- ------------------------------------------------------------------------------------------------------------------------------------
6300 15 OFFICE OF NATIONAL P SM EUTELSAT VIDEO E/S MOROCCO 35,820.25 0.00 0.00 35,820.25
6308 15 SINGAPORE TELECOM Std. A Earth Station 5,703.18 0.00 0.00 5,709.18
6313 15 EMPRESA ESTATAL DE ECUADOR DOMSAT PROJECT 180,340.81 0.00 281,402.00 151,998.81
- ------------------------------------------------------------------------------------------------------------------------------------
6320 15 THORN EMI ELECTRONIC REPLACE TX SYS IN MADLEY 1,2,3 18,552.00 0.00 15,065.00 3,487.00
6364 15 BRITISH TELECOMMUNIC GONNHILLY 5 REMOTE M&C 24,596.00 0.00 0.00 24,596.00
6367 15 SUDATEL 37 STATION DOM. SAT. NETWORK 779,852.00 50,000.00 207,689.00 622,163.00
- ------------------------------------------------------------------------------------------------------------------------------------
6371 15 BANCO DO BRASIL S.A. ku band project EMBRATEL 3,505,353.60 13.00 704,379.00 800,973.60
6387 15 HUGHES NETWORK SYSTE KU Band 16W [illegible] 14,990.17 0.00 0.00 4,990.00
6391 15 NISSHO IWAI AMERICAN Brunei IDR 6,913.00 0.00 0.00 9,913.00
- ------------------------------------------------------------------------------------------------------------------------------------
6400 15 LUCENT TECHNOLOGIES EARTH STATION EXPANSION IN SA 368,180.10 0.00 53,176.50 315,003.60
6407 15 LUCENT TECHNOLOGIES EARTH STATION EXPANSION IN SA 3,523,145.20 0.00 166,725.90 3,356,419.30
6416 15 HUGHES NETWORK SYSTE INSAT E/S/Marcsat 2,171.37 0.00 2,171.37 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6422 15 Posts and Telecommun Equipment and Services 101,567.40 0.00 0.00 101,587.40
6423 15 Posts and Telecommun Equipment and Services 191,576.40 216.00 211.00 191,576.40
6425 15 Satellite Television KU Band Upline/Upgrade 7,340.00 33,945.20 0.00 285.20
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Satellite Transmission Systems, Inc.
11/24/97 10:11 PM BOOKINGS/BACKLOG REPORT JMB Page: 2
<TABLE>
<CAPTION>
JOB JOB OPENING CLOSING
NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
6426 15 HUGHES NETWORK SYSTE Banco do Brazil Upgrade 51,154.50 0.00 0.00 51,154.50
6428 15 C.S. Communications RF Uplink & C. Band Turnaround 380,345.02 239.00 63,203.02 317,381.00
- ------------------------------------------------------------------------------------------------------------------------------------
6429 15 Space Communications Data Distribution E/S 63,381.00 0.00 63,381.00 0.00
6430 15 REUTERS SA 9.0m E/S w/SHELTER & SPARES 66,550.13 0.00 0.00 66,550.13
6439 15 BEIJING TELECOMMUNIC 300,058.00 0.00 0.00 300,068.00
- ------------------------------------------------------------------------------------------------------------------------------------
6463 15 ITS Sdn. Bhd. Earth Stations - SM 1,213.04 0.00 0.00 1,213.04
6480 15 SAMSUNG AMERICA, INC. Transit Hub Station 800.00 0.00 0.00 800.00
6481 15 TELEFONICA SISTEMAS DBS Up Converter Subsystem 36,500.00 0.00 36,500.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
6485 15 PAKISTAN PHASE II PROJECT 10,389,010.00 0.00 0.00 10,389,010.00
6488 15 EMPRESA ESTATAL DE DOMSAT EXPANSION NETWORK 196,277.29 0.00 0.00 196,277.29
6491 15 LOCKHEED MARTIN CORP CHINA STAR-1 TT&C STATION 188,345.00 0.00 0.00 188,345.00
- ------------------------------------------------------------------------------------------------------------------------------------
6495 15 Romsat 11M E/S Hub & Remotes 2,007,629.00 0.00 0.00 2,007,629.00
6498 15 O'CONNOR'S SINGAPRGE BKT-6P & BKT-7P Upgrade 59,523.00 0.00 0.00 59,523.00
6499 15 CHINA NAT. POSTAL & China MPT-Domsat 1,111,056.00 0.00 0.00 1,111,056.00
- ------------------------------------------------------------------------------------------------------------------------------------
7300 15 LINK COMMUNICATIONS Remote VSAT & Hub Station 110,116.00 0.00 0.00 110,116.00
7302 15 TODAY TRADING SDN. B UPLINK/DOWNLINK EQUIPMENT 191,450.00 0.00 0.00 191,450.00
7303 15 TELEFONICA DE ESPANA v901 UUP CONVERTERS 64,317.92 0.00 0.00 64,317.92
- ------------------------------------------------------------------------------------------------------------------------------------
7304 15 HUGHES NETWORK SYSTE FORD REFORMA SPARES 87,273.00 0.00 0.00 87,273.00
7305 15 IMPSAT IMPSAT ARGENTINA-TIGER ASSY. 0.00 168,598.00 0.00 168,598.00
7306 15 SARA VISION Ku BAND TV UPLINK E/S 0.00 1,486,651.00 0.00 1,489,651.00
- ------------------------------------------------------------------------------------------------------------------------------------
------------- ------------ ------------ -------------
15 International Project 24,071,120.38 1,739,636.20 1,340,908.79 24,469,847.79
- ------------------------------------------------------------------------------------------------------------------------------------
7110 20 DEFENSE INFORMATION WHCA MAINTENANCE 108,367.50 0.00 0.00 108,367.50
7121 20 BDM INTERNATIONAL IN SPACE SEGMENT KUTE NET 229,004.00 0.00 229,004.00 0.00
7147 20 NATO COMMUNICATIONS NATO BROADBAND 3,112,570.40 0.00 0.00 3,112,570.40
- ------------------------------------------------------------------------------------------------------------------------------------
7180 20 NATO COMM. & INFORMA X-SAT TERMINAL 10,000.00 0.00 0.00 10,000.00
7208 20 INDUSTRIAL & COMMERC BROADBANDING SPARE PARTS 215,404.80 0.00 0.00 215,404.88
7216 20 INDUSTRIAL & COMMERC CONVERTERS 715.00 0.00 0.00 715.00
- ------------------------------------------------------------------------------------------------------------------------------------
7229 20 INDUSTRIAL & COMMERC CT-9C CONVERSION KIT 3,893.00 0.00 0.00 3,893.00
7231 20 INDUSTRIAL & COMMERC Modified CT3K System 36,630.00 0.00 36,630.00 0.00
7233 20 INDUSTRIAL & COMMERC MISC EQUIP 80,027.00 0.00 0.00 80,027.00
- ------------------------------------------------------------------------------------------------------------------------------------
7234 20 INDUSTRIAL & COMMERC dehydrators 7,086.00 0.00 0.00 1,086.00
7236 20 INDUSTRIAL & COMMERC Down Converter 9,947.00 0.00 9,947.00 0.00
7237 20 INDUSTRIAL & COMMERC 3 Converters 32,955.00 0.00 32,955.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
7238 20 INDUSTRIAL & COMMERC CT-7C Terminals 857,014.00 0.00 0.00 857,014.00
7239 20 DFAS Columbus Center GSCL TERMINAL 1,565,337.00 0.00 0.00 1,565,337.00
7240 20 INDUSTRIAL & COMMERC ENGINEERING SERVICES 50,000.00 0.00 0.00 50,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
------------ -------- ---------- ------------
20 Government Programs 6,318,990.70 0.00 308,576.00 6,010,414.70
- ------------------------------------------------------------------------------------------------------------------------------------
1730 25 HUGHES NETWORK SYSTE MISC. CABLES 9,982.00 9,982.00 0.00 0.00
1744 25 HUGHES NETWORK SYSTE MISC SPARE PARTS 98,330.00 0.00 0.00 98,330.00
1755 25 RAYTHEON SUPPORT SER MISC SPARE PARTS 132,474.00 0.00 0.00 132,474.00
- ------------------------------------------------------------------------------------------------------------------------------------
1763 25 RAYTHEON E-SYSTEMS HANDSET 0.00 250.00 250.00 0.00
1764 25 PanAmSat INC. SUMMARY ALARM PANEL 0.00 3,135.00 0.00 3,135.00
1766 25 HUGHES NETWORK SYSTE UPC-100 GRAY PANEL 0.00 15,150.00 0.00 5,150.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Satellite Transmission Systems, Inc.
11/24/97 10:12 PM BOOKINGS/BACKLOG REPORT JMB Page: 3
<TABLE>
<CAPTION>
JOB JOB OPENING CLOSING
NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1767 25 RALSAT INTERNATIONAL CRYSTAL OSCILLATOR 104.8958 33 0.00 932.00 0.00 932.00
1769 25 HUGHES NETWORK SYSTE JACK COVER 0.00 1,080.00 0.00 1,080.00
- -----------------------------------------------------------------------------------------------------------------------------------
17656 25 PanAmSat INC SUMMARY ALARM PANEL 0.00 3,135.00 0.00 3,135.00
17686 25 CROSSLINK TRANSMIT & RECEIVE CABLES 0.00 591.00 591.00 0.00
---------- --------- -------- ----------
- -----------------------------------------------------------------------------------------------------------------------------------
25 System Product Spares Order 240,786.00 14,291.00 841.00 254,326.00
6532 35 ACUMEN CO., LTD. DEQ-703 4,950.00 0.00 4,950.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
6902 35 EGYPTIAN RADIO & TV SPARES FOR JOB 6282 890.00 0.00 0.00 890.00
6985 35 TEE-COM ELECTRONICS, SOFTWARE MODIFICATION 5,950.00 5,950.00 0.00 0.00
6990 35 TMI COMMUNICATIONS MISC SPARE PARTS 1.00 0.00 0.00 1.00
- -----------------------------------------------------------------------------------------------------------------------------------
65216 35 VIDESH SANCHAR NIGAM CRYSTAL OSCILLATORS 5,885.00 0.00 0.00 5,885.00
65256 35 PHILLIPPINE COMMUNIC OSCILLATOR RP LOCAL PREQ 20,250.00 0.00 0.00 20,250.00
65266 35 ARMENIA TELEPHONE CO MISC SPARE PARTS 25,983.00 0.00 0.00 25,983.00
- -----------------------------------------------------------------------------------------------------------------------------------
65276 35 TELESAT CORPORATION MISC SPARE PARTS 191,948.00 0.00 0.00 191,948.00
65296 35 HARIFF CRYSTALS 24,419.00 0.00 0.00 24,419.00
65316 35 ACUMEN CO., LTD. misc spare parts 15,843.00 0.00 4,500.00 15,843.00
- -----------------------------------------------------------------------------------------------------------------------------------
65346 35 RACAL SURVEY LTD. UPC100 15,150.00 0.00 0.00 15,150.00
65356 35 ETISALAT SUMMARY ALARM PANEL 5,715.05 0.00 0.00 5,715.05
65366 35 ETISALAT MISC SPARE PARTS 21,410.00 0.00 0.00 21,410.00
- -----------------------------------------------------------------------------------------------------------------------------------
---------- --------- -------- ----------
35 International Spares Order 338,394.66 5,950.00 9,450.00 332,994.66
- -----------------------------------------------------------------------------------------------------------------------------------
7711 40 COMMERICAL ACCOUNTS OSCILLATORS 4,444.00 0.00 4,444.00 0.00
7712 40 CMI/GCS U/C &D/C TRIBAND (5.00) 0.00 0.00 (5.00)
7714 40 CMI/GCS MISC SPARE PARTD 36,500.00 0.00 36,500.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
7715 40 CMI/GCS UNIVERSAL SYSTEMS CONTROLLER 16,000.00 0.00 0.00 16,000.00
7716 40 CMI/GCS MCU ASSY 0.00 6,353.75 6,353.75 0.00
7717 40 CMI/GCS TMSX-GIF TRANSFER SWITCH 0.00 1,200.00 1,200.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
76666 40 FINANCE & ACCOUNTING MISC. 6CE SPARES 6,234.00 6,234.00 0.00 0.00
---------- --------- -------- ----------
40 Government Spares Order 63,173.00 1,319.75 48,497.75 15,995.00
- -----------------------------------------------------------------------------------------------------------------------------------
6357 45 GOVERNMENT OF ISLAMI SERVICE AND MAINTENANCE PROJ 104,262.00 0.00 0.00 104,262.00
7202 45 INDUSTRIAL & COMMERC ENGINEERING SERVICE 28,673.00 0.00 0.00 108,673.00
- -----------------------------------------------------------------------------------------------------------------------------------
8010 45 ELNA ELEKTRO-NAVIGAT LEASE EQUIPMENT 0.00 21,200.00 21,200.00 0.00
82009 45 HUGHES NETWORK SYSTE V/C 0.00 4,079.00 4,079.00 0.00
82169 45 HUGHES NETWORK SYSTE SEMI RIGID CABLE 0.00 611.00 611.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
82229 45 CATERPILLAR INC HIGH VOLT CABLE 0.00 3,073.00 3,073.00 0.00
82429 45 TELESAT CANADA 0.00 100.00 100.00 0.00
82708 45 SOTELGU1 S.A. DC4021BU 0.00 4,638.00 4,638.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
83507 45 CALIFORNIA MICROWAVE SC1100 5,514.00 0.00 0.00 5,514.00
84178 45 THOMSON-CSF R.C.C. P/S 0.00 304.00 304.00 0.00
84278 45 ENTERPRISE RENT-A-CA EXTENDER CARD 0.00 207.00 207.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
86158 45 AT&T Tridom MODULATOR 0.10 0.00 0.00 0.00
86238 45 TELESAT CANADA LYNXX 0.00 6,363.00 6,363.00 0.00
86448 45 HELLENIC TELE ORGAN MODULATOR PCB 0.00 682.42 682.42 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Satellite Transmission Systems, Inc.
11/24/97 10:16 PM BOOKINGS/BACKLOG REPORT JMB Page: 4
<TABLE>
<CAPTION>
JOB JOB OPENING CLOSING
NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
86818 45 AMSC SUBSIDAIRY CORP IF AMPLIFIER 0.00 1,570.00 1,570.00 0.00
86876 45 DY GENERAL MANAGER PLA-1010-01 0.00 843.42 843.42 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
86887 45 HUGHES NETWORK SYSTE LNA 0.00 2,046.00 2,046.00 0.00
87258 45 AOS INC. LYNXX 0.00 1,053.66 1,053.66 0.00
87268 45 AOS INC. LYNXX 0.00 1,143.66 1,143.66 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
87438 45 HUGHES NETWORK SYSTE 125W TPA 0.00 1,300.00 1,300.00 0.00
87758 45 TELESAT CANADA LYNXX 0.00 6,512.00 6,512.00 0.00
87878 45 HUGHES NETWORK SYSTE ANTENNA PAINT 0.00 375.00 375.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
87887 45 TODAY TRADING SDN. B SERIAL INTFC PCB 193.83 0.00 0.00 193.83
87927 45 AT&T OF PUERTO RICO HELIX P/S 0.00 2,450.00 2,450.00 0.00
87938 45 TELEFONICA SISTEMAS GMACS KEY 0.00 304.00 304.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
88188 45 HUGHES NETWORK SYSTE DC1233AB 0.00 1,865.25 1,865.25 0.00
88218 45 BOLAR ENTERPRISE CO. UPC100 650.00 0.00 650.00 0.00
88228 45 BOLAR ENTERPRISE CO. UPC100 1,280.00 0.00 1,280.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
88317 45 CALIFORNIA MICROWAVE DEMOD MODULE 0.00 505.00 505.00 0.00
88318 45 TELESAT CANADA LYNXX 0.00 3,487.00 3,487.00 0.00
88327 45 CALIFORNIA MICROWAVE DEMOD MODULE 0.00 500.00 500.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
88328 45 TELESAT CANADA PBX PCB 0.00 1,039.00 1,039.00 0.00
88438 45 RT COMUNICACIONES, S. D/C 0.00 905.00 905.00 0.00
88478 45 HUGHES NETWORK SYSTE U/C 0.00 1,849.75 1,849.75 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
88548 45 NATIONAL PUBLIC RADI LYNXX 0.00 500.00 500.00 0.00
88558 45 HUGHES NETWORK SYSTE ACU 0.00 2,432.00 2,432.00 0.00
88618 45 EL PASO ANALYTICS, I DEMOD MODULE 0.00 812.00 812.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
88628 45 HUGHES NETWORK SYSTE D/C 0.00 3,120.75 3,120.75 0.00
88668 45 UNIVERSITY OF WASHIN UC1431BB 0.00 4,012.00 4,012.00 0.00
88678 45 TRIDOM CORPORATION REPAIR FOR AT&T/HAI 0.00 2,792.00 2,792.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
88738 45 CALIFORNIA MICROWAVE DAS200-2 0.00 1,859.00 1,859.00 0.00
88748 45 CALIFORNIA MICROWAVE DC1233AB 0.00 2,400.00 2,400.00 0.00
88778 45 CALIFORNIA MICROWAVE TRI BAND D/C 0.00 875.00 875.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
88788 45 HUGHES NETWORK SYSTE REPAIR FOR HNS/FORD 0.00 1,986.00 1,986.00 0.00
88818 45 ENTERPRISE RENT-A-CA DEHYDRATOR 0.00 962.00 962.00 0.00
88828 45 HUGHES NETWORK SYSTE U/C 0.00 4,523.00 4,523.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
88928 45 COM NET SPA ADOS TERMINAL 0.00 803.00 803.00 0.00
88938 45 COM NET SPA ADOS TERMINAL 0.00 584.00 584.00 0.00
89001 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/CVS 0.00 2,514.89 2,514.89 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
89018 45 GOVERNMENT OF ISLAMI MAINTENANCE SERVICES PAKISTAN 276,409.25 2,700.00 43,386.00 230,323.25
89031 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/FORD 0.00 1,150.00 1,150.00 0.00
89061 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/TOYSO 0.00 2,246.00 2,246.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
89171 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/CONDISCO (WALS) 0.00 1,396.00 1,396.00 0.00
89181 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/CVS 0.00 2,585.00 2,585.00 0.00
89191 45 TRIDOM CORPORATION FLD TRIP-GE SPACN/AT&T/WAUKAS 0.00 2,931.00 2,931.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
89198 45 LILCO SPACE SEGMENT 7,111.00 6,412.50 6,412.50 7,111.00
89221 45 TRIDOM CORPORATION FLD TRIP-GE SPACENT/S1PCA 0.00 6,205.00 6,205.00 0.00
89298 45 HUGHES NETWORK SYSTE FLD TRIP-HNS/FORD 0.00 1,350.00 1,350.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
89329 45 HUGHES NETWORK SYSTE PREV MAINT-HNS/EDS 0.00 13,017.00 13,017.00 0.00
89341 45 BDM FEDERAL, INC. SPACE SEGMENT/BDM 0.00 458,088.00 0.00 0.00
89479 45 HUGHES NETWORK SYSTE HNS/CIRFY 0.00 16,417.00 16,417.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
11/24/97 10:18 PM JMB Page: 5
BOOKINGS/BACKLOG REPORT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
JOB JOB OPENING CLOSING
NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
89619 45 HUGHES NETWORK SYSTE PREV MAINT -HNS/PBS 0.00 11,783.00 11,783.00 0.00
89527 45 HUGHES NETWORK SYSTE FLD TRIP - HNS/WALMART 0.00 12,053.00 12,053.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
89528 45 SNAPP PERFORMANCE TESTING 20,145.00 0.00 0.00 20,145.00
89529 45 HUGHES NETWORK SYSTE PREV MAINT -HNS/TCI 0.00 12,334.39 12,334.39 0.00
89539 45 HUGHES NETWORK SYSTE PREV MAINT -HNS/CHRYSLER 0.00 14,799.00 14,799.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
89549 45 HUGHES NETWORK SYSTE PREV MAINT -HNS/WALGRN 0.00 11,006.00 11,006.00 0.00
89459 45 HUGHES NETWORK SYSTE PREV MAINT -HNS/GM 0.00 12,805.00 12,805.00 0.00
89607 45 HUGHES NETWORK SYSTE FLD TRIP/HNS/TOYS R US VIDEO 0.00 6,731.00 6,731.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
89739 45 TRIDOM CORPORATION FLD TRIP - GE, SPACENET/FAA 0.00 28,601.00 28,601.00 0.00
89769 45 GLOBE TELECOM, GMCR GMACS UPGRADE 93,357.00 0.00 0.00 93,357.00
89798 45 AT&T Tridom AT&T/KEESLER AFB FIELD TRIP 1,937.50 0.00 0.00 1,937.50
- ----------------------------------------------------------------------------------------------------------------------------------
89799 45 HUGHES NETWORK SYSTE PREV MAINT - HNS/COMDISCO 0.00 10,181.00 10,181.00 0.00
89829 45 HUGHES NETWORK SYSTE ANTENNA WASH - HNS/WALGREEN 0.00 11,470.00 11,470.00 0.00
89848 45 HUGHES NETWORK SYSTE HNS MEXICO MAINTENANCE CONTRA 39,000.00 15,000.00 15,000.00 39,000.00
- ----------------------------------------------------------------------------------------------------------------------------------
89849 45 HUGHES NETWORK SYSTE PREV MAINT - HNS/TOYSV 0.00 10,919.00 10,919.00 0.00
89879 45 HUGHES NETWORK SYSTE FLD TRIP - HNS/JMAXX 0.00 2,448.00 2,448.00 0.00
89889 45 HUGHES NETWORK SYSTE FLD TRIP - HNS/CVS 0.00 3,503.00 3,503.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
89929 45 CATERPILLAR INC. SCAMP TRAINING - CATERPILLER/BZL 0.00 3,648.00 3,648.00 0.00
89969 45 HUGHES NETWORK SYSTE FLD TRIP - HNS/CHRYSLER 0.00 7,277.00 7,277.00 0.00
89979 45 PT. APLIKANUSA LINTA PM/REPAIR- LINTASARYA, INDONESIA 25,080.00 0.00 0.00 25,080.00
- ----------------------------------------------------------------------------------------------------------------------------------
89989 45 RED CORPORATIVA NACI PREV & REPAIR MAINT CONT - RON 0.00 7,000.00 8,000.00 0.00
89999 45 HUGHES NETWORK SYSTE FLD TRIP - HNS/EDJONES 0.00 4,188.00 4,188.00 0.00
---------- ---------- ---------- ------------
- ----------------------------------------------------------------------------------------------------------------------------------
45 Repair Order 603,612.48 793,427.19 387,355.19 1,014,684.48
92418 65 TELESAT CANADA LYNXX 0.00 6,722.00 6,722.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
---------- ---------- ---------- ------------
65 Warranty Jobs 0.00 6,722.00 6,722.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
22025 70 RADIOLA CORPORATION LYNXX AND ACCESSORIES 12,000.00 0.00 0.00 12,000.00
22071 70 AOS INC. (32) STV Options 32,000.00 0.00 0.00 32,000.00
22074 70 CANADIAN DND (37) stv 111 OPTIONS 99,750.00 0.00 0.00 99,750.00
- ----------------------------------------------------------------------------------------------------------------------------------
22134 70 RADIOLA CORPORATION LYNXX AND ACCESSORIES 9,000.00 0.00 0.00 [ILLEGIBLE]
22167 70 FROTRONICS INC. MULTIPLEXER 9,742.00 0.00 0.00 [ILLEGIBLE]
22188 70 TD COMMUNICATIONS LYNXX w/STV 111 OPTION HARD CASE 900.00 0.00 0.00 [ILLEGIBLE]
- ----------------------------------------------------------------------------------------------------------------------------------
22257 70 UNIMESA CO., LTD. LYNXX CABLE 300.00 0.00 0.00 300.00
22275 70 REMOTE SATELLITE SYS LYNXX w/STV_111 & ACCESSORY 7,932.00 212.00 4,830.00 3,314.00
22276 70 AOS INC. MASTER HANDSET FOR LYNXX 840.00 0.00 840.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
22278 70 7E.COMMUNICATIONS LTD. [ILLEGIBLE] 17,850.00 [ILLEGIBLE] 17,879.00 0.00
22280 70 OMNES LTD. LYNXX & REMOTE ANTENNA KIT 1,170.00 52.00 1,222.00 0.00
22283 70 OMNES LTD. REMOTE ANTENNA KIT 1,170.00 52.00 1,222.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
22284 70 ABLE COMMUNICATIONS LYNXX & ACCESSORY 0.00 24,652.00 24,625.00 0.00
22285 70 O'GARA SATELLITE NET LYNXX SURFER 0.00 3,750.00 3,750.00 0.00
22286 70 OMNES LTD. LYNXX & REMOTE ANTENNA KIT 0.00 20,810.00 20,810.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
22287 70 CALIFORNIA MICROWAVE LYNXX 0.00 49,680.00 49,680.00 0.00
22288 70 AOS INC. LYNXX 0.00 20,786.00 20,786.00 0.00
22289 70 ABLE COMMUNICATIONS LYNXX 0.00 20,506.00 20,506.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
11/24/97 10:20 PM JMB Page: 6
BOOKINGS/BACKLOG REPORT
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
JOB JOB OPENING CLOSING
NUMBER TYPE CUSTOMER BOOKING DESCRIPTION VALUE BOOKINGS SALES VALUE
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
22290 70 7E COMMUNICATIONS Lt HARD CASE 0.00 1,280.00 0.00 1,280.00
22291 70 FROTRONICS INC. LYNXX & ACCESSORY 0.00 20,384.00 22,834.00 1,050.00
- ----------------------------------------------------------------------------------------------------------------------------------
22292 70 UNIMESA CO., LTD LYNXX & ACCESSORY 0.00 21,000.00 0.00 121,000.00
22293 70 FROTRONICS INC. HARD CASE 0.00 682.00 0.00 682.00
22294 70 O'GARA SATELLITE NET REMOTE ANTENNA KIT 0.00 3,000.00 3,000.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
22295 70 TOCOM REMOTE ANTENNA KIT 0.00 1,500.00 0.00 1,500.00
------------- ------------ ------------ -------------
70 MOBILESAT 232,654.00 193,448.00 193,584.00 232,518.00
============= ============ ============ =============
- ----------------------------------------------------------------------------------------------------------------------------------
GRAND TOTALS 34,100,027.16 3,047,284.06 2,416,186.56 34,731,124.66
- ----------------------------------------------------------------------------------------------------------------------------------
34,100,027.16 3,047,284.06 136,795.02
------------
2,552,981.58 34,594,329.64
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 4.2
GOVERNMENT APPROVALS AND OTHER CONSENTS
1. Hart-Scott-Rodino filing.
2. Consents required under Buyer's existing credit facility with Bank of
America, as agent bank.
-29-
<PAGE>
SCHEDULE 5.2(e)
LETTERS OF CREDIT; PERFORMANCE AND SURETY BOND
See attachment.
-30-
<PAGE>
Attachment to Schedule 5.2(e) As of 12/11/97
<TABLE>
<CAPTION>
BENEFICIARY ISSUANCE STANDBY IC OUTSTANDING
LC# FOREIGN BANK (Customer) DATE MATURITY DATE AMOUNT
- --- ------------ ---------- ---- ------------- ------
<S> <C> <C> <C> <C> <C>
226639 Bank of America-Athens Hellenic Telecommunications Org S.A.
(OTE) 12/22/95 1/15/98(a) 120,000.00
3001458 Bank of China-Beijing China Nat'l Post & Telecomm 9/l9/96 1/30/98 482,168.00
Appliances Corp. No. 17A
3002082 China Merchant Bank-Shenyang Liaoning Int'l Trade Hongyu Corp 10/28/96 1/30/98 49,400.28
3002083 Industrial Coml Bank-Shanghai Inner Mongolia Machinery Import Export
Corp 10/28/96 1/30/98 85,926.52
3002802 Banco Popular Del Ecuador
Amazonas Emetel S.A. 12/20/96 1/31/98 47,500.00
3002803 Banco Popular Del Ecuador
Amazonas Emetel S.A. 12/23/96 1/31/98 672,377.00
3005966 Bank Hapoalim-Tel Aviv Bezeq-Israel Telecomm Corp 8/28/97 2/13/98 225,000.00
225216 Bank of America-Athens Hellenic Telecommunications 12/22/95 2/14/98(a) 205,000.00
224990 Bank of America-Greece Hellenic Telecommunications 12/22/95 2/15/98(a) 65,000.00
Organization S.A. (OTE)
3003465 Bank Hapoalim-Tel Aviv Bezeq-Israel Telecomm Corp 2/13/97 2/28/98 82,396.65
139161 Union Bank of Bankok Jasmine International 9/15/95 3/14/98(e) 181,425.00
3002729 Arab American Bank-New York Syrian Telecommunications Est 12/17/96 3/15/98 15,587.00
220517 Arab African Int'l Bank, Egypt Egyptian Radio & Television 9/15/95 3/28/98(a) 9,948.00
Union Broadcast Engineering
3003068 Bank of America-Hong Kong Satellite TV Asian Region (STAR) 1/14/97 4/14/98(a) 148,501.00
3007586 Banque Commerciale Du Maroc Kingdom of Morroco-Nat'l 11/10/97 4/15/98 58,000.00
Office of Posts & Telecomm
226085 Bank of America US Samsung America Inc. l2/22/95 4/15/98(a) 146,883.00
225454 Nat'l Bank of Abu Dhabi Egyptian Radio & Television 8/1/95 4/30/98 8,759.00
Engineering Sector/Television
3004932 Banque Bruxelles Lambert NATO 6/11/97 5/16/98(b) 1,100,378.00
138479 Nat'l Bank of Abu Dhabi Emirates Telecommunications Ltd 12/15/95 6/14/98(a) 171,635.40
3004233 Bank of America-Pakistan Gov of Pakistan-Nat'l Logistic Cell 6/24/97 6/24/98(c) 2,175,000.00
223281 Nat'l Bank of Abu Dhabi Emirates Telecommunications Ltd 8/18/95 8/17/98(a) 485.23
3003262 Bank of America-Singapore Singapore Telecom 2/14/97 9/14/98 298,250.00
3005817 Turkiye IS Bankasi A.S. Turk Telekomlikasyon A.S. 8/19/97 12/19/98 14798.20
36222 Bank of America-Singapore Singapore Controller Income Tax 9/17/97 1/31/99(d) 25,103.48
Total Standby LCs 6,374,521.76
Global
Perf Bond Bank of America-Antwerp Armed Forces of Belgium (f) 3/26/97 12/31/97(f) 636,637.03
Bank
Declaration Bank of America-Antwerp Armed Forces of Belgium (g) 9/2/97 (g) 5,139,259.67
Grand Total 12,150,418.46
NOTE:
(a) Automatically extends 6 mos from indicated maturity date
(b) Automatically extends 1 yr from indicated maturity date
(c) Extends addl 11 mos w/ bank's internal approval; max term of LC 26 mos from
6/24/97
(d) In process of cancelling, issued for Expat no longer employed w/
CMI
(e) Automatically extends 3 mos from indicated maturity date
(f) Performance bond outstanding until exp of bid validity date (12/31/97), may
extend to 2/26/98 since STS extended its bid validity date to 2/26/98; if NOT
awarded contract, bond expires; if awarded contract, term= 41 mos from contract
execution; USD amt marked to market monthly based on 9/97 BEF value=
23,355,030= maximum amount, decreases from mos 16
(g) BofA declared to issue guarantee IF awarded contract; Bond amt noted above
currently reserved under our credit line together w/ Global performance
performance bond; USD amt marked to market monthly based on 9/97 BEF value
188,533,741 = maximum amount, decreases from mos 18
</TABLE>
<PAGE>
As of 12/11/97 except where noted
Attachment to Schedule 5.2(e)
<TABLE>
<CAPTION>
OUTSTANDING MAXIMUM
BOND NUMBER BENEFICIARY TYPE OF BOND BOND AMOUNT CONTRACTUAL EXPOSURE ISSUANCE DATE
- ----------- ----------- ------------ ----------- -------------------- -------------
<S> <C> <C> <C> <C> <C>
99ECU00001 Country of Equador Customs $100,000 $100,000 11/26/96
9000001 Emetel Advanced Pmt $8,913,251(a) $6,767,801(c) 3/17/94
K04693620 MFS Network Performance $1,701,458 $1,701,458 4/26/96
122 Emetel Performance $247,435 $247,435 7/6/98
68 Emetel Advanced Pmt $4,309,876(b) $3,970,314(c) 5/24/96
103 Emetel Customs $25,000 $25,000 9/96
----------- -----------
TOTAL $15,297,020 $12,812,008
</TABLE>
ALL ISSUED BY INSURANCE COMPANY OF AMERICA THROUGH SEGUROS BOLIVAR
(a) as of 10/22/97, latest confirmed date available
(b) as of 11/30/97, latest confirmed date available
(c) Maximum Exposure reduced from Bond Amount in 11/97 due to customer
acceptances
<PAGE>
SCHEDULE 5.2(f)
SEVERANCE AGREEMENTS
1. Severance Agreement dated April 3, 1997 between Seller and Brian Maloney.
2. Severance Agreement dated May 20, 1997 between Seller and Bruce Strean.
3. Severance Agreement dated May 20, 1997 between Seller and Michael Pinto.
-31-
<PAGE>
SCHEDULE 6.2(c)
CONSENTS
Customer Agreements
a. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE
Ltd. for design, manufacture, supply, installation, testing & commissioning on a
semi-turnkey basis of an Intelsat STD-A Antenna & its associated equipment at
Seletar Earth Station (6308)
b. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE
Ltd. for Recomm Maintenance Parts (6308)
c. Purchase Order dated March 21, 1994, Singapore Telecommunications PTE
Ltd. for design, manufacture, supply, installation, testing & commissioning on a
semi-turnkey basis of an Intelsat STD-A Antenna & its associated equipment at
Seletar Earth Station (6308)
d. Amended Purchase Order dated May 17, 1994, Singapore Telecommunications
PTE Ltd. for two Intelsat STD-A Antennas & their buildings at Seletar Earth
Station (6308)
e. Contract between the Government of the Islamic Republic of Pakistan and
California Microwave, Inc. Satellite Transmission Systems dated March 17, 1996,
concerning the supply of satellite earth station equipment.
f. Contract documents dated November 29, 1996 between Satellite
Television Asian Region Limited and CMI-STS for supply and installation of
Kuban Video Uplink Upgrade for Video Broadcast Service.
g. Agreement between CMI-STS and Singapore Telecommunications PTE Ltd.
pursuant to a series of purchase orders issued by Singapore Telecom to CMI-STS
dated September 7, 1994, August 16, 1994, August 18, 1994, August 13, 1994.
h. Purchase Agreement dated December 21, 1994 between AT&T International
(Saudi Arabia) and Satellite Transmission Systems, Inc., as amended on November
19, 1995.
Non-Disclosure Agreements
Confidential Disclosure Agreement dated August 8, 1997, between CMI-STS
and Philips Broadcast Television Systems Company.
-32-
<PAGE>
License Agreements
a. Statement of Work for Secure Interworking Function CM-STS Inmarsat-B
MES (Revision 3) dated March 13, 1997 between CM-STS and ICTI (Non-exclusive
license to CM-STS regarding technology for use in the Lynxx Inmarsat B
Transportable Earth Stations).
b. Lynxx Software Royalty Agreement dated September 22, 1997 between
CM-STS, SPACEHAB, Inc. and Crosslink, Inc., including a License Agreement dated
September 22, 1997 from CM-STS to SPAGEHAB, Inc. and a License Agreement dated
September 22, 1997 from SPACEHAB, Inc. to CM-STS (Cross-license regarding
technology relating to the Lynxx Inmarsat B Transportable Earth Stations)
c. Licensing Agreement dated July 19, 1995 between International Mobile
Satellite Organization and Mobile Satellite Products Corporation (Non-exclusive
trademark license to Seller regarding use of the Inmarsat trademark on certain
of its products).
d. Cooperation and Project Funding Agreement dated June 15, 1994 between
the Israel-United States Binational Industrial Research and Development
("BIRD") Foundation, Binational Industrial Research and Development Foundation,
Tadiran Ltd. Communications Systems Division and Satellite Transmissions
Systems, Inc. (CM-STS jointly developed technology relating to Progeny with
funds from the BIRD Foundation. CM-STS is repaying the BIRD Foundation by
making payments based on a percentage of gross sales of Progeny units.)
Other Agreements
a. Amended and Restated Sale Agreement dated as of November 1, 1987
between Suffolk County Industrial Development Agency and Satellite Transmission
Systems, Inc.
b. Guarantee dated January 17, 1995 pursuant to which California
Microwave, Inc. guaranteed the obligations of STS with respect to the Purchase
Agreement dated December 21, 1994 between AT&T International (Saudi Arabia) and
STS, as amended on November 19, 1995.
Other
a. Consents of the Federal Communications Commission.
-33-
<PAGE>
ASSET PURCHASE AGREEMENT
BETWEEN
FAP TRUST
AND
L-3 COMMUNICATIONS CORPORATION
FEBRUARY 10, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS ............................. 1
ARTICLE II
PURCHASE AND SALE .......................... 6
II.1 Purchase and Sale ........................................ 6
II.2 Cash Purchase Price ...................................... 6
II.3 Adjustment of Cash Purchase Price ........................ 7
II.4 Post-Closing Payment ..................................... 8
II.5 Dispute Resolution ....................................... 11
II.6 Closing .................................................. 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER ............... 13
III.1 Due Organization of Seller ............................... 13
III.2 Requisite Consents; Nonviolation ......................... 13
III.3 Due Organization of the Company .......................... 14
III.4 Acquired Assets .......................................... 14
III.5 Subsidiaries, etc ........................................ 14
III.6 Financial Data ........................................... 14
III.7 No Material Changes ...................................... 14
III.8 Undisclosed Liabilities .................................. 15
III.9 Governmental Authorizations; Compliance with Law ......... 15
III.10 Litigation ............................................... 16
III.11 Employee Benefit Plans ................................... 16
III.12 Intellectual Property .................................... 17
III.13 Real and Personal Property ............................... 18
III.14 Insurance ................................................ 19
III.15 Tax Matters .............................................. 19
III.16 Environmental Matters .................................... 20
III.17 Contracts ................................................ 21
III.18 Inventory ................................................ 22
III.19 Accounts Receivable ...................................... 22
III.20 Condition of Plant and Equipment ......................... 22
III.21 Customers and Suppliers .................................. 22
III.22 Bank Accounts ............................................ 23
III.23 Brokers, Finders, Etc .................................... 23
III.24 Employees ................................................ 23
<PAGE>
Page
----
III.25 Government Contracts ..................................... 23
III.26 Government Furnished Equipment ........................... 25
III.27 Organizational Conflicts of Interest ..................... 25
III.28 Affiliate Transactions ................................... 25
III.29 Disclosure in the Seller's Schedule ...................... 25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER ............... 25
IV.1 Due Incorporation; Requisite Power and Authority ......... 25
IV.2 Requisite Consents; Nonviolation ......................... 26
IV.3 Broker's Fees ............................................ 26
ARTICLE V
CERTAIN TRANSACTIONS AND AGREEMENTS
PRIOR TO THE CLOSING DATE ...................... 26
V.1 Confidentiality .......................................... 26
V.2 Business Organization .................................... 26
V.3 Cooperation .............................................. 27
V.4 Subsidiary Merger ........................................ 28
V.5 No Seller Distributions .................................. 28
V.6 Further Assurances ....................................... 28
ARTICLE VI
COVENANTS REGARDING POST CLOSING ACTIVITIES ............. 29
VI.1 Employee Matters ......................................... 29
VI.2 Seller's Indemnification ................................. 30
VI.3 Contracts Requiring Consent to Assignment ................ 33
VI.4 Company Plans ............................................ 33
VI.5 Research and Experimental Expenses ....................... 33
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER ............ 34
VII.1 Government Approvals; Litigation ......................... 34
VII.2 Permits and Approvals .................................... 34
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ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS .................. 34
VIII.1 Representations and Warranties; Performance .............. 34
VIII.2 Escrow Agreement ......................................... 34
VIII.3 Subsidiary Merger ........................................ 35
VIII.4 Material Adverse Change .................................. 35
VIII.5 Proceedings .............................................. 35
VIII.6 Ilex Agreement ........................................... 35
VIII.7 Non-Competition Agreements ............................... 35
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLER ................. 35
IX.1 Representations and Warranties; Performance .............. 35
IX.2 Proceedings .............................................. 35
IX.3 Ilex Agreement ........................................... 36
ARTICLE X
FEES AND EXPENSES .......................... 36
X.1 Expenses ................................................. 36
X.2 Fees or Commissions of Brokers ........................... 36
ARTICLE XI
TERMINATION ............................. 36
XI.1 Termination of Agreement ................................. 36
XI.2 Effect of Termination .................................... 36
ARTICLE XII
MISCELLANEOUS ............................ 37
XII.1 Time of the Essence ...................................... 37
XII.2 Entire Agreement ......................................... 37
XII.3 Press Releases and Public Announcements .................. 37
XII.4 Counterparts ............................................. 37
XII.5 Descriptive Headings ..................................... 37
XII.6 Notices .................................................. 37
XII.7 Arbitration .............................................. 38
XII.8 Choice of Law ............................................ 39
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XII.9 Bulk Sale and Other Tax Filings .......................... 39
XII.10 Transfer Taxes; Sales Tax ................................ 39
XII.11 Binding Effect; Benefits ................................. 39
XII.12 Assignability ............................................ 39
XII.13 Waiver and Amendment ..................................... 39
XII.14 Attorneys' Fees .......................................... 40
XII.15 Severability ............................................. 40
XII.16 No Recourse .............................................. 40
EXHIBIT A Seller's Schedule
EXHIBIT VIII.2 Form of Assignment of Escrow Agreement
EXHIBIT VIII.7 Form of Assignment of Non-Competition Agreements
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") dated as of February 10,
1998 is entered into by and among L-3 COMMUNICATIONS CORPORATION, a Delaware
corporation ("Buyer") and FAP TRUST, a Connecticut trust ("Seller").
RECITALS
WHEREAS, the Buyer wishes to purchase from Seller, and Seller wishes to
sell to the Buyer, all of the Acquired Assets (as hereinafter defined) subject
to the assumption by the Buyer of the Assumed Liabilities (as hereinafter
defined), upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
ARTICLE I
DEFINITIONS
As used herein:
"Acquired Assets" means all of the assets (tangible and intangible)
of the Seller, including those of the Acquired Company (as hereinafter defined)
(except for those assets listed in the proviso to this definition), including,
without limitation, all of its right, title and interest in and to:
(a) Leaseholds and subleaseholds of real property to which it is a
party, and all, improvements, fixtures, and fittings thereon, and
easements, rights-of-way, and other appurtenants thereto (such as
appurtenant rights in and to public streets);
(b) Tangible personal property (such as machinery, equipment,
inventories of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods, furniture, automobiles,
trucks, tractors, trailers, tools, jigs, and dies);
(c) Intellectual Property, goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions;
(d) Leases, subleases, and rights thereunder;
(e) Agreements, contracts, indentures, mortgages, instruments,
security interests, guaranties, other similar arrangements, and rights
thereunder;
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(f) Accounts, notes, and other receivables, except those excluded
under clause (iv) of the proviso to this definition;
(g) Claims, deposits, prepayments, refunds, causes of action, choses
in action, rights of recovery, rights of set off, and rights of
recoupment;
(h) Franchises, approvals, permits, licenses, orders, registrations,
certificates, variances, and similar rights obtained from governments and
governmental agencies;
(i) Prepaid expenses, except those excluded under clause (v) of the
proviso to this definition;
(j) Books, records, ledgers, files, documents, correspondence,
lists, plats, architectural plans, drawings, and specifications, creative
materials, advertising and promotional materials, studies, reports, and
other printed or written materials (collectively, the "Books and
Records"), except those excluded under clause (i) of the proviso to this
definition; and
(k) All cash and all bank accounts and brokerage accounts and
similar accounts and cash equivalents, including deposits in transit,
except as set forth in clause (iii) of the proviso to this definition.
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Acquired Assets shall
not include:
(i) With respect to the Company, the corporate charter,
qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books, blank stock certificates,
original Tax Returns and other documents relating to the
organization, maintenance, and existence of the Company as a
corporation;
(ii) Any assets or rights which are not assignable pursuant to
the terms of the document or instrument creating same or which are
only assignable with the consent of a third party who refuses to
grant such consent, which shall be transferred as and when such
consent is obtained and otherwise as provided in Section VI.3 of
this Agreement;
(iii) Any cash held on deposit in a tax reserve account
established by the Company for the payment of any federal, state,
local or foreign income Taxes payable with respect to periods prior
to the date three (3) Business Days prior to the Closing Date, so
long as notice of the amount of such cash and the account number of
such account shall be provided to the Buyer not later than such
third Business Day); and
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(iv) $1,000,000 book value of trade accounts receivable of the
Acquired Company (which specific receivables shall be identified and
reasonably agreed upon by the parties on or prior to the Closing
Date); and
(v) Prepaid expenses relating to the expenses incurred in
connection with the negotiation and consummation of the transactions
contemplated by this Agreement.
"Acquired Company" means the direct and indirect assets, liabilities
and business as a going concern of the Company transferred to Seller in the
dissolution and liquidation of the Company.
"Agreement" has the meaning set forth in the preface above.
"Assumed Liabilities" means all Liabilities of the Acquired Company
(except for those Liabilities expressly excluded in the proviso to this
definition), including, but not limited to:
(a) All Liabilities of the Company to be performed following the
Closing expressly provided for under or incurred pursuant to the terms of
the written agreements, contracts, employment agreements, leases,
licenses, instruments and other items which are included as Acquired
Assets, but only to the extent any required consents to the assignment
thereof have been obtained or Buyer has otherwise expressly agreed to
assume liability under such agreement;
(b) All Liabilities for product warranty claims or any use of or
defect in any of the products or services sold by the Company, the
Subsidiary or the Acquired Company prior to the Closing Date;
(c) Liabilities to employees of Acquired Company arising out of
workers' compensation or disability leaves of absence if said employee is
entitled to an offer of employment pursuant to this Agreement and any
other similar obligations or liabilities; and
(d) Liabilities resulting from, arising out of or caused by any
breach of contract by the Company, the Subsidiary or the Acquired Company,
tort, infringement, violation of law or any environmental liability or
contamination, including, without limitation, Liabilities arising out of
or relating in any way to any Government Bid, Government Contract or
Government Disclosure.
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Assumed Liabilities
shall not include:
(A) Any Liability of the Acquired Company or Seller for income
and other Taxes, including, but not limited to, any Taxes arising in
connection with the consummation of the transactions contemplated
hereby; provided, however, that any Taxes (other than federal,
state, local or foreign income Taxes and other
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than Taxes arising in connection with the consummation of the
transactions contemplated hereby) accrued on the Closing Statement
of Net Assets shall be Assumed Liabilities;
(B) Except as otherwise provided for in this Agreement
(including, without limitation, as provided for in Section VI.1
hereof), any Liability of the Company related to the employment or
compensation of employees and former employees (including with
respect to any Company Plan or any post-retirement benefits plan, if
any));
(C) Except as otherwise provided for in this Agreement, any
Liability of the Company for costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby; or
(D) Any Liability of Seller which was not related to the
Company, the Subsidiary or the Business or arising under this
Agreement.
"Business" means the business conducted or proposed or planned to be
conducted by the Acquired Company on and as of the Closing Date.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Section II.6 below.
"Closing Date" has the meaning set forth in Section II.6 below.
"Company" means Ilex Systems, Inc.
"Code" means the Internal Revenue Code of 1986, as amended.
"Employee" has the meaning set forth in Section VI.1 below.
"GAAP" means United States generally accepted accounting principles
as in effect as of the date hereof.
"Government Bid" means any offer to sell made by the Acquired
Company prior to the Closing Date which, if accepted, would result or may result
in a "Government Contract".
"Government Contract" means any prime contract, subcontract, teaming
agreement or arrangement, joint venture, basic ordering agreement, pricing
agreement, letter contract, purchase order, delivery order, change order,
Government Bid or other arrangement of any kind between the Acquired Company and
(i) the U.S. Government, (ii) any prime contractor of the U.S. Government in its
capacity as a prime contractor or (iii) any subcontractor with respect to any
contract of a type described in clauses (i) or (ii) above.
"Government Disclosure" means any certification, representation,
warranty or statement by the Acquired Company to the U.S. Government in that
capacity, or any agent or
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instrumentality thereof, which in any way relates to the operation of the
Business or any business of the Acquired Company carried on prior to the Closing
Date.
"Knowledge of Seller" (or any similar expression) shall mean the
actual knowledge of (i) W. Jeffrey Kramer, Vice President of First Union
National Bank, trustee of Seller, Frederick Forster, Jeffrey Furman or Howard
Tieg or (ii) each of Joseph Lopez, John Medea, Joseph Leadley, Scott Feldman,
and all of the Vice Presidents and the members of the Board of Directors of the
Company and the Subsidiary (provided, however, that for purposes of Section
III.27, the individuals referred to in clause (ii) shall be limited to Joseph
Lopez, John Medea, Thomas Deet and Robert Marchand), after, only in the case of
those individuals referred to in clause (ii) of this definition, a reasonable
investigation or inquiry of the subject matter thereof by or on behalf of such
individuals.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Ilex Agreement" means the agreement, dated as of February 9, 1998
by and among Seller, the Company and shareholders of the Company.
"Liability" or "Liabilities" means any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise.
"Losses" means all losses, liabilities, obligations, amounts paid in
settlement, costs and expenses, including court costs, and reasonable attorneys'
fees and expenses, incurred in connection with any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, injunction, judgment,
order, decree, ruling.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, a limited liability company, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Purchase Price" shall mean the sum of (i) any amounts paid by Buyer
under Sections II.2 and II.4 and (ii) the amount of the adjustment, if any, to
the Cash Purchase Price (as hereinafter defined) pursuant to Section II.3.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Seller's Schedule" has the meaning set forth in Article III below.
"Subsidiary" means Hygienetics Environmental Services, Inc., a
California corporation, all of the issued and outstanding shares of capital
stock of which are owned by the Company.
"Subsidiary Merger" means the merger of the Subsidiary with and into
the Company.
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"Tax" and "Taxes" means all taxes, charges, fees, levies or other
assessments imposed by any federal, state, local or foreign taxing authority,
whether disputed or not, including without limitation, income, profits, gross
receipts, capital, estimated, excise, occupational, custom, duty, ad valorem,
value-added, stamp, property, sales, transfer, withholding, real estate, use,
employment, payroll, alternative or add-on minimum, environmental (including
Taxes under Section 59A of Code) and franchise taxes and such terms shall
include any interest, penalties or additions attributable to or imposed on or
with respect to such assessments and any expenses incurred in connection with
the settlement of any tax liability.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
ARTICLE II
PURCHASE AND SALE
II.1 Purchase and Sale.
(a) General. On and subject to the terms and conditions of this Agreement,
the Buyer agrees to purchase from Seller and Seller agrees to sell, transfer,
convey, assign and deliver to the Buyer, all of the Acquired Assets at the
Closing for the consideration specified below in Section II.2.
(b) Assumption of Liabilities. On and subject to the terms and conditions
of this Agreement, the Buyer agrees to assume and become responsible for the
Assumed Liabilities at the Closing.
II.2 Cash Purchase Price.
(a) Subject to adjustment as set forth in Section II.3, at the Closing (as
defined in Section II.6), as consideration for the purchase of the Acquired
Assets, Buyer agrees to pay in aggregate:
(i) Fifty-One Million Nine Hundred Twenty-Three Thousand Dollars
($51,923,000), plus or minus, respectively;
(ii) the amount equal to one hundred seven and one-half percent
(107.5%) of the amount by which the Estimated Closing Date Net Assets (as
defined in Section II.3) as determined in accordance with Section II.3 below
exceeds or fails to equal Ten Million Two Hundred Thousand Dollars
($10,200,000). The above consideration, in the aggregate, is hereinafter
referred to from time to time as the "Cash Purchase Price."
(b) The Cash Purchase Price shall be paid on the Closing Date by wire
transfer in immediately available funds to the account designated by the Seller
in a written notice delivered
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to Buyer at least 5 Business Days (as defined in Section II.3) prior to the
Closing Date (as defined in Section II.6);
(c) (i) If the Company shall be awarded the Software Engineering and
Technical Support ("SWEATS") contract at Fort Huachuca upon the terms of the bid
proposal submitted by the Company in effect as of November 25, 1997, or awarded
the SWEATS contract based on such bid as amended after the date of this
Agreement with the prior written consent of Buyer, in addition to the Cash
Purchase Price, Buyer shall pay to the Seller as additional consideration for
the Acquired Assets in aggregate an amount (the "SWEATS Payment") equal to (i)
$3,762,500, if the SWEATS contract is awarded to the Company as a "prime"
contractor, or (ii) $1,612,500, if the SWEATS contract is awarded to the Company
as a subcontractor. The SWEATS Payment shall be paid by Buyer within 30 days
following the later of (x) the Business Day following the expiration of the
period to protest the SWEATS contract award and (y) the date of final resolution
of any bid protest raised in respect of the award of the SWEATS contract. No
payment shall be due from Buyer if any such bid protest is upheld.
(d) The parties to this Agreement agree to allocate the Purchase Price in
accordance with the rules under Section 1060 of the Internal Revenue Code of
1986, as amended (the "Code") and the Treasury Regulations promulgated
thereunder. The parties recognize that the Purchase Price does not include
Buyer's acquisition expenses and that Buyer will allocate such expenses
appropriately. The Seller and Buyer agree to act in accordance with such
allocations (including any modifications thereto reflecting any post-closing
adjustment of the Purchase Price pursuant to Sections II.3 and II.4, as
applicable) in any relevant Tax returns or filings, including any forms or
reports required to be filed pursuant to Section 1060 of the Code, the Treasury
Regulations promulgated thereunder or any provisions of local, state and
Commonwealth law ("1060 Forms"), and to cooperate in the preparation of any 1060
Forms and to file such 1060 Forms in the manner required by applicable law.
II.3 Adjustment of Cash Purchase Price.
(a) Preparation of Estimated Closing Statement of Net Assets. At least
five Business Days prior to the Closing Date, the Seller shall cause to be
delivered to Buyer a statement of estimated Acquired Assets and Assumed
Liabilities (the "Estimated Closing Statement of Net Assets") as of the date
three Business Days prior to the Closing Date. The Estimated Closing Statement
of Net Assets shall be prepared in the same manner and in accordance with the
procedures that the Closing Statement of Net Assets is to be prepared pursuant
to Section II.3(c), except that it shall be unaudited. The term "Estimated
Closing Date Net Assets" shall mean the book value of the Acquired Assets set
forth on the Estimated Closing Statement of Net Assets in excess of the amount
of the Assumed Liabilities set forth on the Estimated Closing Statement of Net
Assets, determined in accordance with the procedures set forth in Section
II.3(c). For the purposes of this Agreement, "Business Day" means any day that
is not a Saturday, Sunday or day in which banks in New York, New York or San
Francisco, California are authorized or obligated by law or governmental action
to close.
(b) Calculation of Adjustment. The Cash Purchase Price shall be (i)
increased by one hundred seven and one-half percent (107.5%) of the amount that
the Closing Date Net Assets (as hereinafter defined) is greater than the
Estimated Closing Date Net Assets; or (ii) decreased by
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one hundred seven and one-half percent (107.5%) of the amount that the Closing
Date Net Assets is less than the Estimated Closing Date Net Assets. The term
"Closing Date Net Assets" as used herein shall mean the book value of the
Acquired Assets set forth on the Final Closing Statement of Net Assets (as
hereinafter defined) in excess of the amount of the Assumed Liabilities set
forth on the Final Closing Statement of Net Assets, determined in accordance
with the procedures set forth in Section II.3(c). The amount of any decrease or
increase to the Cash Purchase Price pursuant to this Section II.3(b) plus
interest from the Closing Date at the Prime Rate (as hereinafter defined) shall
be paid by the Seller or Buyer, as the case may be, by wire transfer in
immediately available funds within five (5) Business Days after the Final
Closing Statement of Net Assets agreed to on behalf of the Seller and Buyer or
is determined by the Neutral Auditor (as hereinafter defined). For purposes of
this Agreement, "Prime Rate" means the rate of interest announced from time to
time by Bank of America as its prime rate of interest.
(c) Preparation of Closing Statement of Net Assets. As soon as
practicable, and in any event within thirty (30) days after the Closing Date,
the Buyer shall cause to be prepared a statement of net assets for the Business
consisting of the Acquired Assets and the Assumed Liabilities, as of the close
of business on the date three (3) Business Days prior to the Closing Date
determined on a pro forma basis as if the parties to the Ilex Agreement had not
consummated the transactions contemplated thereby on such date (the "Closing
Statement of Net Assets"). The Closing Statement of Net Assets will be prepared
in accordance with United States generally accepted accounting principles
("GAAP") applied on a basis consistent with the September Balance Sheet through
full application of the policies and procedures used in preparing the September
Balance Sheet and with changes in contract estimates at completion ("EAC's") and
estimates to complete ("ETC's") determined on a basis consistent with the method
used for the determination of the September Balance Sheet, and will, at the
option of the Buyer, be audited by an independent public accounting firm
selected by Buyer (the "Auditor"). The Closing Statement of the Net Assets shall
be accompanied by an Auditor's report based upon the audit of the Audited
Closing Statement of Net Assets stating that such statement presents fairly, in
all material respects, the Acquired Assets and Assumed Liabilities presented on
such statement as provided for in this Agreement at the third Business Day prior
to the Closing Date in conformity with GAAP consistently applied with the
September Balance Sheet, except as modified by any modification which is
mutually agreed upon by the parties hereto. Buyer shall provide the Auditor
access to the Books and Records as may reasonably be required for the
preparation of the Closing Statement of Net Assets. Buyer shall be responsible
for the costs and expenses of the Auditor in preparing the Closing Statement of
Net Assets.
II.4 Post-Closing Payment.
(a) As additional consideration for the Acquired Assets ("Additional
Consideration"), Buyer shall make the payments or deliveries to the Seller
required pursuant to this Section II.4. With respect to each of fiscal years of
the Acquired Company ending December 31, 1998, 1999 and 2000, respectively.
Buyer shall pay to the Seller in aggregate for any such fiscal year an amount in
cash (subject to Section II.4(c)) equal to the product of (i) $3,000,000 for
1998, $3,300,000 for 1999 and $3,630,000 for 2000 and (ii) a percentage (the
"Percentage") calculated by dividing (x) EBIT (as defined below) for the
Acquired Company for each in each of fiscal 1998, 1999 and 2000 by (y)
$8,800,000 for 1998, $10,300,000 for 1999 and $12,300,000 for 2000, respectively
provided that the maximum Percentage for any fiscal year shall be 120%.
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No Additional Consideration will be due to the Seller under this Section II.4 in
respect of any fiscal year if the Percentage for that fiscal year shall be less
than 60%. "EBIT" means for any fiscal year operating income of the Acquired
Company before interest and income taxes; provided that for purposes of
calculating EBIT there shall be eliminated (i) the effect of any purchase
accounting adjustments (including any increase in depreciation or amortization
of tangible or intangible assets of the Business resulting from a write-up of
the Acquired Assets for accounting purposes) in connection with the acquisition
of the Company, (ii) all costs and expenses paid in connection with financing
and refinancing the purchase of the Company, (iii) all operating income, if any,
attributable to the SWEATS contract, (iv) all gains (or losses) from
extraordinary items and investments, (v) the cumulative effect of changes in
accounting principles and (vi) the effect (whether revenue or expense) as a
result of any allocation by Buyer of any Buyer-incurred general and
administration expenses or management fees (but only to the extent such
allocation of expenses or fees exceeds amounts which would be an expense of the
operation of the Acquired Company on a stand-alone basis consistent with the
Company's method of operation prior to February 10, 1998). In the event of the
disposition or discontinuation of any of the Acquired Company's current
businesses or operations or the addition of any business or operation to the
Acquired Company, the target EBIT amount referred to above shall be adjusted
appropriately (determined in good faith by the Buyer, in consultation with the
Seller) to reflect such disposition, discontinuation or addition, for purposes
of calculating the Percentage.
(b) For each of the 1998, 1999 and 2000 fiscal years, Buyer shall, no
later than 45 days following the availability of financial statements for such
period, prepare and deliver to Seller a report (the "EBIT Report") reflecting in
reasonable detail Buyer's calculation of EBIT for the applicable fiscal year
(including any adjustments to Buyer's financial statements made in connection
with such calculation), together with a copy of the financial statements from
which such calculation is derived. EBIT will be calculated in accordance with
GAAP applied on a basis consistent with the Financial Statements (as defined in
Section II.6) and with changes to EAC's and ETC's determined on a basis
consistent with the methods used in the Financial Statements.
(c) Any payment of Additional Consideration with respect to any fiscal
year shall be payable to the Seller within 30 days after the date on which the
calculation of EBIT for such fiscal year shall have been finally determined
pursuant to this Section II.4 and Section II.5; provided that no such payment of
Additional Consideration (except portions thereof as to which Early Cash Payment
Elections (as defined in Section II.4(e)) have been received by Buyer in
accordance with Section II.4(e)) with respect to any fiscal year shall be
payable by Buyer pursuant to this Section II.4 prior to the earlier of (i) the
date 60 days following the completion of the initial sale to the public pursuant
to an effective registration statement (other than a registration statement on
Form S-4 or Form S-8 or any similar or successor form) (the "Initial Public
Offering") filed under the Securities Act of 1933, as amended (the "Securities
Act"), of shares of the Class A Common Stock, par value $.0l per share of L-3
Communications Holdings Inc. ("Holdings") (or such other class of common stock
of Holdings issued to the holders of such Class A Common Stock in connection
with a reclassification thereof) ("Class A Common Stock") and (ii) September 30,
2001. Seller shall not be permitted to elect to receive shares in lieu of
Additional Consideration for any fiscal year in an amount less than $250,000
unless the Seller is electing to receive shares for all of such Additional
Consideration for such fiscal year. Each cash payment pursuant to this Section
II.4 shall be made by wire transfer of immediately
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available funds to the account designated by the Seller in a written notice to
Buyer given at least 5 Business Days prior to the date of payment.
(d) Prior to the date of any payment of Additional Consideration pursuant
to Section II.4(b) (other than payments pursuant to Early Cash Payment
Elections), Buyer shall offer the Seller the opportunity to elect to receive, in
lieu of such payment, any Additional Consideration in the form of shares of
Freely Tradable (as defined below) Class A Common Stock. Such offer of such
shares shall be made in a transaction meeting the requirements of the Securities
Act (and any applicable state securities laws). The number of shares of Class A
Common Stock to be delivered if the Seller elects to receive such shares
pursuant to such offer shall be determined by dividing (i) the amount of such
payment of Additional Consideration by (ii) $20 to the extent such Additional
Consideration relates to fiscal 1998, $22 to the extent such Additional
Consideration relates to fiscal 1999 and $24.20 to the extent such Additional
Consideration relates to fiscal 2000. In the event of any change in the
outstanding Class A Common Stock by reason of stock split, stock combination,
reclassification or similar event, the number of shares to be delivered pursuant
to the preceding sentence shall be adjusted appropriately (e.g., if the
outstanding shares of Class A Common Stock are split on a two-for-one basis, the
$20, $22 and $24.20 amounts referred to in clause (ii) would be adjusted to be
$10, $11 and $12.10, respectively). In the event that the Initial Public
Offering is not completed by August 1, 2001, no offer to elect to receive shares
of Class A Common Stock shall be made pursuant to this Section II.4(d). If the
Seller elects to receive shares pursuant to this Section II.4(d) such shares
will be delivered by registered mail to the address designated by the Seller in
a written notice to Buyer given at least five (5) Business Days prior to the
date of delivery. No fractional shares of Class A Common Stock will be issuable
pursuant to this Section II.4. In lieu thereof, any person who would otherwise
be entitled to a fractional share pursuant to the provisions hereof shall
receive an amount in cash equal to the amount of Additional Consideration which
would have been payable in cash with respect to such fraction. For purposes of
this Section II.4, "Freely Tradable" shall mean Class A Common Stock which (a)
may be sold (without legal restriction) to any member of the public, including a
sale by or through a securities exchange and/or broker-dealer, without the
necessity of (I) obtaining an opinion of counsel, obtaining permission or
authorization of the United States Securities & Exchange Commission or any state
securities administrator, (II) providing any advance notice to any such body or
(III) taking other action to remove any legend or legend condition applicable to
such shares of Class A Common Stock that would delay the sale thereof and (b) is
not subject to any material delay in attempting the sale thereof on a public
securities exchange due to any attribute of the Class A Common Stock.
(e) At any time and from time to time, the Seller shall have the right, by
written notice (an "Early Cash Payment Election") to Buyer, to elect to require
Buyer to pay to the Seller the cash amount of any Additional Consideration
payable to the Seller pursuant to Section II.4(c), with the date of payment
being determined pursuant to the first sentence of such Section without regard
to the proviso thereto.
(f) Upon a Change of Control (as hereinafter defined) that occurs prior to
the earlier to occur of the dates referred to in clauses (i) and (ii) of the
proviso to the first sentence of Section II.4(c), the Seller shall receive in
connection with such Change of Control all Additional Consideration payable to
the Seller pursuant to Section II.4(c) but not then paid by reason of the
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proviso contained in the first sentence of such Section prior to the date of
such Change of Control the amount and kind of consideration the Seller would
have received in respect of the shares of Class A Common Stock which the Seller
would have been entitled to elect to receive pursuant to subsection (d) of this
Section II.4 if there had been an Initial Public Offering immediately prior to
the date of the Change of Control. Such amount shall be payable at such time as
the holders of Class A Common Stock receive consideration in connection with
such Change of Control. In the event of a Change of Control, notwithstanding
anything to the contrary contained herein, any Additional Consideration which
becomes payable pursuant to Section II.4(c) following the date of such Change of
Control shall be payable in cash.
For purposes of this Section II.4(f), "Change of Control" shall mean (i)
an acquisition by any person (other than stockholders of Holdings as of the
Closing Date or any of their affiliates) of more than 50% of the combined voting
power of the outstanding voting securities entitled to vote generally of
Holdings or (ii) the sale of substantially all of the direct or indirect assets
of Holdings to any person (other than stockholders of Holdings as of the Closing
Date or any of their affiliates).
(g) The rights of the Seller under this Section II.4 shall be assignable
(in whole or in part) by Seller, subject to the following requirements: (i) any
such assignment shall be made prior to the date six months following the Closing
Date; (ii) if such assignment is to more than one person or entity, (1) any
payment or delivery pursuant to this Section II.4 shall be pro rata, based on
the relative percentage of Additional Consideration to which such person or
entity is entitled hereunder, (2) the $250,000 limitation contained in Section
II.4(c) shall apply to each such person or entity and (3) adequate provision
shall be made in connection with such assignment so that one assignee in
connection with any disputes concerning the calculation and determination of any
amounts payable pursuant to this Section II shall be authorized to resolve any
and all disputes with the Buyer on behalf of all assignees; and (iii)
notwithstanding any such assignment, the right of offset against Seller referred
to in the last sentence of Section VI.2(a) shall continue to apply
notwithstanding such assignment (i.e., a claim against the Seller under Section
VI.2 may be satisfied by exercising such right of offset against amounts due to
an assignee of Seller).
II.5 Dispute Resolution.
(a) Review of Closing Statement of Net Assets and EBIT Report. After
receipt of the Closing Statement of Net Assets or the EBIT Report, Buyer or the
Seller, as the case may be, shall have thirty (30) days to review it. Buyer or
the Seller, as applicable, and their respective authorized representatives shall
have full access to all Books and Records and employees of the Company and, with
respect to the Closing Statement of Net Assets, the Auditor to the extent
required to complete their review of the Closing Statement of Net Assets or the
EBIT Report, as applicable, including Auditor work papers used in preparation or
the Closing Statement of Net Assets. Unless the Buyer delivers written notice to
the Seller, or the Seller delivers written notice to Buyer, on or prior to, the
30th day after receipt of the Closing Statement of Net Assets or the EBIT Report
specifying in reasonable detail all disputed items and the basis therefor, the
parties shall be deemed to have accepted and agreed to the Closing Statement of
Net Assets or the EBIT Report. The parties shall, within thirty (30) days
following the date of such notice (the "Resolution Period"), attempt to resolve
their differences and any resolution by them as to any
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disputed amount shall be final, binding, conclusive and nonappealable for all
purposes under this Agreement.
(b) Resolution. If at the conclusion of the Resolution Period the parties
have not reached an agreement on the objections, then all amounts remaining in
dispute may, at the election of either party, be submitted to Price Waterhouse
or another large international accounting firm not otherwise engaged by either
party (the "Neutral Auditor"). Each party agrees to execute if requested by the
Neutral Auditor, a reasonable engagement letter. All fees and expenses relating
to the work, if any, to be performed by the Neutral Auditor shall be borne
equally by the Seller and Buyer, unless the Neutral Auditor finds one party
acted in bad faith in which case that party pays all such fees and expenses.
Except as provided in the preceding sentence, all other costs and expenses
incurred by the parties in connection with resolving any dispute hereunder
before the Neutral Auditor shall be borne by the party incurring such cost and
expense. The Neutral Auditor shall act as an arbitrator to determine, based
solely on the presentations by the Seller and Buyer, and not by independent
review, only those issues still in dispute. The Neutral Auditor's determination
shall be made within thirty (30) days of its engagement (which engagement shall
be made no later than five (5) business days after an election by either party
to submit the objections to the Neutral Auditor) or as soon thereafter as
possible, shall be set forth in a written statement delivered to the Seller and
Buyer and shall be final, binding, conclusive and nonappealable for all purposes
hereunder. The term "Final Closing Statement of Net Assets" shall mean the
definitive Closing Statement of Net Assets agreed to in accordance with Section
II.5(a) or the definitive Closing Statement of Net Assets resulting from the
determination made by the Neutral Auditor in accordance with this Section
II.5(b).
II.6 Closing.
(a) Subject to satisfaction or waiver of the conditions to closing set
forth in Articles VII, VIII and IX, the closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the local close of
business, or such other time as the parties may mutually agree (the "Effective
Time") on February 26, 1998, at the offices of Pillsbury Madison & Sutro LLP,
235 Montgomery Street, San Francisco, California, or at such other date and
place as the parties may mutually agree (the "Closing Date").
(b) At the Closing (i) Seller will execute, acknowledge (if appropriate),
and deliver to the Buyer (A) an assignment of lease(s), in reasonable customary
form, (B) such other instruments of sale, transfer, conveyance, and assignment
as the Buyer and its counsel may reasonably request; and (C) an Assignment of
Non-Competition Agreements in the form attached hereto as Exhibit VIII.5 (the
"Assignment of Non-Competition Agreements"); (ii) the Buyer will execute,
acknowledge (if appropriate), and deliver to Seller such instruments of
assumption as Seller and its counsel reasonably may request; (iii) the Buyer
will deliver to Seller the consideration specified in sections II.2 and II.3
herein; and (iv) the Buyer and Seller will execute and deliver an Assignment of
Escrow Agreement, in the form attached hereto as Exhibit VIII.2 (the "Assignment
of Escrow").
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to the Buyer as follows (except as
specified to the contrary in the disclosure schedule prepared by Seller and
attached hereto as Exhibit A (the "Seller's Schedule"). The Seller's Schedule is
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article III):
III.1 Due Organization of Seller; Authorization; Title to Acquired Assets.
Seller is a trust duly organized and is validly existing and in good standing
under the laws of the State of Connecticut. Seller has all requisite trust power
and authority to execute, deliver and perform its obligations under this
Agreement, the Assignment of Non-Competition Agreements and the Assignment of
Escrow Agreement (collectively, the "Transaction Documents"), and consummate all
the transactions in the manner contemplated by the Transaction Documents. This
Agreement has been and, when delivered, the remainder of the Transaction
Documents will have been, duly executed and delivered by Seller and duly
authorized and approved by all necessary action on the part of Seller. This
Agreement constitutes and, when delivered, the remainder of the Transaction
Documents will constitute, the valid and binding obligations of Seller,
enforceable against Seller in accordance with its or their terms, subject to
bankruptcy and similar laws and equitable principles regarding the enforcement
of contracts. As of the Closing Date, following Seller's acquisition of the
Company pursuant to the Stock Purchase Agreement, the Company will be dissolved
in accordance with applicable law and all of its assets and Liabilities will be
distributed to Seller. Seller does not have and will not as of Closing Date have
any Liabilities other than the Assumed Liabilities except as set forth in
Section III.1 of the Seller's Schedule. At the Closing, the Seller will hold the
entire legal, equitable and beneficial title (in the case of assets owned by the
Acquired Company) and interest in the assets of the Company and the Subsidiary
and will transfer to Buyer good title to the Acquired Assets, free and clear of
all liens, claims, encumbrances and restrictions of any kind or nature
whatsoever ("Liens").
III.2 Requisite Consents; Nonviolation. The execution, delivery and
performance of this Agreement by Seller and, when delivered, the execution,
delivery and performance of the remainder of the Transaction Documents by Seller
do not on the date hereof and will not on the Closing Date (a) require the
consent, approval or authorization of any governmental person or entity or other
third party (except such approvals or filings as may be required to comply with
applicable state securities and antitrust laws), (b) violate or conflict with
the trust agreement under which Seller is organized, (c) constitute a default
under, violate or conflict with, result in the acceleration of or give rise to
any party the right to terminate, modify or cancel, or result in the loss of any
rights, privileges, options or alternatives under or result in the creation of
any Liens on any assets of the Company or the Subsidiary under or require the
consent of any other party to any material contract, note, lease, mortgage or
other agreement or instrument to which the Seller or the Company or the
Subsidiary is a party or by which the Seller or the Company or the Subsidiary is
bound or to which any Seller, the Company or the Subsidiary or any of their
respective properties is subject (except any Liens held by Seller's lender which
Liens shall be released at or prior to Closing) or (d) violate or conflict with
the charter documents of the Company or the Subsidiary or any material statute,
ordinance, rule, regulation, order, judgment or degree of any court or
governmental or regulatory agency or authority applicable to the Seller
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or the Company or the Subsidiary or by which any of their respective properties
or assets may be bound.
III.3 Due Organization of the Company and the Subsidiary.
The Company and the Subsidiary (i) have been duly organized and are
validly existing and in good standing as corporations under the laws of the
State of California, (ii) except as set forth in Section III.3 of the Seller's
Schedule, are duly qualified to do business in and are in good standing under
the laws of every jurisdiction where each of them is required to be so
qualified, except where the failure to be so qualified would not materially
adversely affect their properties, assets, results of operations or financial
condition and (iii) have all requisite corporate power and authority to own or
lease and to operate their properties and carry on the Business.
III.4 Acquired Assets. The Acquired Assets constitute all of the property
and assets necessary to conduct the business of the Company and the Subsidiary
as currently conducted and as conducted immediately prior to the Subsidiary
Merger.
III.5 Subsidiaries, etc. The Company does not, directly or indirectly, own
or control any equity interest in any corporation, partnership, joint venture or
other legal entity other than, prior to the Subsidiary Merger, its ownership of
all of the outstanding capital stock of the Subsidiary.
III.6 Financial Data. Buyer has been provided with (a) the unaudited
consolidated balance sheet of the Company at September 30, 1997 (the "September
Balance Sheet"), together with the related unaudited consolidated statements of
income and shareholders equity for the nine-month period ended September 30,
1997, and (b) the audited consolidated balance sheets of the Company at December
31, 1996 and 1995, together with the related unaudited consolidated statements
of income and shareholder equity and the notes thereto (the "Financial
Statements"). The Financial Statement are in accordance with the Company's books
and records, have been prepared in accordance with GAAP, consistently applied,
and fairly present the financial position of the Company and the Subsidiary as
of their respective dates and the results of the Company's and the Subsidiary's
operations for the periods then ended.
III.7 No Material Changes. Since September 30, 1997, there has not been
(a) any material adverse change (or any event specifically relating to the
Company that would reasonably be expected to result in such a change) in the
business, financial condition or results of operations of the Acquired Company,
or any change that could materially delay or impair the ability of Seller to
effect the Closing on materially and adversely affect the operation of the
business of the Acquired Company after the Closing Date as the Company had been
operated immediately prior to Seller's acquisition thereof pursuant to the Stock
Purchase Agreement, (b) any damage, destruction or loss (whether or not covered
by insurance) individually or in the aggregate in excess of $100,000; (c) any
labor dispute or any labor union organizing activity, or any actual or
threatened strike, work stoppage, slowdown or lockout, or any material change in
its relationship with employees, customers, distributors or suppliers; (d) any
sale, lease, transfer or other disposition of any asset of the Company or the
Subsidiary having a fair material value in excess of $l00,000 or for proceeds in
excess of $100,000; or (e) army discharge or satisfaction of any obligation or
liability of the Company or the Subsidiary other than in the ordinary course of
business in accordance with the terms of such obligation or liability.
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Since September 30, 1997, except in connection with the transactions
contemplated hereby, neither the Company nor the Subsidiary has engaged in any
of the following transactions, (i) issued or committed to issue any shares of
common stock (except upon exercise of duly issued stock options which were
outstanding as of such date) or other ownership interest of the Company or the
Subsidiary, or any obligations, understanding or commitment regarding the
issuance of capital stock or any option, right, warrant or other security
exercisable or exchangeable for or convertible into capital stock of the Company
or the Subsidiary, (ii) redeemed, purchased or otherwise acquired or committed
to acquire any shares or other ownership interest of the Company or the
Subsidiary, (iii) effected a split or reclassification of any shares of the
Company or the Subsidiary or a recapitalization of the Company or the
Subsidiary, (iv) made any change in the compensation of, or increased benefits
available to, any officer, other employee, sales agent or representative of the
Company or the Subsidiary under any bonus or pension plan or other contract or
commitment, or paid or agreed or promised to pay, whether conditionally or
otherwise, any bonus, incentive, retention or composition, or increased or
agreed or promised to increase any retirement, welfare, fringe or severance
benefits or vacation pay, to or in respect of any officer, other employee, sales
agent or representative of the Company or the Subsidiary, other than, with
respect to any employee other than officers, in the ordinary course of business
and consistent with past practice, (v) incurred, assumed or guaranteed any
obligation or liability, whether absolute, accrued, contingent or otherwise, or
any indebtedness for borrowed money, except current liabilities for trade or
business obligations incurred in connection with the purchase of goods or
services in the ordinary course of the business consistent with past practice,
(vi) mortgaged, pledged or subjected to any lien any property or assets,
tangible or intangible of the Company or the Subsidiary, (vii) transferred or
granted any rights under, or entered into any settlement regarding the breach or
infringement of, any Intellectual Property, or modified any existing rights with
respect thereto, (viii) received any notice of termination or of default or
breach of any material contract, lease or other agreement, (ix) made any capital
expenditures, or commitments to make any capital expenditure in excess of
$250,000 in the aggregate (x) entered into any transaction, contract or
commitment with any affiliate of the Company or (xi) entered into any
transaction, contract or commitment other than in the ordinary course of
business.
III.8 Undisclosed Liabilities. The Acquired Company has no debts, claims,
liabilities or obligations (whether absolute, contingent or otherwise) which are
material to the Acquired Company, except for (a) those reflected, reserved
against or otherwise disclosed in the September Balance Sheet or the notes
thereto and not heretofore paid or discharged or (b) those incurred in, or as a
result of, the ordinary course of business of the Company and the Subsidiary
since the date of the September Balance Sheet to the extent reflected in the
Closing Statement of Net Assets.
III.9 Governmental Authorizations; Compliance with Law.
(a) The Acquired Company has all material governmental licenses, permits,
approvals and other governmental authorizations necessary to permit the
operation of the business of the Company as presently conducted and is in
compliance in all material respects with such governmental licenses, permits,
approvals and other governmental authorizations. Section III.9 of the Seller's
Schedule sets forth a complete and accurate list of all such governmental
licenses, permits, approvals and other governmental authorizations.
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(b) The Acquired Company is in compliance in all material respects with
all laws, statutes, ordinances, rules, regulations, orders, judgements or
degrees applicable to it and its business and none of Seller, the Company or the
Subsidiary has received any notice that any violation or potential violation or
any action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been filed or commenced against the Company or the
Subsidiary alleging failure to comply.
III.10 Litigation. There is no pending or, to the Knowledge of the Seller,
threatened action, suit, arbitration proceeding or investigation in any court or
before any governmental commission or agency against the Company or the
Subsidiary seeking unspecified damages, damages in excess of $50,000, or
injunctive or other equitable relief. There is no order, judgment or decree of
any court or governmental authority or agency which specifically applies to the
Company or the Subsidiary except as listed in Section III.10 of the Seller's
Schedule.
III.11 Employee Benefit Plans.
(a) Section III.11 of the Seller's Schedule contains a true and complete
list of each "employee benefit plan" (within the meaning of section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including, without limitation, multi-employer plans within the meaning of ERISA
section 3(37)), stock purchase, stock option, severance, employment, change-in-
control, fringe benefit, collective bargaining, bonus, incentive, deferred
compensation and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA (including any
funding mechanism therefor now in effect or required in the future as a result
of the transaction contemplated by this Agreement or otherwise), whether formal
or informal, oral or written, legally binding or not, under which any employee
or former employee of the Company or its Subsidiary has any present or future
right to benefits or under which the Company or its Subsidiary has any present
or future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plans".
(b) With respect to each Company Plan, the Seller has delivered to the
Buyer a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate summary thereof) and, to the extent applicable; (i) any
related trust agreement or other funding instrument; (ii) the most recent
determination letter, if applicable; (iii) any summary plan description and
other written communications (or a description of any oral communications) by
the Company or its Subsidiary to their employees concerning the extent of the
benefits provided under a Company Plan; and (iv) for the three most recent years
(A) the Form 5500 and attached schedules, (B) audited financial statements, (C)
actuarial valuation reports and (D) attorney's response to an auditor's request
for information.
(c) (i) Each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable provisions of
ERISA, the Code and other applicable laws, rules and regulations; (ii) each
Company Plan which is intended to be qualified within the meaning of Code
section 401(a) is so qualified and has received a favorable determination letter
as to its qualification, and nothing has occurred, whether by action or failure
to act, that could reasonably be expected to cause the loss of such
qualification; (iii) no event has occurred and no condition exists that would
subject the Company or its Subsidiary, either directly
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or by reason of their affiliation with any member of their "Controlled Group"
(defined as any organization which is a member of a controlled group of
organizations within the meaning of Code sections 414(b), (c), (m) or (o)), to
any tax, fine, lien, penalty or other liability imposed by ERISA, the Code or
other applicable laws, rules and regulations; (iv) for each Company Plan with
respect to which a Form 5500 has been filed, no material change has occurred
with respect to the matters covered by the most recent Form since the date
thereof; (v) no "reportable event" (as such term is defined in ERISA section
4043), "prohibited transaction" (as such term is defined in ERISA section 406
and Code section 4975) or "accumulated funding deficiency" (as such term is
defined in ERISA section 302 and Code section 412 (whether or not waived)) has
occurred with respect to any Company Plan; and (vi) no Company Plan provides
retiree welfare benefits and neither the Company nor its Subsidiary have any
obligations to provide any retiree welfare benefits.
(d) None of the Company Plans is subject to Title IV of ERISA and none of
the Company Plans is a multi-employer Plan (within the meaning of Section
400l(a)(3) of ERISA).
(e) With respect to any Company Plan, (i) no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or
threatened, (ii) to the Knowledge of Seller, no facts or circumstances exist
that could give rise to any such actions, suits or claims, and (iii) no written
or oral communication has been received from the PBGC in respect of any Company
Plan subject to Title IV of ERISA concerning the funded status of any such plan
or any transfer of assets and liabilities from any such plan in connection with
the transactions contemplated herein.
(f) No Company Plan exists that could result in the payment to any present
or former employee of the Company or its Subsidiary of any money or other
property or accelerate or provide any other rights or benefits to any present or
former employee of the Company or its Subsidiary as a result of the transaction
contemplated by this Agreement, whether or not such payment would constitute a
parachute payment within the meaning of Code section 280G.
III.12 Intellectual Property. Each of the Company and the Subsidiary owns
or has the right to use all Intellectual Property necessary to conduct their
businesses substantially as such businesses are currently conducted. All of the
material Intellectual Property owned by the Company and the Subsidiary that has
been issued or registered by or filed with any Governmental Authority (as
defined in Section III.25(b)) and all material license agreements in which the
Company or the Subsidiary is the licensee of Intellectual Property or by which
the Company or the Subsidiary permits any person to use the Intellectual
Property owned by it are listed in Section III.12(a) of the Seller's Schedule.
As of the date hereof and at the Closing, all Intellectual Property licenses are
and will be in full force and effect in accordance with their terms, and are and
will be free and clear of any Liens. Except as set forth in Section III.12(b) of
the Seller's Schedule, (i) all of the Intellectual Property owned or used by the
Company or the Subsidiary is valid, subsisting and unexpired, has not been
abandoned, and is not the subject of any Lien; (ii) no judgment, decree,
injunction, rule or order has been rendered by any court, tribunal or other
government entity which would limit, cancel or question the validity of, or the
Company or the Subsidiary's rights in and to, any Intellectual Property; (iii)
the Company has taken adequate steps to protect, maintain and safeguard its
Intellectual Property and its rights therein including any Intellectual Property
for which improper or unauthorized disclosure would
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impair its value or validity, and has executed appropriate agreements (including
nondisclosure agreements and employee assignments) and made appropriate filings
and registrations in connection with the foregoing, (iv) there is no claim or
demand pertaining to, or any proceeding which is pending, or to the Knowledge of
the Seller, threatened that challenges the rights of the Company or the
Subsidiary to or the validity of any of its Intellectual Property or claims that
a default exists under license by the Company or the Subsidiary of Intellectual
Property and (v) to the Knowledge of Seller, none of the Company's or the
Subsidiary's Intellectual Property is being infringed or otherwise impaired by
third parties.
"Intellectual Property" means all intellectual property, including without
limitation all (i) inventions, discoveries, processes, formulae, designs,
methods, techniques, procedures, concepts, developments, technology, new and
useful improvements thereof and know-how relating thereto, whether or not
patented or eligible for patent protection; copyrights and copyrightable works,
including computer applications, programs, software, databases and related
items; trademarks, service marks, trade names, brand names, corporate names,
logos and trade dress, the goodwill of any business symbolized thereby, and all
common-law rights relating thereto; trade secrets and other confidential
information; (ii) registrations, applications, recordings, and licenses or other
similar agreements related to the foregoing; (iii) rights to sue at law or in
equity for any infringement or other impairment of the foregoing occurring prior
to the Closing Date, including the right to receive all damages and proceeds
therefrom; and (iv) rights to obtain reissues, re-examinations, continuations,
continuations-in-part, divisions, extensions, renewals or other legal
protections pertaining to the foregoing.
III.13 Real and Personal Property. (a) Section III.13 of the Seller's
Schedule contains a list of all real and personal property owned or leased by
the Company and the Subsidiary as of the date hereof having, in the case of
leased property, an annual lease obligation in excess of $10,000 or, in the case
of owned property, a fair market value in excess of $100,000. The Company has
good, valid and marketable title to such owned property. Each lease covering
leased real property is a legal, valid and binding agreement enforceable in
accordance with its terms and there is not under any of such leases any existing
default on the part of the Company or the Subsidiary or, to the Knowledge of
Seller, any other party thereto nor any facts that would, with the passage of
time or notice, or both, constitute such a default.
(b) All material property and assets owned or utilized by the Company and
the Subsidiary are in good standing condition and repair (except for ordinary
wear and tear), free from any material defects (except such minor defects as do
not materially interfere with the use thereof in the conduct of normal
operations), have been maintained consistent with standards generally followed
in the industry and are sufficient to carry on the business of the Company and
the Subsidiary as presently conducted. All buildings, plants and other
structures utilized by the Company and the Subsidiary are in good condition and
repair (except for ordinary wear and tear).
(c) The Company and the Subsidiary enjoy peaceful and quiet possession of
the real property owned or leased by the Company and the Subsidiary. Buyer has
been provided with a true and complete copy of each lease and all amendments
thereto pertaining to any leased real property. The rental set forth in each
lease is the actual rental being paid, and there are not separate agreements or
understandings with respect to the same. Except as listed in Section III.13(c)
of the Seller's Schedule, neither the execution of this Agreement nor the
consummation
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of the transactions contemplated hereby shall cause a default under any lease or
require prior written consent of any landlord under any lease.
III.14 Insurance. Section 111.14 of the Seller's Schedule lists all
material insurance policies in force with respect to the Company, the Subsidiary
and their respective employees and directors. Such policies are in full force
and effect and all premiums due thereon have been paid or accrued. No notice of
cancellations, terminations or reductions of coverage, and no notice of
intention to cancel, terminate or reduce coverage, has been received by the
Company or the Subsidiary.
III.15 Tax Matters.
(a) Tax Returns Filed and Taxes Paid. All Tax Returns required to be filed
by the Company have been duly filed on a timely basis and all Taxes shown to be
payable on the Tax Returns or on subsequent assessments with respect thereto
have been paid in full on a timely basis or are being disputed in good faith by
the Company. All Tax Returns filed by the Company are true and correct in all
material respects.
(b) Tax Reserves. The Company's liability for unpaid Taxes for all periods
ending before the date of this Agreement has been reserved or accrued for in the
Financial Statements (other than reserves or accruals for deferred income Taxes
established to reflect differences between book basis and Tax basis of assets
and liabilities), applicable to all periods ending on or before the Closing Date
in conformity with GAAP. The Company's liability for unpaid Taxes for all
periods ending on or before the Closing Date will be reserved for or accrued for
in the Closing Statement of Net Assets in conformity with GAAP (other than
reserves or accruals for deferred income Taxes established to reflect
differences between book basis and Tax basis of assets and liabilities).
(c) Tax Returns Furnished. For all periods ending on and after December
31, 1992, Buyer has been provided access to true and complete copies of (i)
relevant portions of income tax audit reports, statements of deficiencies,
closing or other agreements received by the Company or Seller or on behalf of
the Company or Seller relating to Taxes, and (ii) all pro-forma separate federal
and state income or franchise tax returns for the Company and Seller.
(d) Tax Deficiencies; Audits; Statutes of Limitations. No deficiencies
have been asserted with respect to Taxes of the Company. The Company is not a
party to any action or proceeding for assessment or collection of Taxes, nor has
such event been asserted or threatened against the Company or any of its assets.
No waiver or extension of any statute of limitations is in effect with respect
to Taxes or Tax Returns of the Company. Except as set forth in Section III.15 of
the Seller's Schedule, the Tax Returns of the Company have not in the past four
(4) years been audited by a government or taxing authority, nor is any such
audit in process, pending or threatened. There is no material agreement or other
document extending, or having the effect of extending, the period of assessment
or collection of any Taxes and no power of attorney with respect to any material
Taxes of the Company has been executed or filed with any Governmental Authority,
and, no power of attorney granted by or with respect to the Company relating to
any material Taxes claimed to be due from the Company is currently in force. The
Company has not executed or entered into a Closing agreement pursuant to section
7121 of the Code or any
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predecessor provisions thereof (or similar provision for purposes of state,
local or foreign income taxes).
(e) Tax Elections and Special Tax Status. The Company is not a party to
any safe harbor lease within the meaning of Section 168(f)(8) of the Code, as in
effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of
1982. The Company is not a "consenting corporation" under Section 341(f) of the
Code. The Company has not entered into any compensatory agreements with respect
to the performance of services which payment thereunder would result in a
nondeductible expense to the Company pursuant to Section 280G of the Code or any
excise tax to the recipient of such payment pursuant to Section 4999 of the
Code.
(f) Tax Liens. There are no unpaid Taxes with respect to any period, or a
portion thereof, ending on or before the Closing Date which are or could become
a lien on the Acquired Assets, except for current Taxes not yet due and payable
or reserved for in the Financial Statements.
(g) Tax Sharing or Other Agreements. The Company is not a party to or
bound by (nor will it become a party to or bound by on or prior to the Closing
Date) any Tax indemnity, Tax sharing, Tax allocation or similar agreement
(whether or not written).
(h) Sales Taxes. The Company (i) has collected all material sales and use
Taxes required to be collected, and has remitted, or will remit, such Taxes as
required by all applicable statutes and regulations, and (ii) regarding all
exempt transactions for all periods open under the applicable statute of
limitations as of the Closing Date, has maintained all such records and
supporting documents, in all material respects in substantial compliance with
all applicable sales and use Tax statutes and regulations.
(i) FIRPTA. The Company is not, and for the applicable period specified in
section 897(c)(1)(A)(ii) of the Code, has not been, a United States real
property holding corporation under section 897 of the Code.
(j) Affiliated Group Liability. The Company (and any predecessor) (i) has
not been a member of an affiliated group filing a consolidated federal income
Tax Return and (ii) has no liability for the Taxes of any person under Treasury
Regulation section 1.1502-6(a) (or any analogous or similar provision of state,
local or foreign law or regulation), as a transferee or successor, by contract,
or otherwise.
III.16 Environmental Matters.
(a) For purposes of this Agreement, the following definitions shall apply:
(i) "Hazardous Materials" shall include any hazardous substance,
pollutant, contaminant, flammable explosives, radioactive materials and
hazardous, toxic or dangerous wastes and any other chemicals, materials or
substances which are identified, defined or regulated pursuant to any Hazardous
Materials Laws, or the release, discharge or exposure to which is prohibited,
limited or regulated by any federal, state or local government under Hazardous
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Materials Laws and any petroleum, waste oil and petroleum by-products, asbestos
in any form, urea formaldehyde.
(ii) "Hazardous Materials Laws" shall mean all applicable laws,
statutes, ordinances, rules, regulations, orders, judgements, or decrees
relating to the protection of the environment, to human health and safety, or to
any emission, discharge, generation, processing, storage, holding, abatement
exercise, release, threatened release, arrangement for the disposal or
transportation of Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended (42 U.S.C. Section 9601 et seq.); the Hazardous Materials Transportation
Act (49 U.S.C. Section 1801 et seq.); Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.); and any so called "Superfund" law.
(iii) "Environmental Report" shall mean any report, study,
assessment, audit, or other similar document that addresses any issue of actual
or potential noncompliance with, or actual or potential liability under or cost
arising out of, any Environmental Law that may in any way affect the Company or
the Subsidiary; provided, however, that "Environmental Report" shall not include
any such document prepared by Subsidiary in the ordinary course of business for
any of its clients.
(b) Each of the Company and the Subsidiary is and, to the Knowledge of
Seller, has been in compliance in all material respects with applicable
Hazardous Materials Laws and has all environmental permits required for the
handling, use, storage and disposition of Hazardous Materials under Hazardous
Materials Laws that are applicable to its operations as presently conducted.
(c) Neither the Company nor the Subsidiary has received any notice from
any Governmental Authority that the Company or the Subsidiary is in violation
of, or may be subject to liability under, any of the terms or conditions of
Hazardous Materials Laws or the Company's or the Subsidiary's material
environmental permits for the handling, use, storage or disposition of Hazardous
Materials under Hazardous Materials Laws.
(d) Buyer has been provided with true and complete copies of all
Environmental Reports in the possession or control of Seller, the Company, or
the Subsidiary.
III.17 Contracts. Section 111.17 of the Seller's Schedule contains a
complete list of the material agreements, contracts, commitments, proposals,
orders, licenses, leases and other instruments ("Contracts") of the Company and
the Subsidiary which (i) is made with any officer, director or stockholder of
the Company or the Subsidiary, or with any affiliate or relative of any such
officer, director or stockholder, (ii) is a contract of employment, consulting,
agency or other similar agreement or arrangement relating to or for the benefit
of employees, sales representatives, distributors, dealers, agents, independent
contractors or consultants, (iii) is made with any labor union, or other labor
organization, (iv) is a loan or other credit agreement, indenture, mortgage,
letter of credit, security agreement, pledge agreement, deed of trust, bond,
note, guarantee or other agreement or instrument relating to the borrowing of
money or extension of credit in excess of $25,000, (v) requires, individually,
annual payments of more than $50,000 or aggregate payments over the life of the
contract of more than $250,000, (vi) is for a remaining
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term of more than one year and is not cancelable as to all its provisions upon
90 days or less notice without payment of any material penalty, (vii) provides
in whole or in part for the use of, or limiting the use of, Intellectual
Property, (viii) is a joint venture, partnership and other similar contract
involving a sharing of profits or expenses (including but not limited to joint
research and development and joint marketing, contracts), (ix) is an asset
purchase agreement or other acquisition or investment agreement, (x) is a
contract or arrangement with respect to the representation of the Company or the
Subsidiary in foreign countries, (xi) restricts or limits in any manner the
operation of the business of the Company or the Subsidiary, or (xii) is material
to the business of the Company or the Subsidiary and was entered into outside of
the normal course of business.
Buyer has been provided with true and complete copies of each Contract so
listed. The Company, the Subsidiary and, to the Knowledge of Seller, each of the
other parties to the Contracts set forth in Section III.17 of the Seller's
Schedule have in all respects performed all material obligations required to be
performed by them under such Contracts and, no event has occurred which, after
notice or lapse of time or both would constitute a default or an event of
default that would give any other party to any such Contract the right to
terminate or otherwise fail to perform its obligations under the Contracts. Each
Contract is the legal, valid and binding obligation of the Company, the
Subsidiary and, to the Knowledge of the Seller, the other parties thereto
enforceable in accordance with its terms against the parties thereto. No consent
of any third party is required under any Contract as a result of or in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
III.18 Inventory. All inventory of the Company and the Subsidiary consists
of a quality and quantity consistent with good business practices net of any
reserves reflected in (i) the case of inventory on the date hereof, the
September Balance Sheet or (ii) the Closing Statement of Net Assets in the case
of inventory on the Closing Date and are salable in the ordinary course
consistent with past practice.
III.19 Accounts Receivable. The accounts receivable of the Company and the
Subsidiary reflected in the September Balance Sheet represent bona fide sales
actually made in the ordinary course of business, and have been properly accrued
in accordance with GAAP, net of any reserves reflected in the September Balance
Sheet. To the Knowledge of Seller there are no facts or circumstances (other
than general economic conditions) which would result in any material increase in
the uncollectibility of the accounts receivable as a class in excess of the
reserves therefor set forth in the September Balance Sheet.
III.20 Condition of Plant and Equipment. To the Knowledge of Seller there
are no material structural defects in the improvements to the real property
owned or leased by the Company or the Subsidiary. To the Knowledge of the
Seller, the equipment of the Company and the Subsidiary is in good operating
condition and repair, ordinary wear and tear excepted.
III.21 Customers and Suppliers. Section III.21 of the Seller's Schedule
lists the ten largest customers of the Company and the ten largest suppliers of
the Company for the most recent fiscal year. To the Knowledge of the Seller,
since January 1, 1997, there has been no
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material adverse change in the business relationship of the Company with any
customer or supplier named on Section III.21 of the Seller's Schedule.
III.22 Bank Accounts. Section III.22 of the Seller's Schedule sets forth
the names and locations of all banks, trust companies, brokerage firms or other
financial institutions at which the Company maintains an account and the name of
each person authorized to draw thereon or make withdrawals therefrom.
III.23 Brokers, Finders, Etc. All negotiations relating to this Agreement,
and the transactions contemplated hereby, have been carried on without the
participation of any person or entity acting on behalf of the Seller in such a
manner as to give rise to any valid claim against Buyer or the Company for any
brokerage or finder's commission, fee or similar compensation, or for any bonus
payable to any officer, director, employee, agent or sales representative of or
consultant to Seller upon consummation of the transactions contemplated hereby.
III.24 Employees. All sums payable to Employees (as defined in Section
VI.1(a)) after the Closing Date with respect to pre-Closing pending items, which
sums shall include, without limitation, salary, wages, overtime, bonuses,
accrued and unused vacation time and any other payments due pursuant to any
agreements between the Acquired Company and such Employees or as required by
applicable law, shall be accrued as a liability on the Closing Statement of Net
Assets.
III.25 Government Contracts.
(a) With respect to each and every Government Contract or bid to obtain a
Government Contract to which the Company is a party and except as set forth in
Section III.25 of the Seller's Schedule: (i) the Company has fully complied with
all material terms and conditions of such Government Contract or bid for a
Government Contract as required as of the date hereof and as of the Closing
Date; (ii) the Company has fully complied with all material requirements of
statute, rule or regulation pertaining to such Government Contract or bid for a
Government Contract; (iii) all representations and certifications executed with
respect to such Government Contract were accurate in every material respect as
of their effective date and the Company has fully complied with all such
representations and certifications in every material respect; and (iv) no
termination or default, cure notice or show cause notice has been issued or, to
the Knowledge of the executive officers of Seller and the management of the
Business, will be issued.
(b) To the Knowledge of Seller, except as set forth in Section III.25(b)
of the Sellers Schedule, (i) none of the Company's or the Subsidiary's
respective employees, consultants or agents is (or during the last three years
has been) under administrative, civil or criminal investigation, indictment or
information by any foreign, domestic, federal, territorial, state or local
governmental authority, quasi-governmental authority, instrumentality, court,
government or self-regulatory organization, commission, tribunal or organization
or any regulatory, administrative or other agency, or any political or other
subdivision, department or branch of any of the foregoing ("Governmental
Authority"), (ii) there is not any pending audit or investigation of the
Company, its officers, employees or representatives nor within the last three
years has there been any audit or investigation of the Company, officers,
employees or representatives
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resulting in a material adverse finding with respect to any alleged
irregularity, misstatement or omission arising under or relating to any
Government Contract or bid; and (iii) during the last three years, neither the
Company nor the Subsidiary has made a voluntary disclosure to the U.S.
Government or any non-U.S. government, with respect to any alleged irregularity,
misstatement or omission arising under or relating to a Government Contract or
bid. Except as set forth in Section III.25(b) Seller's Schedule, to the
Knowledge of Seller neither the Company nor the Subsidiary has had any
irregularities, misstatements or omissions arising under or relating to any
Government Contract or bid that has led or is expected to lead, either before or
after the Closing Date, to any of the consequences set forth in clause (i) or
(ii) of the immediately preceding sentence or any other material damage, penalty
assessment, recoupment of payment or disallowance of cost.
(c) Except as set forth in Section III.25(c) of the Seller's Schedule,
there are (i) no outstanding claims against the Company or the Subsidiary,
either by the U.S. Government or by any non-U.S. government or by any prime
contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract or bid referred to in Section III.25(a) of
the Seller's Schedule and (ii) no disputes between the Company or the Subsidiary
and the U.S. Government or any non-U.S. Government under the Contract Disputes
Act or any other Federal statute or between the Company or the Subsidiary and
any prime contractor, subcontractor or vendor arising under or relating to any
such Government Contract or bid. Except as set forth in Section III.25(c) of the
Seller's Schedule, to the Knowledge of Seller, there are no facts that could
reasonably be expected to result in a claim or a dispute under clause (i) or
(ii) of the immediately preceding sentence.
(d) Except as set forth in Section III.25(d) of the Seller's Schedule,
neither the Company or the Subsidiary nor any of their respective employees,
consultants or agents is (or during the last three years has been) suspended or
debarred from doing business with the U.S. Government or any non-U.S. government
or is (or during such period was) the subject of a finding of non-responsibility
or ineligibility for U.S. Government or non-U.S. government contracting. Except
as set forth in Section III.25(d) of the Seller's Schedule, the Company and its
affiliates conducted their operations in compliance with all requirements of all
material laws pertaining to all Government Contracts and bids.
(e) Except as set forth in Section III.25(e) of the Seller's Schedule, no
statement, representation or warranty made by the Company in any Government
Contract, any exhibit thereto or in any certificate, statement, list, schedule
or other document submitted or furnished to the U.S. Government or any non-U.S.
government in connection with any Government Contract or bid (i) contained on
the date so furnished or submitted any untrue statement of a material fact, or
failed to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading
or (ii) contains on the date hereof any untrue statement of a material fact, or
fails to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they are made, not misleading,
except in the case of both clauses (i) and (ii) any untrue statement or failure
to state a material fact that would not result in any material liability to the
Company or the Subsidiary as a result of such untrue statement or failure to
state a material fact.
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III.26 Government Furnished Equipment. Section III.26 of the Seller's
Schedule incorporates the most recent schedule delivered to the U.S. Government
or any non-U.S. Government which identifies by description or inventory number
certain equipment and fixtures loaned, bailed or otherwise furnished to or held
by the Company or the Subsidiary by or on behalf of the United States or any
foreign country. To the Knowledge of Seller, such schedule was accurate and
complete on its date and, if dated as of the Closing Date, would contain only
those additions and omit only those deletions of equipment and fixtures that
have occurred in the ordinary course of business, except for such inaccuracies
that could not reasonably be expected to have a material adverse effect on the
operations of the Company and the Subsidiary.
III.27 Organizational Conflicts of Interest. Except as set forth in
Section III.27 of the Seller's Schedule, prior to the close of business on the
date three Business Days prior to the Closing Date, to the Knowledge of the
Seller each of the Company and the Subsidiary as part of its performance of the
"IEW Contract" has, in the past four years, not had access to non-public
information nor provided systems engineering, technical direction, consultation,
technical evaluation, source selection services of services any type, nor
prepared specifications or statements of work, nor engaged in any other conduct
that would create in any current Government procurement an Organizational
Conflict of Interest, as defined in Federal Acquisition Regulation 9.501, with
the Company or, based on the Knowledge of the Seller of the business of L-3 as
conducted on the date three Business Days prior to the Closing Date, with L-3 if
the Company or the Subsidiary were to become an affiliate or division thereof.
III.28 Affiliate Transactions. Except with respect to the Ilex Agreement
and the agreements, arrangements, undertakings and transactions contemplated
thereby, there are no agreements, arrangements, undertakings or other
transactions between the Company or the Subsidiary and the Seller or any
affiliate of the Seller.
III.29 Disclosure in the Seller's Schedule. The disclosure in any Section
of the Seller's Schedule to this Agreement of an exception to any representation
and warranty shall constitute disclosure of such exception for all applicable
representations and warranties under this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the statements related to
Buyer contained in this Article IV are correct and complete as of the as of the
date hereof and will be correct and complete as of the Closing Date, except as
specified to the contrary in the disclosure schedule prepared by Buyer and
attached hereto as Exhibit B (the "Buyer's Schedule"). The Buyer's Schedule is
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article IV.
IV.1 Due Incorporation; Requisite Power and Authority. Buyer is a
corporation duly organized, validly existing and in good standing as a
corporation under the laws of the State of Delaware and has all the requisite
power and authority to execute and deliver the Transaction
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Documents and to perform all transactions in the manner contemplated by the
Transaction Documents. This Agreement has been and, when delivered, the
remainder of the Transaction Documents will have been duly executed and
delivered by Buyer and duly authorized and approved by all necessary corporate
action on the part of Buyer. This Agreement constitutes and, when delivered, the
remainder of the Transaction Documents will constitute the valid and binding
obligations of Buyer, enforceable against Buyer in accordance with its or their
terms, subject to bankruptcy and similar laws and equitable principles regarding
the enforcement of contracts.
IV.2 Requisite Consents; Nonviolation. The execution, delivery and
performance of this Agreement by Buyer does not and the execution, delivery and
performance of the remainder of the Transaction Documents by Buyer will not (a)
violate or conflict with (i) the provisions of the Certificate of Incorporation
or Bylaws of Buyer, (ii) any applicable law, rule or regulation, (iii) any
resolution of the Board of Directors or the shareholders of Buyer, or (iv)
order, writ, injunction or decree by which Buyer is bound; or (b) except as set
forth in this Agreement, require the consent, license, permit, approval,
authorization or other action by or with respect to, any governmental person or
entity (except such approvals, permits or filings as may be required to comply
with applicable state securities and antitrust laws).
IV.3 Broker's Fees. Buyer has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
ARTICLE V
CERTAIN TRANSACTIONS AND AGREEMENTS
PRIOR TO THE CLOSING DATE
V.1 Confidentiality. The Company and Seller have provided Buyer
information relating to the Company, the Subsidiary and Seller and have
permitted Buyer to make an investigation of the Company, the Subsidiary and
their business. To facilitate a smooth transition in ownership of the Company,
prior to the Closing Date, Buyer, through its officers, employees, counsel,
accountants and other authorized representatives, will continue to discuss the
Company's business with Seller and the Company's and the Subsidiary's officers,
employees, independent accountants, actuaries and other agents during the
Company's normal business hours only in a manner that does not interfere with
the Company's normal business or contravene any agreement to which the Company
is bound.
V.2 Business Organization.
(a) Seller shall use its reasonable best efforts to cause each of the
Company and the Subsidiary, through the Closing Date, (i) to operate its
business only in the usual, regular and ordinary manner, on a basis consistent
with past practice and to the extent consistent with such operation to preserve
substantially intact its business organization, (ii) to keep available the
services of the present officers and employees of the Company and the
Subsidiary, and (iii) to preserve the present relationships of the Company and
the Subsidiary with all entities or persons having significant business dealings
with either of them.
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(b) Except as may be approved in writing by Buyer, (1) from the date
hereof to and including the date four Business Days prior to the Closing Date,
Seller shall use its reasonable best efforts to cause the Company and its
affiliates not to, and (2) from the date three Business Days prior to the
Closing Date to and including the Closing Date, Seller shall not and shall cause
its affiliates not to (i) transfer, sell, encumber or otherwise convey any asset
of the business of the Company and the Subsidiary other than the sale of
inventory in the ordinary course, (ii) grant or agree to any bonuses to any
employee of the Company or the Subsidiary, any general increase in the rate of
salary or compensation of the employees of the Company or the Subsidiary, (iii)
commit the Company or the Subsidiary to provide any additional pension,
retirement or other employee benefits to any employee of the Company or the
Subsidiary, or any increase of existing benefits for such employees, (iv) enter
into any contract, agreement or commitment other than in the ordinary course of
business which involves aggregate consideration of in excess of $100,000 and
which is not cancelable without penalty within 30 days, (v) incur or increase
any indebtedness for borrowed money or guarantee the debt of any other person
(other than any incurrence or increase in the ordinary course of business and
then only if the amount of such incurrence or increase (to the extent not repaid
prior to the date three Business Days prior to the Closing Date) is reflected as
a liability on the Estimated Closing Statement of Net Assets), (vi) submit any
bid or proposal, or modify any existing bid or proposal, in excess of
$2,000,000, (vii) make any capital expenditure, or commit to make any capital
expenditure, in excess of $100,000 in the aggregate, (viii) take any act on
inconsistent with the representations and warranties of Seller hereunder or that
would cause any of the representations and warranties of Seller hereunder to
become untrue in any material respect, (ix) except for conversion of the Company
from its status as a subchapter S Corporation under the Code to a subchapter C
Corporation under the Code, make or change any material tax election or settle
or compromise any material federal, state, local or foreign income tax liability
or file any amended Tax Returns, (x) increase the compensation or fringe
benefits of any present or former director, officer or employee of the Company
or its Subsidiary (except for the payment of bonuses and increases in salary or
wages of employees (other than officers) in the ordinary course of business
consistent with past practice), (xi) grant severance or termination pay to any
present or former director, officer or employee of the Company or its
Subsidiary, in excess of $100,000 in the aggregate, (xii) loan or advance any
money or other property to any present or former director, officer or employee
of the Company or its Subsidiary (except for travel and other similar advances
in the ordinary course of business and consistent with past practice), (xiii)
establish, adopt, enter into, amend or terminate any Company Plan or any plan,
agreement, program, policy, trust, fund or other arrangement that would be a
Company Plan if it were in existence as of the date of this Agreement, (xiv)
following the fourth Business Day prior to the Closing Date, make, declare or
set a record date with respect to any distribution of assets of the Company or
the Subsidiary in respect of the capital stock of the Company (whether by
dividend, redemption, share purchase or otherwise) other than a liquidation and
dissolution of all of the assets of the Company or (xv) agree, whether or not in
writing, to do any of the foregoing.
V.3 Cooperation.
(a) General. Each of the parties will use all reasonable efforts to take
all action and to do all things reasonably necessary, proper or advisable in
order to consummate and make effective the transaction contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions).
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(b) Filings and Consents. As soon as practicable, Buyer and Seller shall
make, or cause to be made, any and all filings which are required under the
Hart-Scott-Rodino Act, or any other required filings in any jurisdiction. The
parties will furnish to each other such necessary information and assistance as
each may reasonably request in connection with their preparation of necessary
filings or submissions to any governmental agency, including, without
limitation, any filings necessary under the provisions of the Hart-Scott-Rodino
Act or any other required filings in any jurisdiction. Buyer shall pay the
filing fee(s) associated with all Hart-Scott-Rodino Act filings.
Seller shall use its reasonable efforts to obtain at the earliest
practicable date all material required third party consents, identified in
Section V.3(b) of the Seller's Schedule, of all third parties to leases,
licenses, agreements, indentures or other instruments necessary to the
consummation of the transactions contemplated hereby, and Buyer shall cooperate
with Seller in order to obtain such consents at the earliest practicable date by
performing such actions and by providing Seller with such information,
including, without limitation, publicly-available financial information relating
to Buyer, all as Seller may reasonably request. Anything contained in this
Section V.3(b) to the contrary notwithstanding this Agreement shall not
constitute an agreement to assign any claim, contract, license, lease,
commitment, sales order or purchase order if an attempted assignment of the same
without the consent of the other party thereto would constitute a breach thereof
or in any way materially and adversely affect the rights of Seller thereunder.
(c) Access. Prior to Closing, Seller will use its reasonable best efforts
to cause the Company to permit representatives of Buyer to have reasonable
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the Company upon reasonable advance notice, to all
premises, properties, personnel, books, records (including Tax records),
contracts and documents of or pertaining to the Company.
(d) Notice of Developments. Each party will give prompt written notice to
the other of any material adverse development causing or constituting a breach
of any of its own representations and warranties.
V.4 Subsidiary Merger. Prior to the Closing, Seller shall consummate the
Subsidiary Merger.
V.5 No Seller Distributions. Until such time as the transactions pursuant
to this Agreement have been consummated in accordance with the terms hereof,
Seller shall not distribute nor transfer any of its assets now owned or
hereafter acquired.
V.6 Further Assurances. Each of the parties hereto agrees that it will,
from time to time after the date of the Agreement, execute and deliver such
other certificates, documents and instruments and take such other action as may
be reasonably requested by the other party to carry out the actions amid
transactions contemplated by this Agreement.
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ARTICLE VI
COVENANTS REGARDING POST CLOSING ACTIVITIES
VI.1 Employee Matters.
(a) Immediately following the Closing on the Closing Date, Buyer shall
offer employment at will in a similar position to each employee of the Business
who on the Closing Date is employed by the Acquired Company or on an approved
leave of absence (the "Employees") at a rate of base compensation and salary
equal to not less than one hundred percent (100%) of their base compensation and
salary immediately prior to the Closing Date; provided, however, that nothing
herein shall interfere with or otherwise impair any right of Buyer to terminate
the employment of any employee at any time. Buyer shall assume the
responsibility for all obligations and liabilities arising out of or in any way
connected with its employment of the Employees or the termination thereof,
including, without limitation, any and all claims for wrongful discharge,
discrimination or other violations of law or for payment under any employee
benefit plans for claims incurred after the Closing on the Closing Date. Buyer
shall also offer to Employees participation in benefit programs in accordance
with Buyer's employee benefit plans and other fringe benefits which programs
shall be, at a minimum, substantially comparable, in the aggregate, to the
Company Plans (excluding for these purposes any Company Plans providing equity
awards or equity based awards) and shall be eligible to participate in said
employee benefit plans and other fringe benefits of Buyer immediately and on the
same basis as such plans and benefits are offered to new employees of Buyer;
provided, however, that payment of any deductibles under the Company Plans by
such Employees will be credited under Buyer's plans during 1998; provided,
further, that Buyer may change, amend or terminate any such Company Plans at any
time following the Closing Date. In addition, Buyer agrees that any preexisting
condition clause in any of the Acquired Company's health or disability insurance
coverage shall not be applicable to the Employees to the extent allowable.
(b) Buyer shall assume and be responsible for all sums then due any
Employee who accepts Buyer's offer of employment, which sums shall include,
without limitation, salary, wages, overtime, bonuses, accrued and unused
vacation time and any other payments due pursuant to any agreements between the
Acquired Company and such Employee payable after the Closing Date or as required
by applicable law. All Employees who accept Buyer's offer of employment shall
receive credit for years of service with or as granted by the Acquired Company.
(c) Any former employee of the Acquired Company (or their dependents) who
becomes eligible for health continuation coverage under the Acquired Company's
major medical plan by virtue of his or her failure to accept Buyer's offer of
employment being tantamount to a qualifying event, for the entitlement to such
coverage, shall have available health continuation coverage satisfying the
requirements of Section 4870 B of the Code and Section 601 through 608 of ERISA
after the Closing through health benefit plans maintained by Buyer or its
affiliates.
(d) Buyer covenants and agrees that it will assume and be responsible for
any obligations after the Closing Date to Employees who are on workers'
compensation or a similar leave of absence from the Acquired Company on the
Closing Date to the extent such obligations
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are (i) pursuant to fully insured Company Plans, or (ii) fully accrued on the
Closing Statement of Net Assets.
VI.2 Seller's Indemnification.
(a) Seller's Indemnification. Subject to the limitation of Section
VI.2(c), Seller shall indemnify, defend and hold Buyer and its affiliates (and
their respective officers, directors, employees and agents), harmless from any
liability, damages, deficiency, loss, cost or expense (including but not limited
to reasonable attorney's fees and any expenses of investigation in connection
with any claim hereunder) actually incurred or paid by Buyer and its affiliates
(or their respective officers, directors, employees and agents), arising out of
or resulting from (i) the inaccuracy of any representation or the breach of any
warranty made in this Agreement by Seller to Buyer; (ii) any failure of Seller
to perform or comply with any of its covenants and agreements set forth in this
Agreement; (iii) any Liability of the Seller or any of its affiliates or the
Company or any of its affiliates other than Assumed Liabilities; or (iv) any
Government Bid, Government Contract or Government Disclosure; provided, however,
that Seller shall only indemnify Buyer and its affiliates for the first
$10,000,000 of claims related to any Government Bid, Government Contract or
Government Disclosure. Notwithstanding anything to the contrary contained
herein, the Buyer shall be permitted to offset any amounts which would otherwise
become payable to the Seller under Section 11.4 against amounts owing by the
Seller under this Section VI.2(iv); provided that such right of offset shall
only be exercisable with respect to Additional Consideration if notice of the
exercise of such right is delivered to the Seller by the Buyer prior to the date
on which the calculation of EBIT with respect to such Additional Consideration
shall have been finally determined and agreed to pursuant to Section II.5.
(b) Tax Indemnification. Seller shall indemnify and hold harmless the
Buyer and its affiliates (and their respective officers, directors, employees
and agents) from and against any and all Taxes for or in respect of each of the
following (excluding, in all cases, Taxes included within the definition of
Assumed Liabilities):
(i) any and all Taxes with respect to any taxable period or a
portion thereof, of the Company (or any predecessor) ending on or before
the close of business on the date three Business Day's prior to the
Closing Date;
(ii) with respect to any and all Taxes of any member of a
consolidated, combined or unitary group of which the Company (or any
predecessor) is or was a member on or prior to the close of business on
the date three Business Days prior to the Closing Date by reason of the
liability of the Company pursuant to Treasury Regulation Section
1.1502-6(a) (or any analogous or similar state, local or foreign law or
regulation), as a transferee or successor, by contract, or otherwise;
(iii) any Taxes arising out of a breach of the representations and
warranties contained in Section III.15; and
(iv) any payments required to be made after the Closing Date under
any Tax sharing, Tax indemnity, Tax allocation or similar contracts
(whether or not written), to
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which the Company or any predecessor was obligated, or was a party, on or
prior to the close of business on the date three Business Days prior to
the Closing Date.
(c) Notification; Control of Proceedings. Buyer shall promptly give to the
Seller written notice if it becomes aware of any liability, loss, damage, claim,
cost and expense with respect to which indemnity may be asserted; provided that
the failure to give prompt notice will not release the Seller from liability
hereunder, except to the extent they are actually prejudiced thereby. If any
claim is made by a third person or an action or proceeding commenced for which
Buyer shall seek indemnity from Seller, Buyer shall give to the Seller
reasonable written notice of the claim and request Seller to defend the same.
Seller shall have the right to defend against such liability at their expense,
and shall give written notice to Buyer of the commencement of such defense with
reasonable promptness after the giving of the written notice of the claim by
Buyer. Buyer shall be entitled to participate with Seller in such defense, but
shall not be entitled in any way to release, waive, settle, modify or pay such
claim without the written consent of the Seller, if Seller have assumed such
defense. In the event Seller does not assume the defense of the matter as
provided above, or does not notify Buyer of its election to defend such a matter
within 30 days, Buyer shall have the full right to defend against such liability
in such manner as it may deem appropriate. In the event Seller shall assume the
defense, Buyer shall cooperate in the defense of such action, and the records of
each shall be available to the other with respect to such defense, provided,
however, that the Seller shall not, in the defense of any such action, consent
to the entry of any judgment or enter into any settlement where such entry of
judgment or settlement does not include a provision releasing the Buyer from all
liability with respect to such action or that provides for a remedy other than
the payment of money damages, except with the written consent of Buyer, such
consent not to be unreasonably withheld or delayed.
(d) Limitation on Indemnification. Notwithstanding the provisions of
Sections VI.2(a) (except with respect to (A) clauses (ii), (iii) and (iv) of
Section VI.2(a) and (B) Taxes as provided under Section VI.2(b)), (i) Seller
shall not be liable to Buyer on account of any breach of any warranty or
representation by Seller in this Agreement until the aggregate amount of all
claims against Seller for which indemnification would have been available
hereunder but for the application of the limitation set forth in this clause (i)
for all breaches exceeds one percent (1%) of the Cash Purchase Price and then
only for the amount by which such aggregate cumulative liability is in excess of
one percent (1%) of the Cash Purchase Price; and (ii) in no event shall Seller's
obligations to Buyer under Section VI.2(a)(i) exceed, in the aggregate,
$5,000,000.
(e) Survival. The indemnification obligations of Seller under this Section
VI.2 (except with respect to indemnification pursuant to Section VI.2(a)(ii),
(iii) and (iv)) shall terminate on June 30, 1999 as to any claim not asserted
prior to such date, except that the indemnification obligations of Seller for
(x) a breach of Sections III.1, III.2, III.3, III.5 and III.15 and (y) for Taxes
under Section VI.2(b) shall not terminate until the expiration of the sixty-day
period after the expiration of the applicable statute of limitations as to any
claim not asserted prior to such date and that the indemnification obligations
of Seller for a breach of Sections III.4, III.11 and III.16 shall terminate
three (3) years after the date hereof as to any claim not asserted prior to such
date. The indemnification obligations of Seller (I) under Section VI.2(a)(ii)
shall terminate ten (10) years after the date hereof and (II) under Section
VI.2(a)(iv) shall terminate on June 30, 2000, in each case as to any claim not
asserted prior to such date.
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(f) Indemnification Provisions for Benefit of Seller.
(i) In the event Buyer breaches (or in the event any third party
alleges facts that, if true, would mean Buyer has breached) any of its
representations, warranties, and covenants contained in this Agreement or
in any of the Transaction Documents, then the Buyer agrees to indemnify
Seller and its affiliates (and their respective officers, directors,
employees and agents) from and against the entirety of any Losses (up to
but not in excess of the Cash Purchase Price) Seller or its affiliates
(and their respective officers, directors, employees and agents) may
suffer through and after the date of the claim for indemnification
(including any Losses Seller or its affiliates (and their respective
officers, directors, employees and agents) may suffer after the end of any
applicable survival period) resulting from, arising out of, or caused by
the breach (or the alleged breach).
(ii) Notwithstanding anything to the contrary herein contained, (i)
Buyer will indemnify, defend and hold harmless Seller and its affiliates
(and their respective officers, directors, employees and agents) from and
against any Losses as a result of claims based on or arising from any
Assumed Liabilities or the operation of the Business after the Closing
Date and (ii) such indemnification shall not be limited in time or amount
or subject to any deductible or cap.
(iii) Seller or its affiliates shall with reasonable promptness give
to the Buyer written notice if it becomes aware of any Losses with respect
to which indemnity may be asserted; provided that the failure to give
prompt notice will not release the Buyer from liability thereunder, except
to the extent they are actually prejudiced thereby. If any claim is made
by a third person or an action or proceeding commenced for which Seller or
other indemnified parties shall seek indemnity from Buyer, Seller or its
affiliates shall give to Buyer reasonable written notice of the claim and
request Buyer to defend the same. Buyer shall have the right to defend
against such liability at their expense, and shall give written notice to
Seller of the commencement of such defense with reasonable promptness
after the giving of the written notice of the claim by Seller or its
affiliates. Seller or other indemnified parties shall be entitled to
participate with Buyer in such defense, but shall not be entitled in any
way to release, waive, settle, modify or pay such claim without the
written consent of the Buyer, if Buyer has assumed such defense. In the
event Buyer does not assume the defense of the matter as provided above,
or does not notify Seller of their election to defend such a matter within
30 days, Seller or other indemnified parties shall have the full right to
defend against such liability in such manner as it or they may deem
appropriate. In the event Buyer shall assume the defense, Seller or other
indemnified parties shall cooperate in the defense of such action, and the
records of each shall be available to the other with respect to such
defense, provided, however, that the Buyer shall not, in the defense of
any such action, consent to the entry of any judgment or enter into any
settlement where such entry of judgment or settlement does not include a
provision releasing the Seller or other indemnified parties from all
liability with respect to such action or that provides for a remedy other
than the payment of money damages, except with the written consent of
Seller or other indemnified parties.
(iv) The indemnification obligations of Buyer under this Section
VI.2(f) shall not terminate until the expiration of the applicable statute
of limitations; provided, however,
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that the indemnification obligations of Buyer related to any failure of
Seller to perform or comply with any of its covenants and agreements set
forth in this Agreement shall terminate ten years from the date hereof as
to any claim not asserted prior to such date.
VI.3 Contracts Requiring Consent to Assignment. Notwithstanding anything
in this Agreement, neither this Agreement nor any document or instrument
delivered pursuant hereto shall constitute an assignment of any claim, contract,
agreement, license, lease, commitment, sales order or purchase order or any
claim or right or any benefit arising thereunder or resulting therefrom if an
attempted assignment thereof without the consent of any other Person would
constitute a breach thereof or in any way adversely affect the rights to be
assigned. Until such consent is obtained, or if an attempted assignment
thereunder would be ineffective or would affect the rights of Seller or any
affiliate thereunder so that the Buyer would not in fact receive all such
rights, Seller and the Buyer will cooperate with each other (and, to the extent
required, Seller shall cause its affiliates to cooperate with the Buyer) to
provide for the Buyer the benefits of, and to permit the Buyer to assume all
liabilities under, any such claim, contract, agreement, license, lease,
commitment, sales order or purchase order, including enforcement at the request
and expense of the Buyer for the benefit of the Buyer of any and all rights of
Seller or any affiliate against a third party thereto arising out of the breach
or cancellation thereof by such third party; and any transfer or assignment to
the Buyer by Seller or any affiliate of any property or property rights or any
contract or agreement which shall require the consent or approval of any third
party shall be made subject to such consent or approval being obtained. The
parties shall each use their best efforts to obtain any required consent to
assignment.
VI.4 Company Plans. From and after the Closing, Buyer agrees to assume
Seller's obligations under and become the plan sponsor of each of the Company
Plans in effect immediately prior to the Closing Date and Buyer shall be
entitled to all rights, obligations and duties of Seller under such Company
Plans and Seller shall cause any assets, set-aside or otherwise, pertaining to
the Company Plans to be transferred to Buyer; such assets shall include, but not
be limited to, qualified trusts, VEBAs, and grantor trusts and insurance
policies. Notwithstanding anything to the contrary herein contained, the
assumption of such obligations is not intended to and shall not be construed to
impair the right or ability of Buyer to unilaterally amend or terminate any such
benefit plans and other fringe benefits, or any Company Plan in effect
immediately prior to the Closing Date, at any time after the Closing Date.
VI.5 Research and Experimental Expenses. Seller will use its reasonable
best efforts to cause to be furnished to Buyer as soon as reasonably
practicable, but in no event more than 180 days after Closing, all information
reasonably requested relating to the base period research expenses and any other
information to allow Buyer to claim research and experimental credits in
accordance with the relevant sections of the Code and treasury regulations
promulgated thereunder.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
The obligations of Buyer and Seller to consummate the transactions
contemplated by this Agreement on the Closing Date shall be subject to the
fulfillment at or prior to the Closing of each of the following conditions,
except to the extent such conditions are waived in writing by Buyer and Seller:
VII.1 Government Approvals; Litigation. All requisite governmental
approvals and authorizations necessary, including, but not limited to, any such
approvals or authorizations under the Hart-Scott-Rodino Act, for the
consummation of the transactions contemplated hereby shall have been duly issued
or granted and all applicable waiting periods shall have expired or otherwise
been terminated. No action or proceeding by any governmental authority or any
third party challenging the transactions contemplated by this Agreement or any
parties' ability or right to participate therein shall be pending or threatened
against any party. No unfavorable decree or order shall exist that would prevent
or make the consummation of any of the transactions contemplated by this
Agreement unlawful or would result in the payment of damages or other
consequences materially adverse to the business or assets of Seller, Buyer or
the Company.
VII.2 Permits and Approvals. Buyer, Seller and the Company shall each have
received all consents, waivers, approvals, licenses, or other authorizations
required for the performance of this Agreement by the parties hereto.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligation of Buyer to consummate the transactions contemplated by
this Agreement on the Closing Date shall be subject to the fulfillment at or
prior to the Closing of each of the following conditions, except to the extent
such conditions are waived by Buyer, such waiver to be evidenced by Buyer's
consummation of the transaction contemplated hereby:
VIII.1 Representations and Warranties; Performance. The representations
and warranties of the Seller set forth in this Agreement shall be true in all
material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects) as of the Closing Date with the same effect as
though made at such time. Seller shall have performed and complied in all
material respects with all agreements, covenants and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
Seller shall have delivered to Buyer a certificate, dated the Closing Date, as
to the foregoing.
VIII.2 Escrow Agreement. The Escrow Agreement to be entered into pursuant
to the Stock Purchase Agreement shall have been assigned to Buyer pursuant to an
Assignment of Escrow Agreement in substantially the form of Exhibit VIII.2
hereto.
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VIII.3 Subsidiary Merger. The Subsidiary Merger shall have been
consummated.
VIII.4 Material Adverse Change. Between the date of this Agreement and the
Closing, there shall have been no material adverse change (or any event that
would reasonably be expected to result in such change) in the condition
(financial or otherwise), results of operation, business, assets or properties
of the Company.
VIII.5 Proceedings. All proceedings to he taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Buyer and its counsel,
and Buyer shall have received copies of such documents and such other evidence
as it or its counsel may reasonably request in order to establish the
consummation of such transaction and the taking of all proceedings in connection
therewith.
VIII.6 Ilex Agreement. The Closing (as defined therein) under the Ilex
Agreement shall have occurred in accordance with the terms thereof.
VIII.7 Non-Competition Agreements. The Non-Competition Agreements entered
into pursuant to the Stock Purchase Agreement shall have been assigned to Buyer
pursuant to an Assignment of Non-Competition Agreements in substantially the
form of Exhibit VIII.6 hereto.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated by
this Agreement on the Closing Date shall be subject to the fulfillment at or
prior to the Closing of each of the following conditions, except to the extent
such conditions are waived by Seller, such waiver to be evidenced by Seller's
consummation of the transaction contemplated hereby.
IX.1 Representations and Warranties; Performance. The representations and
warranties of Buyer set forth in this Agreement shall be true in all material
respects (except that where any statement in a representation or warranty
expressly includes a standard of materiality, such statement shall be true and
correct in all respects) as of the Closing Date, with the same effect as though
made at such time. Buyer shall have paid the Cash Purchase Price and otherwise
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
IX.2 Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Seller and their
counsel, and Seller shall have received copies of such documents and such other
evidence as they or their counsel may reasonably request in order to establish
the consummation of such transactions and the taking of all proceedings in
connection therewith.
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IX.3 Ilex Agreement. The Closing (as defined therein) under the Ilex
Agreement shall have occurred.
ARTICLE X
FEES AND EXPENSES
X.1 Expenses. Except as explicitly provided hereunder each party hereto
shall bear its own expenses incurred in connection with the negotiation and
consummation of the transactions contemplated by this Agreement.
X.2 Fees or Commissions of Brokers. Buyer has no obligation to pay any
fees or commissions of any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Seller could be liable.
ARTICLE XI
TERMINATION
XI.1 Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated at any time before the Closing Date, as
follows, and in no other manner:
(a) by mutual consent of Buyer and Seller;
(b) by either Buyer or Seller if the Closing shall not have occurred on or
before 5:00 p.m., Pacific Time, on March 31, 1998; provided that the right to
terminate this Agreement under this Section XI.1 shall not be available to any
party whose failure to fulfill any obligations under this Agreement has been the
cause of, or results in, the failure of the Closing to have occurred within such
period;
(c) by either Buyer or Seller, respectively, if there has been a material
breach of any representation, warranty, covenant or agreement contained in this
Agreement on the part of the other party and such breach of a covenant or
agreement has not been cured within ten (10) days after notice of such breach
has been given to the other party; or
(d) by either Buyer or a majority in interest of Seller if (i) there shall
be a final, non-appealable order of a federal or state court in effect
preventing consummation of the transaction, or (ii) there shall be any action
taken, or any statute, rule, regulation or order enacted, promulgated or issued
or deemed applicable to the acquisition by any governmental entity which would
make consummation of the transaction illegal.
XI.2 Effect of Termination. In the event of a termination of this
Agreement by any party pursuant to Section XI.1, this Agreement shall become
void and have no effect, and there shall be no obligations or liability on the
part of any party or its respective officers, directors or
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trustees, except as set forth in Sections V.1 and X.1 (except to the extent that
termination has occurred pursuant to subsection XI.1(c), above).
ARTICLE XII
MISCELLANEOUS
XII.1 Time of the Essence. Time is of the essence in this Agreement;
provided, however, that the parties shall have a reasonable period of time to
cure any failure to perform their obligations hereunder, which period shall not
be longer than three (3) Business Days for purposes of any obligations under
Article II.
XII.2 Entire Agreement. Except as set forth in Section V.1 above, this
Agreement and the other agreements contemplated hereby contain the entire
agreement of the parties hereto, and supersedes any prior written or oral
agreements between them concerning the subject matter contained herein. There
are no representations, agreements, arrangements or understandings, oral or
written, between the parties to this Agreement, relating to the subject matter
contained in this Agreement, which are not fully expressed herein or the
agreement identified in Section V.1 above. The Schedules and each Exhibit
attached to this Agreement or delivered pursuant to this Agreement is
incorporated herein by this reference and constitutes a part of this Agreement.
XII.3 Press Releases amid Public Announcements. Neither Seller nor Buyer
shall issue any press release or make any public announcement concerning the
matters set forth in this Agreement (other than as required by applicable
disclosure rules or regulations) without the consent of the other party, which
consent shall not be unreasonably delayed or withheld. Seller and Buyer will
cooperate to jointly prepare and issue any press release which may be issued to
announce the entering into this agreement or the closing of the transaction
contemplated by this Agreement.
XII.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
XII.5 Descriptive Headings. The Article and Section headings in this
Agreement are for convenience only and shall not affect the meanings or
construction of any provision of this Agreement.
XII.6 Notices. Any notices required or permitted to be given under this
Agreement shall be in writing and shall be deemed sufficiently given on the date
delivered personally or by telecopier (if a copy is sent by mail), or five (5)
days after posting by registered or certified mail, postage prepaid, addressed
as follows:
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If to Buyer:
L-3 Communications Corporation
600 Third Avenue
New York, NY 10016
Telecopier Number: (212) 805-5494
Attention: Christopher C. Cambria
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier Number: (212) 455-2502
Attention: William E. Curbow
And if to Seller:
FAP Acquisition Trust
c/o First Union National Bank
10 State House Square
Hartford, CT 06103-3698
Telecopier Number: (860) 247-1356
Attention: W. Jeffrey Kramer
With copies to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Telecopier Number: (415) 983-1200
Attention: Graham Taylor
and
Bingham Dana LLP
100 Pearl Street
Hartford, CT 06103
Telecopier Number: (860) 527-5188
Attention: James G. Scantling
or to such other address or addresses as a party shall have previously
designated by notice to the sender given in accordance win this Section.
XII.7 Arbitration. Any dispute under this Agreement prior to June 30, 2000
(and after such date, but in such case only if and for so long as there are
Impounded Funds (as defined in the Escrow Agreement between Seller, the Company
and the stockholders of the Company (the
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"Escrow Agreement")) with respect to such dispute) (the "Initial Arbitration
Period") which is not settled by mutual agreement among the parties hereto,
shall be finally settled by binding arbitration in New York, New York, conducted
by and in accordance with the rules then in effect of the Judicial Arbitration
and Mediation Service; provided that after the Initial Arbitration Period or the
payment or distribution of all amounts held in escrow pursuant to the Escrow
Agreement (or when a Notice of Release (as defined in the Escrow Agreement) has
been received with regard to all remaining amounts in such escrow), whichever
occurs earlier, any such dispute shall be settled by binding arbitration in San
Francisco, California, conducted by and in accordance with the rules then in
effect of the Judicial Arbitration and Mediation Service. Each party shall bear
its own costs and attorneys' and witness' fees. The prevailing party in any
arbitration, as determined by the arbitration panel, shall be entitled to an
award against the other party in the amount of the prevailing party's costs and
reasonable attorneys' fees. In making any such award, the arbitration panel
shall take into consideration the outcome of the proceeding and the
reasonableness of the conduct of each such party in connection with the dispute,
in light of the facts known to such party at the time such party engaged in such
conduct. The arbitrator shall not have authority to award punitive damages
hereunder.
XII.8 Choice of Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York.
XII.9 Bulk Sale and Other Tax Filings. The Buyer and Seller agree to waive
compliance with applicable state sales Tax, bulk sales notification statutes and
regulations and any applicable state tax statutes, in connection with the sale
of the Acquired Assets to the Buyer.
XII.10 Transfer Taxes; Sales Tax. The parties agree that the Buyer shall
pay the sales Tax on the transfer of personal property and each of the Seller or
the Buyer, as appropriate, shall be responsible for such other transfer Taxes
applicable to the transaction contemplated hereby as are customary in the
jurisdiction in which the Tax is payable (other than Taxes computed on the basis
of income) and each party so responsible shall indemnify, defend and hold the
other harmless with respect to such Taxes. Each Party shall file, or cooperate
with the other Party in filing, all necessary documentation and Tax Returns with
respect to such Transfer Taxes.
XII.11 Binding Effect; Benefits. This Agreement shall inure to the benefit
of and be binding upon the parties and their respective successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to confer on
any person other than the parties or their respective successors and permitted
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
XII.12 Assignability. Except as explicitly contemplated hereunder, neither
this Agreement nor any of the parties' rights hereunder shall be assignable by
any party without the prior written consent of the other party and any attempted
assignment without such consent shall be void provided, however, that this
Agreement may be assigned by Buyer to an affiliate of Buyer which shall have
been formed for the purpose of consummating the transactions contemplated
hereby.
XII.13 Waiver and Amendment. Any term or provision of this Agreement may
be waived at any time by the party which is entitled to the benefits thereof.
The waiver by any
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party of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach. The parties may, by mutual
agreement in writing, amend this Agreement in any respect.
XII.14 Attorneys' Fees. In the event of any action or proceeding to
enforce the terms and conditions of this Agreement, the prevailing party shall
be entitled to an award of reasonable attorneys' and experts' fees and costs, in
addition to such other relief as may be granted.
XII.15 Severability. If and to the extent that any court of competent
jurisdiction holds any provisions (or any part thereof) of this Agreement to be
illegal, invalid or unenforceable, such holding shall not affect the validity of
the remainder of this Agreement.
XII.16 No Recourse. It is expressly understood and agreed that this
Agreement is executed and delivered on behalf of Seller by First Union National
Bank ("First Union"), not in its individual capacity but solely as Trustee under
the trust agreement under which Seller is organized, in the exercise of the
powers and authority conferred and vested in it as the Trustee thereunder, and
each of the representations, warranties, undertakings and agreements herein made
on the part of Seller is made and intended not as a personal representations,
warranty, undertaking and agreement by First Union but is made and intended for
the purpose of binding only the trust estate created by the trust agreement
under which Seller is organized (the "Trust Estate"), and all persons having any
claim against First Union or Seller by reason of the transactions contemplated
by this Agreement shall for payment or satisfaction thereof not seek recourse
against First Union except in its capacity as trustee and then only to the
extent of the Trust Estate.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above written.
L-3 COMMUNICATIONS CORPORATION
By: /s/ [ILLEGIBLE]
---------------------------------
Name:
Title:
FAP TRUST
By: First Union National Bank, not
in its individual capacity but
solely as trustee
By:
---------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above written.
L-3 COMMUNICATIONS CORPORATION
By:
---------------------------------
Name:
Title:
FAP TRUST
By: First Union National Bank, not
in its individual capacity but
solely as trustee
By: /s/ W. Jeffrey Kramer
---------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
<PAGE>
EXHIBIT A
FAP Trust Disclosure Schedule
Section III.1
Due Organization of Seller;
Authorization; Title to Acquired Assets
The Company has a five million dollar line of credit with Comerica Bank
which grants the Bank a security interest in the assets of the Company. The
Company also has a $100,000 line of credit with IBM which grants IBM a security
interest in the assets of the Company. The Company has not drawn down either
line of credit as of February 9, 1998.
Seller will borrow all or a portion of the funds required to acquire all
of the capital stock of the Company pursuant to the Ilex Agreement and will
repay such borrowings (the "Borrowings") with the Cash Purchase Price to be
received from Buyer in connection with the consummation of the transactions
contemplated by the Asset Purchase Agreement. Buyer may grant in favor of its
lender various Liens upon some or all of the capital stock of the Company and
some or all of the assets of the Company and the Subsidiary, which Liens will be
released upon consummation of the transactions contemplated hereby and repayment
of the Borrowings.
<PAGE>
FAP Trust Disclosure Schedule
Section III.2
Requisite Consents; Nonviolations
Specific consent by the owner of the Milpitas facility (Barber Associates
LP C/O Menlo Equities 2901 Tasman Dr., Suite 220, Santa Clara, CA 95054) at 1570
Buckeye Drive, Milpitas, CA 95035 leased by the Company will be required as
stipulated in the lease agreement in connection with the execution of the Ilex
Agreement, this Asset Purchase Agreement and the consummation of the
transactions contemplated hereby and thereby. The referenced lease agreement
specifically states that consent cannot be unreasonably denied. (See chart that
is a part of Section III.13.) Consent by Comerica Bank, lender under the
Company's line of credit may also be required in connection with the execution
of the Ilex Agreement, this Asset Purchase Agreement and the consummation of the
transactions contemplated hereby and thereby. The consent of the U.S. Government
in connection with (or novation of) the IEW contract (See Section III.17) is
required in connection with the execution of the Ilex Agreement, this Asset
Purchase Agreement and the consummation of the transactions contemplated hereby
and thereby. Other Government Contracts and bids for Government Contracts
require consent in connection with the execution of the Ilex Agreement, this
Asset Purchase Agreement and the consummation of the transactions contemplated
hereby and thereby (see attached list).
In addition to the above, the consent of the counterparty to various of
the agreements to which the Company or the Subsidiary is a party may be required
in connection with the
<PAGE>
2
execution and delivery of this Asset Purchase Agreement and the consummation of
the transactions contemplated hereby.
<PAGE>
- --------------------------------------------------------------------------------
Novation or corporate name change required:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Novation:
- --------------------------------------------------------------------------------
DELIVERY
- --------------------------------------------------------------------------------
ORDER
- --------------------------------------------------------------------------------
SOURCE CONTRACT NUMBER NUMBERS
- --------------------------------------------------------------------------------
Fort Monmouth-CECOM DAAB07-91-D-Q501 21-47 incl.
- --------------------------------------------------------------------------------
Fort Monmouth-CECOM DAAB07-96-D-H510 1-14 incl.
- --------------------------------------------------------------------------------
MD PROCUREMENT MDA904-97-C-0172
- --------------------------------------------------------------------------------
MD PROCUREMENT MDA904-97-C-0100
- --------------------------------------------------------------------------------
MD PROCUREMENT MDA904-96-C-1161
- --------------------------------------------------------------------------------
MD PROCUREMENT MDA904-95-C-2215
- --------------------------------------------------------------------------------
MD PROCUREMENT MDA904-98-C-A813
- --------------------------------------------------------------------------------
USPS (Hygienetics) BID
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name Change Notification or Amendment: PO or TASK
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOOZ ALLEN 25704NS100 1038-4
- --------------------------------------------------------------------------------
GENERAL INSTRUMENT 2101438
CORP.
- --------------------------------------------------------------------------------
L3-NERVETRUNK SUB ON MDA904-94-C-8028
- --------------------------------------------------------------------------------
L3-MAROON ARCHER SUB ON MDA904-96-C-0291 KT0156608 &
KTO137830
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FAP Trust Disclosure Schedule
Section III.3
Organization and Authorization
The Company is not qualified to do business in Arizona, Colorado, Georgia,
New York, North Carolina, Tennessee, and Texas. Company Employees in all of
these states work on U.S. Military installations under Government Contracts.
<PAGE>
FAP Trust Disclosure Schedule
Section III.5
Subsidiaries, etc.
The Subsidiary is a California corporation and is operated as a wholly
owned subsidiary of the Company. Joseph Lopez is Chairman of the Board of
Directors and the Sole Director of the Subsidiary. Ralph Vitagliano is the Chief
Financial Officer and Secretary of the Subsidiary. Officers of the Subsidiary
are:
Scott Feldman President
Scott Sargis Vice President
Richard Peduto Vice President
Robert Bays Vice President
When the Company changed from a C to an S corporation in March 1997, the
Subsidiary was also changed to an S form so that earnings could be consolidated
and distributed to the Company shareholders.
The Company owns Series E preferred shares of OSI, an affiliate of Jack
Harris (see Section III.28 below). The Company also owns some warrants and
common stock of TWA, and some common stock of Continental Airlines which it
acquired for uncollectible accounts receivable. The Company will dispose of
these TWA and Continental shares and warrants in advance of consummation of the
Ilex Agreement.
<PAGE>
FAP Trust Disclosure Schedule
Section III.7
No Material Changes
Disclosure required re the OSI financial situation. (See Section III.28
below.) Disclosure required in connection with the issuance of stock to Jack
Harris. Director Jack Harris' fees for the first four meetings (April 1997
through January 1998) at the rate of 850 shares per meeting were issued in
January. There are 25,000 stock options outstanding at an exercise price of
$17.50 per share. Terms of the Stock Incentive Option Plan are disclosed (see
Section III.11) and the options all vest in the acquisition of the Company under
the Company's Stock Option Plan.
<PAGE>
FAP Trust Disclosure Schedule
Section III.8
Undisclosed Liabilities
Not disclosed in the financial statements is the commission which will be
due to Bowles Hollowell Conner in the event that the Company is sold. Expenses
which include preparation of a confidential offering memorandum and
out-of-pocket travel and legal fees incurred by the Company in connection with
the sale of stock which are recorded as prepaid expenses of the Company on
closing financial statements as per advice from the Company's outside
accountants.
See discussion of the OSI investment in Section III.28 below.
<PAGE>
FAP Trust Disclosure Schedule
Section III.9
Governmental Authorizations; Compliance with Law
See attached list
<PAGE>
FAP Trust Disclosure Schedule
Section III.10
Litigation
The Subsidiary entered into an Agreement with the Florsheim Group, Inc.
(Florsheim) for the survey, engineering and construction management of the
abatement and demolition of the former headquarters building of Florsheim in
Chicago, IL. The Subsidiary subcontracted the abatement and demolition phases of
the project to EHC, Inc. (EHC), who subsequently subcontracted a portion of the
demolition to MasterCraft, Inc. (MasterCraft). The subcontract Agreement
executed between the Subsidiary and EHC includes a provision restricting EHC and
their subcontractors from filing mechanic liens against the property, as well as
a provision to indemnify and hold the Subsidiary harmless from any and all
damages associated with EHC's actions of those of its subcontractors. A work
quality issue arose between EHC and MasterCraft, resulting in EHC terminating
the subcontract Agreement. MasterCraft then filed suit against EHC, claiming
contract breach by improper contract termination. The suit also named the
Subsidiary, Florsheim, and other project development and financing entities, and
includes a demand for damages for $51,000.
The Subsidiary has answered these charges, and has contacted plaintiff's
counsel to investigate terminating the action against the Subsidiary. Plaintiff
did not object to this approach, and may decide to accept that proposal at a
hearing on the matter scheduled for February 17, 1998. The Subsidiary has also
contacted EHC regarding its obligations to accept defense cost and other
financial responsibilities, which it admits. The Subsidiary management
anticipates that the Subsidiary will ultimately be dismissed from the action.
<PAGE>
FAP Trust Disclosure Schedule
Section III.11
Employee Benefits Plan
ILEX SYSTEMS, INC.
EMPLOYEE BENEFIT PLANS
(INSURANCE)
Plan + Coverage/Benefit Insurer
Medical (PPO) Great West Life
Dental Plan Great West Life
Medical (HMO) Kaiser Permanente
Basic Life/Accidental Death & Great West Life
Dismemberment
Long Term Disability ITT Hartford
HYGIENETICS ENVIRONMENTAL SERVICES, INC.
EMPLOYEE BENEFIT PLANS
Plan + Coverage/Benefit Insurer
Medical (PPO) AETNA
Dental Delta Dental
Basic Life/Accidental Death & AETNA
Dismemberment
Long Term Disability ITT Hartford
The Company and the Subsidiary also maintain an incentive stock option
plan (copy attached). In addition, the Company provides a bonus plan for its
senior management which is based on the achievement profit targets. The plan is
approved and paid on an annual basis. The Company and the Subsidiary also offer
normal days off, two week of paid vacation per year and customary holidays. The
attached Benefits Summary provides details on the listed plans. The Company
sponsors a Section 401(k) Plan through T. Rowe Price and the Subsidiary sponsors
a Section 401(k) Plan through Fidelity Investments. (Copies of plan documents
attached.)
<PAGE>
FAP Trust Disclosure Schedule
Section III.12
Intellectual Property
The Company has rights in the following firmware or software, the
copyright for none of which has been registered, as a different version of the
software is created for each customer's specific needs.
1. SCADA System Software
2. DGU Software
3. (Medical) Pharmaceutical Software
4. RTU Firmware (8100, 8200, 9500)
Environmental System Management
5. Software (to Boston University)
The Company uses form license agreements in connection with its marketing
of these products.
The Company uses the trade names Ilex and Ilex Systems; its wholly owned
subsidiary uses the trade name Hygienetics.
The Company is the licensee of many "off the shelf" software programs used
in conducting its business.
<PAGE>
FAP Trust Disclosure Schedule
Schedule Section III.13
Real & Personal Property
Real Property - See Attached Lease Analysis
Personal Property - See Attached Fixed Asset Schedules
<PAGE>
FAP Trust Disclosure Schedule
Section III.14
Insurance Policies
See attached list and analysis
<PAGE>
FAP Trust Disclosure Schedule
Section III.17
Contracts
The Company has two large contracts. The IEW contract and the $5.0 million
line of credit with Comerica Bank.
(i) See Section III.7 and III.28 for director and affiliate contract.
(ii) The Company's employees (including officers) are employed at "at
will" basis at current salaries and salaries are reviewed annually.
Discretionary bonuses also paid. See also Disclosure Schedule Section III.11 for
additional benefits information.
(iii) None
(iv) The Company has a $5,000,000 line of credit with Comerica Bank and a
$100,000 line of credit with IBM.
[(v) See Section III.3.]
(vi) See (xii) below.
(vii) See Schedule III.12.
(viii) None
(ix) None
(x) None
(xi) See (iv) above; other contracts have terms which have incidental
effects on the manner in which the business of the Company is operated.
(xii) IEW Contract
<PAGE>
FAP Trust Disclosure Schedule
Section III.21
Largest Customers & Suppliers
See attached lists
<PAGE>
FAP Trust Disclosure Schedule
Section III.22
Bank Accounts
See attached lists
for Company and Subsidiary
bank accounts
<PAGE>
FAP Trust Disclosure Schedule
Schedule Section III.26
Government Property
Held by the Company
See attached Schedules
<PAGE>
FAP Trust Disclosure Schedule
Section III.28
Transactions with affiliates.
The Company has no contacts or arrangements with its officers, directors,
major affiliates, subsidiaries and entities which they control except as
follows:
In January, 1995 the Company made a $250,000 investment in 62,500 shares
of series E preferred stock of Optical Specialties Inc. (OSI). Mr. Jack Harris,
a director of the Company, is the president of OSI. The investment was made
pursuant to the Series E Preferred Stock Purchase Agreement dated December 14,
1994.
<PAGE>
FAP Trust Disclosure Schedule
Section V.3(b)
Filings and Consents
To the extent material, those consents referred to in Section III.2 and
Section III.13 hereof.
<PAGE>
Schedule 1 - Products
Ocean Systems Product List
Airborne
AQS-18
AQS-18A
AQS-18 V1A
AQS-18V(3)
AQS-13B (Spares, and R&O only)
AQS-13F
AQS-24B Test Bench
AWS-18M (Japan)
HELRAS
SHELRAS
Test Adapter Test Set (TATS)
Reeling Machine Test Set (RMTS)
ASW System Trainer (AST)
Related Spares, service, R&O, provisioning, engineering and technical
support, documentation and publications.
Sea Systems
Non-Standard Towed Array (NSTA)
TB-23 Towed Array Modules, Tow Cables
TB-23 Towed Array Receiver Coupler (TARC)
TB-16 Towed Array
AN/SQR-19 Towed Array
ADC MK3 Countermeasure
TB-16 Array Module Test Set
TB-23 Array Module Test Set
Integrated Side Looking Sonar (ISLS)
Expendable Mine Destructor (EMD)
Low Frequency Active Towed Sonar (LFATS)
WLY-1, SSTD Sensors/Telemetry
Related spares, service, R&O, provisioning, engineering and technical
support, documentation and publications.
Engineering
Hybrids
Various Transducers
Fiber Optic Rotating Joint
<PAGE>
ELAC Product List
Navigation Systems
Navigation Sounders
Echosounders type LAZ 5000, 4400 for depth measurement and recording.
Echosounder VE 59
Naval Depth Sounder acc. to military standards for surface ships and
submarines. Operating frequencies between 12 kHz and 1 MHZ. For submarines
additional Sound Velocity Measurement Bases with or without Temperature
Sensor and CTD-Sensors (conductivity, temperature, depth) to compute
density, salinity and sound velocity.
Fog Horns
Foghorns designed for stationary application at the coast or on off-shore
platforms, available in directional and non-directional version.
Hydrographic Sounding Systems
Dual-Frequency Echosounders LAZ 4400/20
LAZ 4400 is a dual-frequency echograph with integrated LCD-display
including digital depth information for multi-purpose application, i.e.
navigation, fishery and survey. Its successor, the LAZ 4420, offers two
echosounders in one housing, each operating completely independently via
its own transmitter and transducer.
Hydrographic Survey Sounder LAZ 4700
LAZ 4700 is ELAC's state-of-the-art graphic echosounder for all types of
hydrographic survey. It provides a choice of frequencies, transducers,
transmitters, precision digitizers and other peripheral equipment. While
suited for stand-alone use it has been designed to form the basis of an
integrated computer-based survey system.
Hydrographic Survey System LAZ 4721
LAZ 4721 is an integrated dual-frequency system (at customer choice, from
12 kHz up to 200 kHz) comprising Echosounder LAZ 4700 and Digitizer STG
721, including two digital displays.
<PAGE>
Multibeam Mapping System BOTTOMCHART and HDP 4061
The BOTTOMCHART multibeam mapping system is used for commercial and
scientific applications and offers real-time wide area bathymetry together
with facilities for onboard post-processing. Collected data are used to
create a digital terrain model. Graphic output is provided with the
Hydrographic Data Processing Software System HDP 4061 on a high resolution
color monitor and on color printers/plotter which offer real-time output
in the form of a bicolor, ship centered contour chart. Processing of
measured data is performed on a high performance computer which allows
production of depths charts having already undergone corrections for
position, speed, heave, roll and pitch. Additionally the HDP 4061 provides
extensive data analysis and graphic presentation, for example presentation
of Variance, Density, Heave, Roll, Pitch and Runtime.
Navigation System ONCOURSE
ONCOURSE is designed as central operating software for an integrated
survey system. Main features are: cruise planning, track steering
(autopilot interface), calculation of optimum position, acquisition and
storage of navigation data from different sources, heave/roll/pitch and
depth, acquisition of sound velocity depth, and graphical presentation of
track charts, depth profiles, wrecks and other symbols.
SEACLASS
SEACLASS is a data acquisition and postprocessing software package for
sediment analysis according to the Echostrength Measuring Technique. The
most famous result of ELAC's efforts was the echostrength measuring unit
EMG II which SEACLASS now replaces. The system also provides
postprocessing capabilities for calculating different geophysical
parameters of the sediment and allows graphical output, e.g. sections,
coverage and track plot.
Sonar Systems and Components
Underwater Communication System UT 2000
A microprocessor-controlled communication system with integrated
EL-display for surface ships and submarines. Wide frequency range (from 1
- 60 kHz) and output power (from 0,03 to 300 W), sector and/or
omnidirectional operation, includes communication with divers. Operating
modes e.g. telephony, telegraphy, pinger, transponder, distance
measurement, noise monitoring, emergency mode.
Transducers, Hydrophones and other Wet-Ends
A wide range of transducers, hydrophones, baffles, special staves,
submarine cables, outboard connectors and pressure hull penetrators is
available for installation on submarines in Active-, Passive-,
HF-Intercept-, Passive Ranging-, Flank-Array Sonar Systems.
<PAGE>
Sonar Systems
Passive-, HF-Intercept-, Passive Ranging- and Flank Array Sonars are
available as stand-alone systems or as components of integrated systems
such as SUBICS (Submarine Integrated Combat System) and ISAACS (Integrated
Sensor and Arms Control System).
Integrated Systems
Following integrated systems can be provided with teaming partners:
ISAACS: (Integrated Sensor and Armaments Control System)
Terma Elektronik AS
SUBICS: (Submarine Integrated Combat System)
Lockheed Martin Librascope, US
These integrated systems integrate data collection, monitoring and
processing as well as combat systems monitoring and control.
Low Frequency Active Sonar (LFAS)
A towed low frequency sonar for surface ships with high output level for
long range transmission. Remote controlled towed body and automatic
launching and handling system. LFAS is a part of the German ATAS,
Activated Towed Array System.
Navigation and Detection Sonar NDS 3070
A supplementary dual-frequency sonar for navigation, detection and
obstacle avoidance for use on board of submarines and surface ships. NDS
3070 is a small, microprocessor-controlled high resolution sonar with
color display and optional audio channel.
Diver Sonar
An active/passive sonar for divers with EL-display, search and display
sector 64 degrees, max. scale range 200 m, audio channel 1-50 kHz,
endurance max. 90 minutes, rechargeable NiCd-batteries.
Sonar Beacon Equipment SBE
An independent submarine emergency device system with its own power supply
that provides acoustic signals which enable rescue sonar systems to detect
and locate a submarine in distress situations. SBE is available as mono or
dual frequency system with different operating frequencies, pulse
repetition rates and pulse lengths.
<PAGE>
UZG (SUBTAS for export)-Mobile Acoustic Underwater Target System
The Mobile Target UZG is a self-propelled underwater vehicle for fleet ASW
training. It is operated in open sea without instrumental range. The
system is capable of simulating a submarine's dynamic behavior relative to
its acoustic characteristics. ELAC has been awarded a development contract
by the BWB (Federal Office for Technology and Procurement) to develop the
UZG System. The two prototype systems have undergone trials by the German
Navy in a one year Operational Evaluation (OPEVAL). The production
contract for the German Armed Forces has been given to ELAC in 1997.
TOSO
The torpedo sonar components have been designed for the new German
heavy-weight torpedo DM2A3 to enhance acquisition capabilities.
TAU - Torpedo Countermeasure System
TAU is a soft-kill torpedo countermeasure system for submarines. TAU was
initiated by a feasibility study funded by the German Federal Office for
Technology and Procurement (BWB).
LCAW
LCAW is a low cost weapon for anti-submarine-warfare. ELAC as a member of
a team with STN (Vulkan Group) and Rheinmetall has successfully completed
the concept phase for a NATO programme. The development phase will start
in 1998. Serial production to be expected for 2001.
Mine Countermeasure Systems (MCM)
Multibeam BOTTOMCHART Mapping System
The BOTTOMCHART system can also be used as a MCM system.
Sediment Classifier System SEACLASS
SEACLASS, a fast Bottom Classifier System provides differentiated
information about structure and nature of upper soft and non-solidified
sediments as well as clear, high-contrast detection of buried objects with
different reflectivity from surrounding matter.
Buried objects detection system SEFAS
SEFAS, a fan beam system, enables a fast and extensive sweep of threatened
areas to detect and display objects buried in the seabed.
<PAGE>
Services
Spare parts, service, R&O, provisioning, engineering and technical
support, and documentation and publications services are provided in connection
with the above referenced products.
<PAGE>
Schedule 1.1(a) - Personal Property
The following documents, which have been delivered to Purchaser, are
incorporated by reference herein:
1. Schedule of Ocean Systems' Fixed Assets, dated September 30,
1997
2. Schedule of ELAC Fixed Assets dated September 30, 1997
<PAGE>
Schedule 1.3(j) - Excluded Assets
Excluded Technology
Technical and Intellectual Property developed in connection with and
related to using sensors to detect occupant's position for passenger side air
bags is excluded from the sale.
Excluded Services
The following services are provided to Ocean Systems and ELAC by
AlliedSignal, and are not included in the sale:
Contracts and Business Development
Offset Administration
International Sales Representative
Administration
Legal Support Services
Export Control Administration
Government Relations through Allied
Signal's Washington, DC Government Relations
Office
Real estate Purchase and Sales Services
Public Relations Services
Letter of Credit Management
Operations/Purchasing
Metrology
Commodity Team Support Services (Limited)
Negotiation of Long Term Agreements (Limited)
Circuit Card Assemblies
Financial
Payroll Processing Including Check
Writing, Payroll Tax Submission and W-2 Processing
Income and Property Tax Return Services
Consolidating Financial Reporting System
Travel and Expense Processing Including American Express
Administration Risk Management Services
Fixed Property Accounting
System and Related Support
Walker General Ledger and Support Services
Walker Accounts Receivable System and Related Cash
Application Function
Credit and Collections Support
Treasury Services
Forward Pricing Rate Proposal Submissions to ACO
Government Compliance Support
<PAGE>
Information Systems
Mainframe Computer Processing and Related Support
Essbase Server Resident in Tempe, AZ
MSMail Gateway
Enterprise-Wide Network
Electronic Data Interchange
Internet
Human Resources
PeopleSoft Human Resource Management System
Pension, Savings Plan and Benefits Management
Expatriate Employment Management
<PAGE>
Schedule 4.6(a) -Intellectual Property
See also Schedule 4.6(c).
Patents and Patent Applications
Ocean Systems Patents
DEPLOYABLE SONAR ARRAY WITH INTERCONNECTED TRANSDUCERS OPERATED IN THE BENDING
MODE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4208738 17JE1980 GRANTED EXPIRES 01MY1998
TERMINATION AND METHOD OF TERMINATING ROPES OR CABLES OF ARAMID FIBER OR THE
LIKE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4184784 22JA1980 GRANTED EXPIRES 03JL1998
HYDRODYNAMIC CONFIGURATION FOR TOWED SUBMERSIBLE BODY
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
France 7836235 OIAP1985 GRANTED EXPIRES 22DE1998
Great Britain 2010764 17MR1982 GRANTED EXPIRES 14DE1998
West Germany P2855443.0 16JL1987 GRANTED EXPIRES 21DE1998
Japan 1401012 21FE1987 GRANTED EXPIRES 26DE1998
United States 4173195 06NO1979 GRANTED EXPIRES 27DE1997
COLLET TYPE CYLINDER SEPARATION DEVICE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4120519 17OC1978 GRANTED EXPIRES 03OC1997
SPHERICAL VEHICLE FOR OPERATION IN A FLUID MEDIUM
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4377982 29MR1983 GRANTED EXPIRES 29MR2000
PRESSURE-COMPENSATED ACCELERATION INSENSITIVE HYDROPHONE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 860012 12DE1977 SECRECY ORDER
HYDRODYNAMIC CONFIGURATION FOR UNDERWATER VEHICLE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 226314 19JA1983 SECRECY ORDER
DELAY LINE TIME COMPRESSION CORRELATION CIRCUIT
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4270180 26MY1981 GRANTED EXPIRES 09NO1999
FISH COUNTER WITH SCANNING TRANSDUCER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Canada 1129981 17AU1982 GRANTED EXPIRES 17AU1999
United States 4225951 30SE19S0 GRANTED EXPIRES 05FE1999
WHEEL SPEED SIGNAL- PRODUCING SYSTEM FOR SKID CONTROL
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4267575 12MY1981 GRANTED EXPIRES 09JLI999
CABLE CONSTRUCTION
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Great Britain 2056157 13AP1983 GRANTED EXPIRES 21JL2000
West Germany P3028113.1 18OC1990 GRANTED EXPIRES 24JL2000
Japan 1486221 14MR1989 GRANTED EXPIRES 08AU2000
United States 4250351 10FE1981 GRANTED EXPIRES 08AU1999
PROPULSION SYSTEM FOR AN UNDERWATER VEHICLE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
<PAGE>
United States 4424042 03JA1984 GRANTED EXPIRES 23JL2001
CONNECTOR FOR SMALL DIAMETER ELONGATED SONAR ARRAYS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4304456 08DE1981 GRANTED EXPIRES 10DE1999
CONNECTOR FOR ELONGATED UNDERWATER TOWED ARRAY
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4346954 31AU1982 GRANTED EXPIRES 31AU1999
FUNNEL CONSTRUCTION FOR A DIPPING SONAR
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 43887091 4JE1983 GRANTED EXPIRES 19JA2001
SONAR TRANSCEIVER SYSTEM AND METHOD
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4442513 10AP1984 GRANTED EXPIRES 05FE2002
SALMON COUNTER WITH SEPARATE KING SALMON TABULATOR
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Canada 1194976 08OC1985 GRANTED EXPIRES 08OC2002
TUNED CIRCUIT & METHOD FOR SONAR BEAM PATTERN OPTIMIZATION
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 5309410 03MY1994 GRANTED EXPIRES 03MY2011
CONSTRUCTION AND METHOD FOR ELONGATED TOWED UNDERWATER SONAR ARRAY
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
France EP0113623 07SE1988 GRANTED EXPIRES 15DE2003
Great Britain EP0113623 07SE1988 GRANTED EXPIRES 15DE2003
West Germany P3377954.6 07SE1988 GRANTED EXPIRES 15DE2003
Japan 1727441 19JA1993 GRANTED EXPIRES 27DE2003
United States 4538250 27AU1985 GRANTED EXPIRES 27DE2002
DIGITAL DRIVE SYSTEM FOR PULSE WIDTH MODULATED POWER CONTROL
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Great Britain EP0187282 17MR1993 GRANTED EXPIRES 09DE2005
West Germany P3587191.1 17MR1993 GRANTED EXPIRES 09DE2005
Italy EP0187282 17MR1993 GRANTED EXPIRES 09DE2005
United States 4613933 23SE1986 GRANTED EXPIRES 07JA2005
EXPANDABLE SONAR ARRAY STRUCTURE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
France EP0580808 08JA1997 GRANTED EXPIRES 15AP2012
Great Britain EP0580808 08JA1997 GRANTED EXPIRES 15AP2012
Germany EP0580808 08JA1997 GRANTED EXPIRES I5AP2O12
Italy EP0580808 08JA1997 GRANTED EXPIRES 15AP2012
Japan 510286/92 15AP1992 FILED
United States 5091892 25FE1992 GRANTED EXPIRES 25FE2009
SYSTEM FOR DEPLOYING AN ARRAY OF SONAR PROJECTORS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
France EP0205740 29JA1992 GRANTED EXPIRES 17FE2006
Great Britain EP0205740 29JA1992 GRANTED EXPIRES 17FE2006
West Germany P3683692.3 29JA1992 GRANTED EXPIRES 17FE2006
Italy EP0205740 29JA1992 GRANTED EXPIRES 17FE2006
Japan 2017615 19FE1996 GRANTED EXPIRES 28MR2006
United States 4725988 16FE1988 GRANTED EXPIRES 28MR2005
HELRAS MECHANICAL CONFIGURATION AND HYDRAULIC DRIVE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 758909 25JL1985 SECRECY ORDER
ELONGATED RETAINING AND ELECTROMAGNETIC SHIELDING MEMBER FOR A TOWED UNDERWATER
ACOUSTIC
<PAGE>
ARRAY
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4636998 13JA1987 GRANTED EXPIRES 27AU2002
POLYURETHANE HEAT FORM AND BONDING OF CABLE JACKETS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4533418 06AU1985 GRANTED EXPIRES 21SE2004
VIBRATION ISOLATION MODULE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4628851 16DE1986 GRANTED EXPIRES 24DE2004
SELF THREADING CAPSTAN DRIVE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4634102 06JA1987 GRANTED EXPIRES 23DE2005
ELECTRICAL TILT SWITCH
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4628160 O9DE 1986 GRANTED EXPIRES 28OC2005
UNDERWATER TRANSDUCER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Australia 590050 22FE1990 GRANTED EXPIRES 23FE2007
France EP0243591 14AP1993 GRANTED EXPIRES 09FE2007
Great Britain EPO243591 14AP1993 GRANTED EXPIRES 09FE2007
West Germany P3785384.8 14AP1993 GRANTED EXPIRES 09FE2007
Italy EP0243591 14AP1993 GRANTED EXPIRES 09FE2007
Japan 2033626 19MR1996 GRANTED EXPIRES 30AP2007
Netherlands EP0243591 14AP1993 GRANTED EXPIRES 09FE2007
United States 4764907 16AU1988 GRANTED EXPIRES 30AP2006
FLEXURAL DISK TRANSDUCER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
France EP0265679 22JL1992 GRANTED EXPIRES 28SE2007
Great Britain EPO265679 22JL1992 GRANTED EXPIRES 28SE2007
West Germany P37805592 22JL1992 GRANTED EXPIRES 28SE2007
Italy EPO265679 22JL1992 GRANTED EXPIRES 28SE2007
Japan 2579173 07NO1996 GRANTED EXPIRES 28OC2007
United States 4709361 24NO1987 GRANTED EXPIRES 30OC2006
CABLE WIPER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4845683 04JL1989 GRANTED EXPIRES 16OC2006
UNDERWATER SONAR ARRAY
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4901287 13FE1990 GRANTED EXPIRES 28MR2008
FIBER OPTIC SENSOR
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Eur. Patent Cony. 94112474.5 10AU1994 FILED
United States 5359445 25OC1994 GRANTED EXPIRES 25OC2011
LEVEL WIND SYSTEM
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4795108 03JA1989 GRANTED EXPIRES 17SE2007
MARINE ACOUSTIC AEROBUOY AND METHOD OF OPERATION
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 5060206 22OC1991 GRANTED EXPIRES 25SE2010
PISTON & DRUM DRIVE SYSTEM
Country Number Date STATUS Substatus Date
- ----------------------------------------------------------------------
Canada 2069494-7 07NO 1990 FILED
<PAGE>
France EP0505437 16MR1994 GRANTED EXPIRES 07NO2010
Great Britain EP0505437 16MR1994 GRANTED EXPIRES 07NO2010
Germany P69007492.1 16MR1994 GRANTED EXPIRES 07NO2010
Italy EP0505437 16MR1994 GRANTED EXPIRES 07NO2010
Japan 501453/91 07NO1990 FILED
United States 4973893 27NO1990 GRANTED EXPIRES 12DE2009
SHOCK RESISTANT FLEXTENSIONAL TRANSDUCER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Canada 2007096 04JA 1990 FILED
France 9001617 12FE1990 FILED
Great Britain 2303760 03JE 1997 GRANTED EXPIRES 04JA2010
United States 5497357 05MR1996 GRANTED EXPIRES 05MR2013
HYDRODYNAMIC CONFIGURATION FOR UNDERWATER VEHICLE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4919066 24AP1990 GRANTED EXPIRES 19JA2009
FIBER OPTIC ROTARY JOINT
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Canada 2107878 25MR1992 FILED
France EP0582639 08JA1997 GRANTED EXPIRES 25MR2012
Great Britain EP0582639 08JA1997 GRANTED EXPIRES 25MR2012
Germany P692166032 08JA1997 GRANTED EXPIRES 25MR2012
United States 5078466 07JA1992 GRANTED EXPIRES 19AP2011
LOW FREQUENCY SONAR PROJECTOR AND METHOD
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Australia 664961 07JEI996 GRANTED EXPIRES 04MY2013
France EP0640020 13MR1996 GRANTED EXPIRES 04MY2013
Great Britain EP0640020 13MR1996 GRANTED EXPIRES 04MY2013
Germany P69301819.4 13MR1996 GRANTED EXPIRES 04MY2013
Italy EP0640020 13MR1996 GRANTED EXPIRES 04MY2013
Japan 503624/94 04MY1993 FILED
FIBER OPTIC ROTARY JOINT
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 5450509 12SE1995 GRANTED EXPIRES 26JL2014
IMPROVED SENSORS BASED ON STRETCH-DENSIFIED MATERIALS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 000000 29MY1997 FILED
DIGITAL HOMODYNE PROCESSING SYSTEM
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4280202 21JL1981 GRANTED EXPIRES 3lOC1999
CAGE-ENHANCED SENSORS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 08/617529 15MR1996 FILED
ELAC Patents
ELECTRO ACOUSTIC TARGET SEARCHING SYSTEM FOR TORPEDOES
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Great Britain 2265218 22SE1993 GRANTED EXPIRES 05NO2001
United States 5341347 23AU1994 GRANTED EXPIRES 23AU2011
ECHO-SOUNDING APPARATUS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Canada 1210129 19AU1986 GRANTED EXPIRES 19AU2003
SOFT PROTECT LAYER FOR SOUND TRANSDUCER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
West Germany P3422206.5 10SE1987 GRANTED EXPIRES 15JE2004
<PAGE>
TUBE-LIKE ELECTROACOUSTIC TRANSDUCER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
France 8708243 24DE1993 GRANTED EXPIRES 12JE2007
West Germany P3620085.9 10MR1994 GRANTED EXPIRES 14JE2006
United States 4823327 18AP1989 GRANTED EXPIRES 01JE2007
ACOUSTIC SIMULATION OF UNDERWATER TARGET
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
West Germany P3809900.4 11JA1989 GRANTED EXPIRES 24MR2008
PAT#P3809900.4 UNDER SECRECY ORDER
BROAD BAND OMNIDIRECTIONAL ELECTROACOUSTIC TRANSDUCER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Canada 1310739 24NO1992 GRANTED EXPIRES 24NO2009
West Germany P3812244.8 09NO1989 GRANTED EXPIRES 13AP2008
Italy 1231754 21DE1991 GRANTED EXPIRES 13AP2009
Norway 171700 11JA1993 GRANTED EXPIRES 12AP2009
United States 4916675 10AP1990 GRANTED EXPIRES 01MY2009
DIVER SONAR MONITOR
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Canada 1330587 05JL1994 GRANTED EXPIRES 05JL2011
France EPO345718 15DE1993 GRANTED EXPIRES 06JE2009
Great Britain EPO345718 15DE1993 GRANTED EXPIRES 06JE2009
Italy EP0345718 15DE1993 GRANTED EXPIRES 06JE2009
Norway 174826 13JL1994 GRANTED EXPIRES 08JE2009
UNDERWATER DIRECTION FINDING
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
France EP0355669 06AP1994 GRANTED EXPIRES 16AU2009
Great Britain EP035S669 06AP1994 GRANTED EXPIRES 16AU2009
Italy EP0355669 06AP1994 GRANTED EXPIRES 16AU2009
Norway 173528 22DE1993 GRANTED EXPIRES 18AU2009
Spain EPO355669 06AP1994 GRANTED EXPIRES 16AU2009
DEFENSE AGAINST TORPEDO ATTACK
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
West Germany P3914248.5 29AP1989 SECRECY ORDER
DIGITAL BEAM FORMER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
West Germany P3920705.6 23MY1991 GRANTED EXPIRES 24JE2009
PROTECTION CIRCUIT FOR TRANSDUCER
Country Number Date Substatus Date
- ----------------------------------------------------------------------
West Germany P3939398.4 24JA1991 GRANTED EXPIRES 29NO2009
DEFENSE AGAINST TORPEDO ATTACK FROM BACKSIDE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
West Germany P4010475.3 11MR1993 GRANTED EXPIRES 31MR2010
DETERMINATION OF PULSE LENGTH OF ACOUSTIC SIGNALS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
West Germany P4013684.1 07AP1994 GRANTED EXPIRES 28AP2010
Japan 96665/91 26AP1991 FILED
Norway 91.1671 26AP1991 FILED
United States 5132691 21JL1992 GRANTED EXPIRES 24AP2011
NOISE SUPPRESSION FOR THE INPUT SIGNAL OF SONAR SYSTEMS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
West Germany P4017849.8 12MR1992 GRANTED EXPIRES 02JE2010
ELECTROACOUSTIC TRANSDUCER WITH REDUCED BUNDLING
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Denmark 1539/91 02SE1991 FILED
<PAGE>
West Germany P4027949.9 20AU1992 GRANTED EXPIRES 04SE2010
SONAR BUOY WITH DRAG CHAIN
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Germany P4039031.4 24MR1994 GRANTED EXPIRES 07DE2010
PASSIVE ACOUSTICAL CAMOUFLAGE MEANS FOR UNDERWATER BODIES
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Germany P4131991.5 18AU1992 GRANTED EXPIRES 26SE2011
PAT# P4131991.5 UNDER SECRECY ORDER
SONAR TRANSDUCER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Denmark EP0524371 11AU1994 GRANTED EXPIRES 20MR2012
France EP0524371 11AU1994 GRANTED EXPIRES 20MR2012
Great Britain EP0524371 11AU1994 GRANTED EXPIRES 20MR2012
Germany P69200439.4 11AU1994 GRANTED EXPIRES 20MR2012
Italy EP0524371 11AU1994 GRANTED EXPIRES 20MR2012
Netherlands EP0524371 11AU1994 GRANTED EXPIRES 20MR2012
Sweden EP0524371 11AU1994 GRANTED EXPIRES 20MR2012
OWNED BY THE KILDARE CORPORATION ACCORDING TO A LICENSE AGREEMENT BETWEEN THE
KILDARE CORPORATION, 95 TRUMBULL STREET. SUITE D NEW LONDON, CT 06320-5595 &
ALLIEDSIGNAL ELAC NAUTIK GmbH.
SONAR SYSTEM TEST APPARATUS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Germany P4213121.9 21APP1992 FILED
METHOD AND CIRCUITRY FOR DETERMINING THE BEGINNING OF ECHO PULSES
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
France 9400492 18OC1996 GRANTED EXPIRES 18JA2014
Great Britain 2274560 11SE1996 GRANTED EXPIRES 29DE2013
Germany P4301341.4 21OC1993 GRANTED EXPIRES 20JA2013
United States 5436580 25JL199S GRANTED EXPIRES 30DE2013
INTERCONNECTION OF UNDERWATER TRANSDUCER ARRAY
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Germany P4307843.5 19MY1994 GRANTED EXPIRES 12MR2013
PATENT TITLE: UNKNOWN
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Germany P4323212.4 12MR1993 FILED
ANTI-SEA MINE EFFECTOR
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Germany P4323904.8 16JL1993 FILED
JOINTLY OWNED BY ALLIEDSIGNAL ELAC NAUTIK GmbH AND DIEHL GmbH.
UNDERWATER TARGET LOCALIZER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Eur. Patent Cony. 94112749.0 16AU1994 FILED
Germany P4327841.8 09MR1995 GRANTED EXPIRES 19AU2013
METHOD FOR LOCALIZING AND SWEEPING OF SEA MINES
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Eur. Patent
Cony. 95925762.7 26JE1995 FILED
Germany P4423235.7 02JL1994 FILED
Pat. Coop.
Treaty PCT/EP95/02476 26JE 1995 FILED
United States 000000 26JE 1995 FILED
ECHO SIGNAL STACK CIRCUIT
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Canada 1095162 03FE1981 GRANTED EXPIRES 03FE1998
ECHO-SOUNDING RECORDER WITH DIFFERENT DEPTH MEASURING RANGES
<PAGE>
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4104643 01AU1978 GRANTED EXPIRES 20JL1997
ABRASION PROTECTION SHIELD FOR ECHO SOUNDER
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Norway 145594 21AP1982 GRANTED EXPIRES 07JL1998
RECEIVER CIRCUIT FOR AN ECHO-SOUNDING SYSTEM
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
United States 4245332 13JA1981 GRANTED EXPIRES 12AP1999
DIVER SONAR MONITOR
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
West Germany P58906406.1 15DE1993 GRANTED EXPIRES 06JE2009
UNDERWATER DIRECTION FINDING
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
West Germany P58907386.9 06AP1994 GRANTED EXPIRES 16AU2009
APPARATUS FOR ULTRA-SOUND TREATMENT OF FLOWING LIQUID
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Great 96221170.0 24OC1996 FILED
Germany 19541417.9 11NO199S FILED
PROGRAMMABLE PLL OSCILLATOR
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Germany P19625970.3 28JE1996 FILED
ELECTRONIC FUNCTION GENERATOR USING A STATUS ENGINE
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Germany P19632553.6 13AU1996 FILED
BEAM FORMING METHOD FOR DIRECTION FINDING SYSTEMS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Germany P19648327.1 22NO1996 FILED
SHOCK ABSORBING BEARING FOR GEAR WHEELS
Country Number Date Status Substatus Date
- ----------------------------------------------------------------------
Germany P19652143.2 14DE1996 FILED
Trademarks, Copyrights and Trade Names
Trademarks - Ocean Systems
AlliedSignal holds no registered trademarks for Ocean Systems, but the
following product names and acronyms may be subject to certain usage
rights and protections afforded under common law:
Common Law
Product Name Trademark
------------ ---------
Helicopter Long Range Sonar HELRAS
Low Frequency Active Dipping Sonar LFADS
Shipboard HELRAS SHELRAS
Expendable Mine Detector EMD
Light Minehunting Sonar LMHS
Integrated Side Looking Sonar ISLS
Low Frequency Active Towed Sonar LFATS
ASW Systems Trainer AST
<PAGE>
Trademarks - ELAC
ELAC holds the following registered trademarks:
Country Registration No. Trademark
------- ---------------- ---------
Germany 1051300 Hydrostar
International(1) 480581 Hydrostar
Germany 989375 ELAC (black letters on white background)
International(2) 458578 ELAC (black letters on white background)
Germany 1006999 ELAC (black letters on white background)
International(2) 458579 ELAC (black letters on white background)
- ----------
(1) for Belgium, Luxembourg, Netherlands, France and Italy
(2) for Egypt, Algeria, Belgium, Luxembourg, Netherlands, Spain, France,
Italy, Morocco, Slowenia, Croatia, Yugoslavia, Macedonia, Romania,
Russia, Kazakstan, Belorus, Ukrainia, Ouzbekistan, Vietnam
Intellectual Property Agreements
License and Technical Assistance Agreements. between AlliedSignal and:
ELAC, dated July 18, 1995
Compagnia Generale Di Elettricita, dated December 1, 1970
Aero International, Inc., dated April 26, 1996, and amendment dated
June 10, 1997 Mitsubishi Heavy Industries, Ltd., dated February 2,
1989
Manufacturing License Agreement, between AlliedSignal and:
Aeronautica Industrial, S.A., dated July 16, 1990
Technical Assistance and Manufacturing License Agreement, between ELAC
and:
The Kildare Corporation, dated March 15, 1993
Software Licenses - Ocean Systems
<TABLE>
<CAPTION>
Support Provided by:
Local
System/Application Version Vendor Platform Infrastructure App. Support
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
VAX - General/Utilities
- ------------------------------------------------------------------------------------
Micro Tech
CIQBA 2.8 INC. VAX/VMS X
- ------------------------------------------------------------------------------------
ACCESS
2020 3.02.13 TECH VAX/VMS X
- ------------------------------------------------------------------------------------
ADA 2.3 DIGITAL VAX/VMS X
- ------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Support Provided by:
Local
System/Application Version Vendor Platform Infrastructure App. Support
- -------------------------------------------------------------------------------
BASE-VMS 5.5-2 DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
BASIC 3.5 DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
C 3.1 DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
CDD S DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
CDD - PLUS DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
CMS 3.5-05 DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
COBOL DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
DBMS 4.3 DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
DSNLINK 1.2B DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
DTM 3.3 DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
DTR 6 DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
DECnet (end node) 5.5-2 DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
DECnet (routing node) 5.5-2 DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
DEC Windows MOTIF 1.2-4 DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
FMS DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
FORTRAN DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
GKS DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
LSE DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
MMS DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
RDB DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
RDB-RUNTIME DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
SNA-3270-DSPI DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
SNA-3270-TE DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
SNA-PRE DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
SNA-RJE DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
SNA-VMS DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
SSU DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
STRIPING DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
UCX DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
VAXCLUSTER DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
VMS-USER DIGITAL VAX/VMS X
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Support Provided by:
Local
System/Application Version Vendor Platform Infrastructure App. Support
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
VOLSHAD DIGITAL VAX/VMS X
- ----------------------------------------------------------------------------------
VAX - CONTROL Manufacturing and Associated Software
- ----------------------------------------------------------------------------------
Accounting 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Accounts Payable 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Accounts Receivable 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Bill Of Material 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Cost Accounting 7.3 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Engineering Config. 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Order Management System 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Inventory Control 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Master Production
Scheduling 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
MRP 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Order Entry Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------
Project Accounting 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Purchasing 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Shop Floor Control 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Purchase Part and Quote 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Soft Pegging Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------
Interfaces Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------
Control Link 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
DCLS Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------
MANTIS User BRP/BRP 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
Spectra Custom 7.2.2 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
QRW 7 Cincom VAX/VMS X
- ----------------------------------------------------------------------------------
PC NT Servers
- ----------------------------------------------------------------------------------
MMTA Microsoft NT X
- ----------------------------------------------------------------------------------
MSMAIL Microsoft NT/W95 X
- ----------------------------------------------------------------------------------
DNS Microsoft NT X
- ----------------------------------------------------------------------------------
WINS Microsoft NT X
- ----------------------------------------------------------------------------------
DHCP Microsoft NT X
- ----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Support Provided by:
Local
System/Application Version Vendor Platform Infrastructure App. Support
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Internet Information Server Microsoft NT X
- ------------------------------------------------------------------------------------------
McAfee Anti Virus McAfee NT/W95 X
- ------------------------------------------------------------------------------------------
ArcServer Cheyenne NT X
- ------------------------------------------------------------------------------------------
Remote Access (RAS) Microsoft NT X
- ------------------------------------------------------------------------------------------
Remote Mail Microsoft NT X
- ------------------------------------------------------------------------------------------
System Management Server Microsoft NT X
- ------------------------------------------------------------------------------------------
NetBoy Suite NDG SW NT X
- ------------------------------------------------------------------------------------------
VAX - Database / SW Development
- ------------------------------------------------------------------------------------------
SQL*Forms 3 Oracle VAX/VMS X
- ------------------------------------------------------------------------------------------
Developer/2000 Forms 45 Oracle VAX/VMS X
- ------------------------------------------------------------------------------------------
Developer/2000 Reports 2.5 Oracle VAX/VMS X
- ------------------------------------------------------------------------------------------
Oracle Enterprise Manager 1.2.2 Oracle Windows95 X
- ------------------------------------------------------------------------------------------
Oracle SQL*Net 2.3.2.1.3 Oracle VMS/W95 X
- ------------------------------------------------------------------------------------------
Oracle Server Manager 2.0.3.1 Oracle VAX/VMS X
- ------------------------------------------------------------------------------------------
Oracle SQL*Plus 3.1 Oracle Windows95 X
- ------------------------------------------------------------------------------------------
Oracle SQL*Plus 3.1.3.5.1 Oracle VAX/VMS X
- ------------------------------------------------------------------------------------------
Airborne Sonar R&O Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Applicant Flow Log Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Auto Stock Withdrawal Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Automatic Carousel Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Substitute Part List Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Customer Inquiry Tracking Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
DCMC Inspection System Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Discrepancy Reporting Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Drawing Info System Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Estimating System Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Failure and R&O Reporting Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Gov't Property Inventory Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Job Scheduler Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
KITPRINT Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
Labor/Timekeeping Custom In-house VAX/VMS X
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Support Provided by:
Local
System/Application Version Vendor Platform Infrastructure App. Support
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lost Time Tracking Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Maint. Work Request Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Payroll Timecard Entry Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Personnel Info System Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
P&D Request System Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Procedure Master Index Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Workstream Product Load Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Production Scheduling Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Proms/Pals Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Rec Inspection Requests Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Repair & Overhaul System Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Risk Analysis/Control Plan Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
SSR System Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Tooling System Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
TQM Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
Wire list System Custom In-house VAX/VMS X
- ----------------------------------------------------------------------------------------
PC Desktop
- ----------------------------------------------------------------------------------------
Windows 95 Microsoft NT/W95 X
- ----------------------------------------------------------------------------------------
PVCS 5.01 PVCS NT/W95 X
- ----------------------------------------------------------------------------------------
MSExcel 7 Microsoft NT/W95 X
- ----------------------------------------------------------------------------------------
MS Word 7 Microsoft NT/W95 X
- ----------------------------------------------------------------------------------------
MsPowerpnt 7 Microsoft NT/W95 X
- ----------------------------------------------------------------------------------------
MSSchedule Plus 7 Microsoft NT/W95 X
- ----------------------------------------------------------------------------------------
MS WinProject 4 Microsoft NT/W95 X
- ----------------------------------------------------------------------------------------
MSAccess 2 Microsoft NT/W95 X
- ----------------------------------------------------------------------------------------
MSAccess 7 Microsoft NT/W95 X
- ----------------------------------------------------------------------------------------
MSExchange Microsoft NT/W95 X
- ----------------------------------------------------------------------------------------
MSProject 4 Microsoft NT/W95 X
- ----------------------------------------------------------------------------------------
Designer 4.1 Micrografix NT/W95 X
- ----------------------------------------------------------------------------------------
MathCAD 6 MathCAD NT/W95 X
- ----------------------------------------------------------------------------------------
Visio 4 Visio NT/W95 X
- ----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Support Provided by:
Local
System/Application Version Vendor Platform Infrastructure App. Support
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Photo Magic 1 Micrografix NT/W95 X
- ------------------------------------------------------------------------------------------
Corel 4 Corel NT/W95 X
- ------------------------------------------------------------------------------------------
ABCFlowcharter Micrografix NT/W95 X
- ------------------------------------------------------------------------------------------
Acrobat 3 Adobe NT/W95 X
- ------------------------------------------------------------------------------------------
Netscape 3.01 Netscape NT/W95 X
- ------------------------------------------------------------------------------------------
COMIINS 3.1 Custom NT/W95 X
- ------------------------------------------------------------------------------------------
Peoplesoft 5.1 Peoplesoft NT/W95 X
- ------------------------------------------------------------------------------------------
NT 4 Microsoft NT/W95 X
- ------------------------------------------------------------------------------------------
Interleaf 6.1 Interleaf NT/W95 X
- ------------------------------------------------------------------------------------------
Visio Technical 4.5 Visio NT/W95 X
- ------------------------------------------------------------------------------------------
ASPPP97 3 Corporate NT/W95 X
- ------------------------------------------------------------------------------------------
DOS 6.22 Microsoft NT/W95 X
- ------------------------------------------------------------------------------------------
AutoCAD 13 AutoDesk NT/W95 X
- ------------------------------------------------------------------------------------------
AutoCAD 12 AutoDesk NT/W95 X
- ------------------------------------------------------------------------------------------
CADStar 2.2.2.4 AutoDesk NT/W95 X
- ------------------------------------------------------------------------------------------
DatalO (Futurenet) Futurenet NT/W95 X
- ------------------------------------------------------------------------------------------
Windows 3.1 Microsoft NT/W95 X
- ------------------------------------------------------------------------------------------
Windows 3.11 Microsoft NT/W95 X
- ------------------------------------------------------------------------------------------
MS Word 6 Microsoft NT/W95 X
- ------------------------------------------------------------------------------------------
MSExcel 5 Microsoft NT/W95 X
- ------------------------------------------------------------------------------------------
MSPowerpnt 4 Microsoft NT/W95 X
- ------------------------------------------------------------------------------------------
HP Unix Desktop
- ------------------------------------------------------------------------------------------
oce3-2/ANSYS 5.3 ANSYS HP 9000 X
- ------------------------------------------------------------------------------------------
oce305/UGII 9.1 UGII HP 9000 X
- ------------------------------------------------------------------------------------------
oce306/ProE IS PTC HP9000 X
- ------------------------------------------------------------------------------------------
oce307/Mentor Graphics B.4 Mentor HP 9000 X
- ------------------------------------------------------------------------------------------
oce3l8/Intercap 7.83 Intercap HP 9000 X
- ------------------------------------------------------------------------------------------
oce319/interleaf 6 Interleaf HP 9000 X
- ------------------------------------------------------------------------------------------
oce322/IDEAS 5 SDRC HP 9000 X
- ------------------------------------------------------------------------------------------
IBM (Ocean Systems Specific)
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Support Provided by:
Local
System/Application Version Vendor Platform Infrastructure App. Support
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Payroll Distr. (HP & SP) Custom Corporate IBM X
- ------------------------------------------------------------------------------------
Sun Unix Desktop
- ------------------------------------------------------------------------------------
SW Development VX-Works VX-Works X
- ------------------------------------------------------------------------------------
Signal Processing AP-Labs AP-Labs X
- ------------------------------------------------------------------------------------
</TABLE>
GlobalLink Software Licenses
GlobalLink is an AlliedSignal corporate initiative that focused on
upgrading the desktop and server infrastructure and software at all divisions to
a common level of performance. These upgrades would allow AlliedSignal to roll
out corporate based software applications and economize on desktop support given
the common software / infrastructure.
Ocean Systems did not receive any hardware improvements from this
initiative. The division did receive, and is being charged, for software
products covered under GlobalLink umbrella. These software products include all
of the following (note that some of these products are not actually in use at
this division but are being assessed none the less):
o 32-bit Desktop Operating System o LANdesk (Electronic (NT or W95
Inventory Tool - NOT USED)
o Netscape o Microsoft Exchange (Email
o McAfee VirusScan Client Licenses - NOT USED)
o Netware 4.1 (Network Operating System o Attachmate (IBM Connectivity
-NOT USED) Tools)
o Managewise (Remote Desktop o Office97
Management Tool - NOT USED) o Server Tools
This software was purchased at $278 / seat in 1996 and is being amortized over
three-years ($74,319 per year).
If licenses were not part of the sale, the impact to Ocean Systems is as
follows:
o Little or no impact related to current desktop operating system as most
are already owned
o Requires procurement of replacement WEB tool (Netscape) and virus
protection (McAfee)
o Impact related to IBM connectivity would depend on new owner IBM access
requirements
o Future impact related to desktop upgrades (NT, Office97, Microsoft
Exchange)
<PAGE>
Software Licenses - ELAC
Software at ELAC, current through November 6, 1997
- ------------------------------------------------------------
Program Provider Version License
- ------- -------- ------- -------
- ------------------------------------------------------------
Transcend 3Com 6.0 250
- ------------------------------------------------------------
Powerchut Plus APC 4.2.4 2
- ------------------------------------------------------------
ACAD AutoDesk 13 1
- ------------------------------------------------------------
ACAD AutoDesk 12 1
- ------------------------------------------------------------
C++ Borland 3.1 5
- ------------------------------------------------------------
Paradox Borland 1
- ------------------------------------------------------------
Pascal Borland 7.0 5
- ------------------------------------------------------------
Quatropro win Borland 1
- ------------------------------------------------------------
Arcserve Cheyenne 6.2 1
- ------------------------------------------------------------
Corel Draw Corel Corporation 5.0 10
- ------------------------------------------------------------
Corel Flow Corel Corporation 2.0 10
- ------------------------------------------------------------
Paisy GSI 3
- ------------------------------------------------------------
VPPS Infor 4.5 75
- ------------------------------------------------------------
Landesk VirusProtect001 Intel 3.01 1
- ------------------------------------------------------------
Landesk VirusProtect002 Intel 3.01 1
- ------------------------------------------------------------
Landesk VirusProtect003 Intel 3.01 1
- ------------------------------------------------------------
Landesk VirusProtect004 Intel 3.01 1
- ------------------------------------------------------------
Varial isb 2.7 10
- ------------------------------------------------------------
Side Meeter McAfee 50
- ------------------------------------------------------------
Cobol Microfocus 3.2 5
- ------------------------------------------------------------
Infonnix Microfocus 7.1 5
- ------------------------------------------------------------
Foxpro Dos Microsoft 2.0 5
- ------------------------------------------------------------
Foxpro Win Microsoft 2.5 5
- ------------------------------------------------------------
MS Access Microsoft 2.0 50
- ------------------------------------------------------------
MS-Mail Microsoft 3.2 150
- ------------------------------------------------------------
MS-Office Microsoft 4.2 50
- ------------------------------------------------------------
MS-Projekt Microsoft 4.0 15
- ------------------------------------------------------------
<PAGE>
- --------------------------------------------
Program Provider Version License
- ------- -------- ------- -------
- --------------------------------------------
Windows 3.11 Microsoft 3.11 100
- --------------------------------------------
Windows 95 Microsoft 4.00950 60
- --------------------------------------------
Disc View Microtest 4.10a 1
- --------------------------------------------
LanWorkplac Novell 16 5
- --------------------------------------------
Manage Wise Novell 2.1 250
- --------------------------------------------
Manage Wise Novell 2.1 5
- --------------------------------------------
ManageWise Novell 2.1 5
- --------------------------------------------
ManageWise Novell 2.1 5
- --------------------------------------------
Netware00l Novell 4.1 75
- --------------------------------------------
Netware002 Novell 4.1 50
- --------------------------------------------
Netware003 Novell 4.1 50
- --------------------------------------------
Netware004 Novell 4.1 250
- --------------------------------------------
Netware100 Novell 3.12 2
- --------------------------------------------
Netware101 Novell 4.1 2
- --------------------------------------------
Orcad Orcad 4.0 6
- --------------------------------------------
Easy-Archiv Recognita 2000 1
- --------------------------------------------
Unix102 SCO 5
- --------------------------------------------
PCNFS SunSelect 5.1 5
- --------------------------------------------
Rumba SunSelect 4.0 2
- --------------------------------------------
PCAnywhere Symantec 1
- --------------------------------------------
PS-Gef Weka Verlag 2.1 1
- --------------------------------------------
Confidentiality Agreements - Ocean Systems
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Agreement Effective Term/ OS
Company Subject Number Date Expiry Contact
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADI Limited RAN ASSTASS SEA 11000 96-033 11/6/96 10 years A.J. Garber
- ----------------------------------------------------------------------------------------------------
ADI Limited Underwater Warfare Business 95-007 4/10/95 3
- ----------------------------------------------------------------------------------------------------
Aero International International Spares 95-010 3 years P.A. Boskovich
- ----------------------------------------------------------------------------------------------------
Agusta/Italy Quality Assurance Survey 4/28/97 1 year L. Daniels
- ----------------------------------------------------------------------------------------------------
Albion Group Intl. Inc. Hellenic Navy Offset 95-013 7/12/95 3 years J. Hall/L.
Daniels
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliant Techsys. Seismic data 96-027 10/16/97 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------
Atlantic Aero
Elect Corp. Various 95-001 1/17/95 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------
Australian Defense
Industries Undersea Warfare Business 95-007 5/10/95 3 years K.D. Adams
- --------------------------------------------------------------------------------------------------
Atlantic Aero
Elect. Corp. Foreign Integrated Sonar Suites 95-0 17 8/21/95 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------
AT&T Various Information 8/7/95 2 years D. Samsury
- --------------------------------------------------------------------------------------------------
Babcock Intl. Sonar 2087 Feasibility Study 3/7/95 5 years J. Caughey
- --------------------------------------------------------------------------------------------------
BBN US Navy 6152 97-0 15 5/30/97 1 year A.J. Garber
- --------------------------------------------------------------------------------------------------
Cambridge Bank Ltd. Sonar Equip. Brazil/Peru 96-0 17 5/28/96 5 years V. Riehl
- --------------------------------------------------------------------------------------------------
Celsius Tech Sys. Mine Counter Measurers 94-021 8/19/94 3 years L. Daniels
- --------------------------------------------------------------------------------------------------
Celsius Tech Sys. Proprietary Info. 11/14/97 5 years J. Devine
- --------------------------------------------------------------------------------------------------
Chesapeake Sciences TARS 95-0 18 8/28/95 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------
Chesapeake Sciences TB 16/BQ 10/18/94 4 years R. Tomlinson
- --------------------------------------------------------------------------------------------------
Chevron Petroleum Bore Hole Seismic Multi Level 94-037 3/3/94 3 years A.J. Garber
Receiver
- --------------------------------------------------------------------------------------------------
Computing Devices Maritime Helicopter 95-014 7/14/95 3 years J. Anderson
- --------------------------------------------------------------------------------------------------
C-Tech Y52000 96-029 10/2/96 2 years J. Roscigno
- --------------------------------------------------------------------------------------------------
DAF Special Products NH-90 96-006 2/15/96 3 years D. Webb
- --------------------------------------------------------------------------------------------------
DRA Hunt Class Mid Life 11/22/96 1 year A.J. Garber
- --------------------------------------------------------------------------------------------------
Defense Evaluation
Research Agency Defense Hunt Class Mid Life 11/27/96 1 year A.J. Garber
- --------------------------------------------------------------------------------------------------
Devonport Management
Ltd. Sonar 2087/Type 23 Frigates 96-007 2/13/96 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------
Durodyne, Inc. Epichlorohydrin rubber compound 88-01 4/DA 5/1/88 10 years J. Andersen
- --------------------------------------------------------------------------------------------------
Dynacon, Inc. LFATS Handling System 94-023 6/2/94 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------
E-Systems Montek Siesmic Receiving 95-012 6/28/95 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------
Electramotive TB16 Towed Array 11/12/93 3 years J. Proko
- --------------------------------------------------------------------------------------------------
FIAR NH-90 96-005 1/18/96 3 years D. Webb
- --------------------------------------------------------------------------------------------------
Fokker Aviation EMD 97-008 2/4/97 1 year S. McDonald
- --------------------------------------------------------------------------------------------------
Greenblatt MCDV 95-004 3/27/95 3 years L. Daniels
- --------------------------------------------------------------------------------------------------
Goldstar ATE 11/24/82 5 years B. Polaski
- --------------------------------------------------------------------------------------------------
Geo Test Inc. AQS-18 Test Equipm 95-032 12/14/95 3 years L. Daniels
- --------------------------------------------------------------------------------------------------
Hughes Naval Marine Airborne Sonar Sys. 96-026/1 5/13/97 2 years R. Husar
- --------------------------------------------------------------------------------------------------
Hughes Naval Marine Surface Ship Programs 96-026 8/9/96 2 years R. Husar
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hewlett Packard Weapons Replaceable Assy. Test Set 96-002 1/8/96 3 years L. Daniels
- -------------------------------------------------------------------------------------------------------
Hollandse
Signaalapparten Alkmaar class mine counter 97-007 1/23/97 2 years S. McDonald
- -------------------------------------------------------------------------------------------------------
Kaman Aerospace AQS-18 Dipping Sonar SH-2G 94-019 7/19/95 5 years L. Daniels
- -------------------------------------------------------------------------------------------------------
Loral Canada Maritime Helicopter Program 7/29/95 10 years J. McDermott
- -------------------------------------------------------------------------------------------------------
Lockheed Martin Canadian Remote Minehunting Sonar 95-024 12/19/95 3 years A.J. Garber
- -------------------------------------------------------------------------------------------------------
Loral ASIC B2TC 5/28/95 10 years A.J. Garber
- -------------------------------------------------------------------------------------------------------
Litton Sys. Acoustic Sensor Array Systems 5/24/96 5 years L. DiRienzo
- -------------------------------------------------------------------------------------------------------
Northop Grumman Hybrids 95.020 9/15/95 3 years J.P. Andersen
- -------------------------------------------------------------------------------------------------------
NUWC Wide-Band Omni Telemetry Sys. 10/31/96 A.J. Garber
- -------------------------------------------------------------------------------------------------------
Optiphase Fiber Optic Technologies 96-003 1/10/96 3 years A.J. Garber
- -------------------------------------------------------------------------------------------------------
Paulsson Geo
Svc. Inc. Boreholde Seismic Systems 11/22/96 1 year
- -------------------------------------------------------------------------------------------------------
Penn State LELFAS 96-034 12/17/96 3 years V. Riehl
- -------------------------------------------------------------------------------------------------------
Raytheon Electronics LFATS/Taiwan/Australian/Spanish 10/25/96 2 years V. Riehl
- -------------------------------------------------------------------------------------------------------
Raytheon Electronics Y52000/Italian Navy ASW Frig 7/2/96 5 years
- -------------------------------------------------------------------------------------------------------
STN Atlas Undersea Warfare Business 95-006 4/25/95 3 years K. Adams
- -------------------------------------------------------------------------------------------------------
STN Atlas Australia ASSTASS LFAPS 2/11/97 1 year D. MacCulloch
- -------------------------------------------------------------------------------------------------------
Signal Processing Sys. Norwegian Towed Array 97-014 5/23/97 3 years W. Tally
- -------------------------------------------------------------------------------------------------------
Sikorsky Aircraft Job Shoppers 11/22/96 7 years D. Bennett
- -------------------------------------------------------------------------------------------------------
Transfield Defense Sys. SEA 1000 Australian Surface Ship 8/6/96 10 years J. Winters
Towed
- -------------------------------------------------------------------------------------------------------
3M Specialty Optical
Fibers Fiber Optic Technologies 95-029 11/30/95 3 years A.J. Garber
- -------------------------------------------------------------------------------------------------------
Taiwan Int Standard S-70C Offset 96-010 5/11/96 5 years J. Corso/
Electronics Ltd. J. Winter
- -------------------------------------------------------------------------------------------------------
Witten Technologies Mine Warfare 94-030 7/11/94 3 years A.J. Garber
- -------------------------------------------------------------------------------------------------------
Whitehead Alenia
Sistemi Subacquci Undersea Warfare Business 95-003 4/27/95 3 years S. Schorer
- -------------------------------------------------------------------------------------------------------
</TABLE>
Confidentiality Agreements - ELAC
---------------------------------
95-01-01 Marimatek
95-01-02 SeaBeam
95-01-03 Qubit
95-01-04
95-01-05 Ultra Electronics
95-01-06 BASYS Marine Ltd.
<PAGE>
95-01-07 BAeSEMA
95-01-08 Westinghouse
96-01-01 Evia
96-01-02 Mjellum & Carlson
96-01-03 Reson
96-01-04 Raytheon Anschutz
96-01-05 HDW
96-01-06 Elektro-Optik GmbH
97-01-01 SEPA
97-01-02
97-01-06 Sonatech
97-01-07 NautroniX
97-01-08 EdgeTech
97-01-09 Kongsberg
97-01-10 Camber Corp.
<PAGE>
Schedule 4.6(c) - Licensed Intellectual Property
See also Intellectual Property expiration information contained in Schedule
4.6(a).
Intellectual Property to be Licensed to Purchaser
o Armour Cable for Airborne Dipping Sonar
o Impact Resistant, Lightweight, Composite Sonar Panels
o Improved Clutter Rejection Algorithms
o Lead Magnesium Niobate (PMN) Activer Sonar Source Material
US Patent No. 5,239,518
o Piezoelectric Ceramic Copolymer
US Patent Application No. 08/618690
o Autonomous Underwater Mine Hunting Algorithms
o Enhanced Thickness Piezoelectric Polymer/Ceramic Composite Active Transducer
<PAGE>
Schedule 4.6(d) - Intellectual Property
The following Intellectual Property agreements may involve certain third
party rights.
License and Technical Assistance Agreements, between AlliedSignal and:
ELAC, dated July 18, 1995
Compagnia Generale Di Elettricita, dated December 1, 1970 Aero
International, Inc., dated April 26, 1996, and amendment dated June
10, 1997
Mitsubishi Heavy Industries, Ltd., dated February 2, 1989
Manufacturing License Agreement, between AlliedSignal and:
Aeronautica Industrial, S.A., dated July 16, 1990
Technical Assistance and Manufacturing License Agreement, between ELAC
and:
The Kildare Corporation, dated March 15, 1993
Confidentiality Agreements - Ocean Systems
<TABLE>
<CAPTION>
Agreement Effective Term/ OS
Company Subject Number Date Expiry Contact
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADI Limited RAN ASSTASS SEA 11000 96-033 11/6/96 10 years A.J. Garber
- --------------------------------------------------------------------------------------------------------------
ADI Limited Underwater Warfare Business 95-007 4/10/95 3
- --------------------------------------------------------------------------------------------------------------
Aero International International Spares 95-010 3 years P.A. Boskovich
- --------------------------------------------------------------------------------------------------------------
Agusta/Italy Quality Assurance Survey 4/28/97 1 year L. Daniels
- --------------------------------------------------------------------------------------------------------------
Albion Group Intl. Inc. Hellenic Navy Offset 95-013 7/12/95 3 years J. Hall/L.
Daniels
- --------------------------------------------------------------------------------------------------------------
Alliant Techsys. Seismic data 96-027 10/16/97 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------------------
Atlantic Aero Elect Corp. Various 95-001 1/17/95 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------------------
Australian Defense Industries Undersea Warfare Business 95-007 5/10/95 3 years K.D. Adams
- --------------------------------------------------------------------------------------------------------------
Atlantic Aero Elect. Corp. Foreign Integrated Sonar Suites 95-017 8/21/95 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------------------
AT&T Various Information 8/7/95 2 years P. Saxnsury
- --------------------------------------------------------------------------------------------------------------
Babcock Intl. Sonar 2087 Feasibility Study 3/7/95 5 years J. Caughey
- --------------------------------------------------------------------------------------------------------------
BBN US Navy 6152 97-015 5/30/97 1 year A.J. Garber
- --------------------------------------------------------------------------------------------------------------
Cambridge Bank Ltd. Sonar Equip. Brazil/Peru 96-017 5/28/96 5 years V. Riehl
- --------------------------------------------------------------------------------------------------------------
Celsius Tech Sys. Mine Counter Measurers 94-021 8/19/94 3 years L. Daniels
- --------------------------------------------------------------------------------------------------------------
Celsius Tech Sys. Proprietary Info. 11/14/97 5 years J.Devine
- --------------------------------------------------------------------------------------------------------------
Chesapeake Sciences TARS 95-018 8/28/95 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------------------
Chesapeake Sciences TB16/BQ 10/18/94 4 years R.Tomlinson
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Chevron Petroleum Bore Hole Seismic Multi Level 94-037 3/3/94 3 years A.J. Garber
Receiver
- --------------------------------------------------------------------------------------------------------------------
Computing Devices Maritime Helicopter 95-014 7/14/95 3 years J. Anderson
- --------------------------------------------------------------------------------------------------------------------
C-Tech Y52000 96-029 10/2/96 2 years J. Roscigno
- --------------------------------------------------------------------------------------------------------------------
DAF Special Products NH-90 96-006 2/15/96 3 years D. Webb
- --------------------------------------------------------------------------------------------------------------------
DRA Hunt Class Mid Life 11/22/96 1 year A.J. Garber
- --------------------------------------------------------------------------------------------------------------------
Defense Evaluation Research Agency Defense Hunt Class Mid Life 11/27/96 1 year A.J. Garber
- --------------------------------------------------------------------------------------------------------------------
Devonport Management Ltd. Sonar 2087/Type 23 Frigates 96-007 2/13/96 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------------------------
Durodyne, Inc. Epichlorohydrin rubber compound 88-014/DA 5/1/88 10 years I. Andersen
- --------------------------------------------------------------------------------------------------------------------
Dynacon, Inc. LFATS Handling System 94-023 6/2/94 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------------------------
E-Systems Montek Siesmic Receiving 95-012 6/28/95 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------------------------
Electramotive TB16 Towed Array 11/12/93 3 years J. Proko
- --------------------------------------------------------------------------------------------------------------------
FIAR NH-90 96-005 1/18/96 3 years D. Webb
- --------------------------------------------------------------------------------------------------------------------
Fokker Aviation EMD 97-008 2/4/97 1 year S. McDonald
- --------------------------------------------------------------------------------------------------------------------
Greenblatt MCDV 95-004 3/27/95 3 years L. Daniels
- --------------------------------------------------------------------------------------------------------------------
Goldstar ATE 11/24/82 5 years B. Polaski
- --------------------------------------------------------------------------------------------------------------------
Geo Test Inc. AQS-18 Test Equipm 95-032 12/14/95 3 years L. Daniels
- --------------------------------------------------------------------------------------------------------------------
Hughes Naval Marine Airborne Sonar Sys. 96-026/1 5/13/97 2 years R. Husar
- --------------------------------------------------------------------------------------------------------------------
Hughes Naval Marine Surface Ship Programs 96-026 8/9/96 2 years R. Husar
- --------------------------------------------------------------------------------------------------------------------
Hewlett Packard Weapons Replaceable Assy. Test Set 96-002 1/8/96 3 years L. Daniels
- --------------------------------------------------------------------------------------------------------------------
Hollandse Signaalapparten Alkmaar class mine counter 97-007 1/23/97 2 years S. McDonald
- --------------------------------------------------------------------------------------------------------------------
Kaman Aerospace AQS-18 Dipping Sonar SH-2G 94-019 7/19/95 5 years L. Daniels
- --------------------------------------------------------------------------------------------------------------------
Loral Canada Maritime Helicopter Program 7/29/95 10 years I. McDermott
- --------------------------------------------------------------------------------------------------------------------
Lockheed Martin Canadian Remote Minehunting Sonar 95-024 12/19/95 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------------------------
Loral ASIC B2TC 5/28/95 10 years A.J. Garber
- --------------------------------------------------------------------------------------------------------------------
Litton Sys. Acoustic Sensor Array Systems 5/24/96 5 years L. DiRienzo
- --------------------------------------------------------------------------------------------------------------------
Northop Grumman Hybrids 95-020 9/15/95 3 years J.P. Andersen
- --------------------------------------------------------------------------------------------------------------------
NUWC Wide-Band Omni Telemetry Sys. 10/31/96 A.J. Garber
- --------------------------------------------------------------------------------------------------------------------
Optiphase Fiber Optic Technologies 96-003 1/10/96 3 years A. 3. Garber
- --------------------------------------------------------------------------------------------------------------------
Paulsson Geo Svc. Inc. Boreholde Seismic Systems 11/22/96 1 year
- --------------------------------------------------------------------------------------------------------------------
Penn State LELFAS 96-034 12/17/96 3 years V. Riehl
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Raytheon Electronics LFATS/Taiwan/Australian/Spanish 10/25/96 2 years V. Riehl
- --------------------------------------------------------------------------------------------------------
Raytheon Electronics YS2000/Italian Navy ASW Frig 7/2/96 5 years
- --------------------------------------------------------------------------------------------------------
STN Atlas Undersea Warfare Business 95-006 4/25/95 3 years K. Adams
- --------------------------------------------------------------------------------------------------------
STN Atlas Australia ASSTASS LFAPS 2/11/97 1 year D. MacCulloch
- --------------------------------------------------------------------------------------------------------
Signal Processing Sys. Norwegian Towed Array 97-014 5/23/97 3 years W. Tally
- --------------------------------------------------------------------------------------------------------
Sikorsky Aircraft Job Shoppers 11/22/96 7 years D. Bennett
- --------------------------------------------------------------------------------------------------------
Transfield Defense Sys. SEA 1000 Australian Surface Ship 8/6/96 10 years J. Winters
Towed
- --------------------------------------------------------------------------------------------------------
3M Specialty Optical Fibers Fiber Optic Technologies 95-029 11/30/95 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------------
Taiwan Int Standard S-70C Offset 96-010 5/11/96 5 years J. Corso/
Electronics Ltd. J. Winter
- --------------------------------------------------------------------------------------------------------
Witten Technologies Mine Warfare 94-030 7/11/94 3 years A.J. Garber
- --------------------------------------------------------------------------------------------------------
Whitehead Alenia Sistemi Undersea Warfare Business 95-003 4/27/95 3 years S. Schorer
Subacquei
- --------------------------------------------------------------------------------------------------------
</TABLE>
Confidentiality Agreements - ELAC
---------------------------------
95-01-01 Marimatek
95-01-02 SeaBeam
95-01-03 Qubit
95-01-04
95-01-05 Ultra Electronics
95-01-06 BASYS Marine Ltd.
95-01-07 BAeSEMA
95-01-08 Westinghouse
96-01-01 Evia
96-01-02 Mjellum & Carlson
96-01-03 Reson
96-01-04 Raytheon Anschfltz
96-01-05 HDW
96-01-06 Elektro-Optik GmbH
97-01-01 SEPA
97-01-02
97-01-06 Sonatech
97-01-07 Nautronix
97-01-08 EdgeTech
97-01-09 Kongsberg
97-01-10 Camber Corp.
<PAGE>
Schedule 4.7 - Contracts
See also Schedule 4.12.
Ocean Systems - Open Contracts over $75,000
Contract Contract Value Country Status
- -------- -------------- ------- ------
N00019-90-G-0200YC94 471117.95 USA OP
N00019-90-G-0200YC95 1645386.00 USA OP
N00019-93-G-0131UU2K 245635.00 USA OP
N00019-97-G-00080001 8299107.00 USA OP
N00019-97-G-0008UU0l 348023.00 USA OP
N00024-89-C-6066 20440163.00 USA OP
N00024-91-C-6501 11539100.00 USA OP
N00024-92-C-6225 5963263.00 USA OP
N00024-92-C-6502 83243508.87 USA OP
N00024-92-C-6503 27614976.00 USA OP
N00024-94-C-6152 9464260.00 USA OP
N00024-96-C-6214 34217858.00 USA OP
N00024-97-C-6375 149911.00 USA OP
N00104-96-P-G022 81408.00 USA OP
N00140-95-D-N083 208958.00 USA OP
N00140--97-D-E156 131418.00 USA OP
N00383-88-G-K3010108 820326.88 USA OP
N00383-88-G-K3010131 9460000.10 USA OP
N00383-94-G-700N0020 307778.00 USA OP
N00383-94-G-700N0030 2742742.00 USA OP
N00383-94-G-700N5045 3218001.12 USA OP
N00383-94-G-700N5209 266598.00 USA OP
N00383-94-G-700N5212 448500.00 USA OP
N00383-94-G-700N5213 77000.00 USA OP
N00383-95-G-209N0002 157836.00 USA OP
N00383-95-G-2O9NUUIR 79367.00 USA OP
N00383-95-G-2O9NUUIT 75108.00 USA OP
N00383-95-G-209NUU51 117108.00 USA OP
N00383-95-G-209NUU55 165960.00 USA OP
N00383-95-G-209NUU57 100500.00 USA OP
N00383-95-G-209NUU65 178536.00 USA OP
N00383-95-G-209NUU66 153500.00 USA OP
N00383-95-G-209NUU68 83060.00 USA OP
N00383-95-G-209NUU69 87888.00 USA OP
N00383-95-G-209NUU76 170072.00 USA OP
N00383-95-G-209NUU77 164572.00 USA OP
N00383-95-G-209NUU91 100500.00 USA OP
<PAGE>
N00383-95-G-209NUU92 100500.00 USA OP
N00383-95-G-209NUU93 134000.00 USA OP
N5588983 149111.99 USA OP
N66001-96-C-6008 819118.00 USA OP
N66604-92-C-1078 288121.00 USA OP
N66604-93-C-0788 148716.00 USA OP
N66604-97-M-5934 100814.00 USA OP
N68335-94-G-000IUU08 153189.00 USA OP
N68335-96-G-0047UU02 152100.00 USA OP
P015101 106873.00 USA OP
P7805158 4862872.00 USA OP
P7822564 154500.00 USA OP
R9525401 357259.00 USA OP
SP0960-97-M-0936 95880.00 USA OP
A1EO2546 - Aero International 4697043.00 VAR- Non US OP
W8472-5-BGV1 3309635.27 CAN OP
P7900173 25843178.00 CHN OP
0774888 20566000.00 EGY OP
GWG864609 378168.00 GBR OP
SSDW1/434 429712.00 GBR OP
7/1994 5017476.00 GRC OP
P7870275 3879870.00 GRC OP
1248USA 25818944.00 ITA OP
31-1/96 237671.00 ITA OP
L40870 1649997.00 ITA OP
1E295 86880.00 JPN OP
1E312 963086.00 JPN OP
1F449 425999.00 JPN OP
1F450 1295177.00 JPN OP
1F458 103293.00 JPN OP
1F480 334691.00 JPN OP
1F481 979628.00 JPN OP
1F483 257503.00 JPN OP
1F485 127123.00 JPN OP
1F496 76584.00 JPN OP
1F509 691160.00 JPN OP
1F511 129420.00 JPN OP
1F514 95524.00 JPN OP
56S265 75754.00 JPN OP
5S0226 1680670.00 JPN OP
5S0227 919541.00 JPN OP
5S250 1751240.00 JPN OP
5S251 3502480.00 JPN OP
5S252 3502480.00 JPN OP
5S253 1751240.00 JPN OP
5S257 75921.00 JPN OP
<PAGE>
5S258 252534.00 JPN OP
5S259 398143.00 JPN OP
5S260 163056.00 YPN OP
5S262 919541.00 JPN OP
5S265 75754.00 JPN OP
5S266 619421.00 JPN OP
5S267 78446.00 JPN OP
5S268 158862.00 JPN OP
5S270 86446.00 JPN OP
5S271 92524.00 JPN OP
5S276 99749.00 JPN OP
5S277 267555.00 JPN OP
960050 389850.00 KOR OP
970050 224977.00 KOR OP
KFX-DPA-72DA57025 29700000.00 KOR OP
MGP-DGMIDAR-95-074 122720.00 PER OP
DNOl/96 151793.00 PRT OP
TURKEY 1 15548572.00 TUR OP
PA2314-C059 272645.00 TWN OP
PB4961-C067-POO 281000.00 TWN OP
ROCN 25843178.00 TWN OP
N00019-90-G-0200YCIF 83400.00 USA OP
N00019-90-G-0200YC93 715362.76 USA OP
Ocean Systems - Open POs Over $75,000
- -------------------------------------
<TABLE>
<CAPTION>
PO No. PO Value Status Open Amt Pd Amt Vendor ID Vendor Name
- ------ -------- ------ -------- ------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
A00458 $ 81,547 Open $ 63,245 $ 18,302 80863 SPECTRUM ENGINEERING CORP.
A00493 $1,059,969 Open $ 345,849 $714,120 70212 PRECISION INTERCONNECT
A00499 $ 731,090 Open $ 255,965 $475,125 00169 AT&T
A00573 $ 115,000 Open $ 65,000 $ 50,000 65109 OCEAN PROJECTS ASSOCIATES
A01277 $ 185,600 Open $ 185,600 29152 DYNACON, INC.
A01597 $ 115,961 Open $ 106,734 $ 9,227 65109 OCEAN PROJECTS ASSOCIATES
A46821 $ 178,423 Open $ 1 $178,423 81041 SPIRATEX COMPANY
A48903 $5,000,000 Open $5,000,000 16113 CDI CORPORATION WEST
A48904 $ 500,000 Open $ 500,000 81750 STANDARD REGISTER
B00541 $ 375,000 Open $ 375,000 72749 RAM TEK BUSINESS CO
B01149 $ 333,750 Open $ 333,750 47287 INTERTEK TECHN. SERVICES
B01263 $ 200,000 Open $ 200,000 29744 EGGHEAD SOFTWARE
B01742 $ 106,000 Open $ 100,800 $ 5,200 63168 NAVAL UNDERWATER SYSTEMS
B03266 $ 155,760 Open $ 155,760 04216 ALLIEDSIGNAL AEROSPACE CO.
B04402 $ 436,000 Open $ 436,000 56881 FORSYTHE MCARTHUR
B04984 $ 136,751 Open $ -- $136,751 64014 NORMALAIR GARRETT LIMITED
B05158 $ 111,000 Open $ 111,000 52284 LAIDLAW ENVIRONMENTAL
B05579 $ 152,500 Open $ 152,500 72935 RAWLINGS MECHANICAL CORP.
B05829 $ 150,000 Open $ 150,000 27698 DIGITAL SYSTEM RESOURCES
B05859 $ 160,000 Open $ 160,000 22781 COMPUDRAFT
B06572 $ 98,950 Open $ 98,950 18762 CARRIER BUILDING SERVICES
B07260 $ 152,770 Open $ 139,735 $ 13,035 41300 HAMILTONIAYNET ELECTRONIC
B07471 $ 240,750 Open $ 35,310 $205,440 72805 RANTEC COMPANY
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
B07815 $ 432,000 Open $ 432,000 89966 VP AND ASSOCIATES
B07816 $ 140,000 Open $ 140,000 83135 STREAMLINE SYSTEM INTEGRA
B07875 $ 123,410 Open $ 81,866 $ 41,544 42916 HERMETIC SEAL CORP.
C00l14 $ 145,000 Open $ 145,000 32469 ENTEX INFORMATION SERVICES
C00954 $ 112,975 Open $ 5,575 $107,400 65109 OCEAN PROJECTS ASSOCIATES
C01624 $ 139,600 Open $ 139,600 75689 ROMIC ENVIRONMENTAL TECH.
C02490 $ 200,000 Open $ 200,000 47873 JAMAR PACKAGING CO., INC.
C03546 $ 98,000 Open $ 98,000 19035 CAPTAIN C.J. CAUGHEY RN (RET)
C03692 $ 153,400 Open $ 153,400 92011 WACKENHUT CORP.
C03842 $ 547,580 Open $ 80,135 $467,447 69973 POWERTECH INC.
C04282 $ 160,000 Open $ 160,000 72935 RAWLINGS MECHANICAL CORP.
C06070 $ 231,951 Open $ 231,951 52935 R E LEE DESIGN
C06215 $ 75,270 Open $ 73,101 $ 2,169 62372 NATEL ENGINEERING CO., IN
D00281 $ 200,000 Open $ 200,000 27310 JOHN DEVINE
D00401 $ 96,900 Open $ 96,900 19010 CATALINA COMPUTER SOLUTIONS
D00522 $ 85,000 Open $ 85,000 89966 VP AND ASSOCIATES
D00528 $ 84,450 Open $ 84,450 26748 DELTA CONSULTING SERVICES
D00553 $ 85,000 Open $ 85,000 32469 ENTEX INFORMATION SERVICES
D00768 $ 77,175 Open $ 77,175 03086 AIRFLYTE ELECTRONICS CO.
D00815 $ 190,400 Open $ 27,200 $163,200 23230 CONSOLIDATED PRODUCTS CORP.
D00821 $ 99,900 Open $ 99,900 26382 DIS RESEARCH
D01326 $ 189,909 Open $ 20,000 $169,909 72935 RAWLINGS MECHANICAL CORP.
D01546 $ 78,000 Open $ 78,000 03955 ALL PHASE ELECTRIC SUPPLY
D01619 $ 100,000 Open $ 100,000 28352 DOUBLE "3" PACKAGING CO., INC.
D01646 $ 227,916 Open $ 227,916 52935 R E LEE DESIGN
D01714 $ 480,585 Open $ 325,962 $154,623 76365 SMTEK, INC.
D02115 $ 75,226 Open $ 51,718 $ 23,508 20582 CICON ENGINEERING, INC.
D03621 $ 120,000 Open $ 120,000 72935 RAWLINGS MECHANICAL CORP.
D04093 $ 96,600 Open $ 96,600 23230 CONSOLIDATED PRODUCTS CORP.
D04316 $ 151,265 Open $ 151,265 70212 PRECISION INTERCONNECT
D04599 $ 79,468 Open $ 79,468 62372 NATEL ENGINEERING CO., INC.
Y23066 $ 143,500 Open $ 143,500 12628 BIG 3 INDUSTRIES, INC.
Y27874 $ 422,114 Open $ 81,122 $340,992 56881 FORSYTHE MCARTHUR
738189 $ 110,000 Open $ 110,000 25171 DVR ENTERPRISE
740850 $ 250,000 Open $ 250,000 29742 EGGHEAD DISCOUNT SOFTWARE
Z40937 $1,012,000 Open $1,012,000 92011 WACKENHUT
740952 $ 647,220 Open $ 634,685 $ 12,535 56881 FORSYTHE MCARTHUR
</TABLE>
Ocean Systems - Marketing Consulting Agreements*
Sigma International, dated June 1, 1995 Guy Reynolds
Reynolds Beckwith Kerry Stephen
LeeCor, Inc. (Ronald Beckwith) Omicron Corp.
John Caughy SMAT, Est.
John Devine Kuo-Chun, Henry Feng
John McDermott
Ocean Systems - International Service Representative Agreements*
C.I.E.R., dated June 30, 1996
Sigma International, dated June 1, 1995
Atkem, A.S., dated July 7, 1997
<PAGE>
Ocean Systems - Sales Representative Agreements*
Taewoos LLC, dated January 7, 1995
Hollinda N.V., dated August 1, 1995
Itochu Aviation, Inc., dated October 1, 1994
Siam Aviation Company, Ltd., dated November 1, 1995
Benavia AB, dated October 1, 1995
Panamerica Organization Properties, Inc., dated November 1, 1995
Hovet & Co., dated October 1, 1995
Compania Aeronautica Espanola, S.A, dated October 1, 1995
Aktem A.S., dated March 1, 1997
Top Entity, dated January 1, 1997
Sistemas Electronicos S.A., dated June 1, 1997
J.C. Rangel, Representacoes Ltd., dated June 1, 1997
Alberto Maria Bravo & Filhos, dated July 1, 1997
Southwest Trading Company, dated April 1, 1997
Technica De Electronica Y Metalurgia (TADEM), dated July 1, 1997
Aero Precision Industries, Inc., dated June 1, 1997
BD Miltech Ltd., July 1, 1997
Mereit Lab Corporation, dated August 1, 1997
Ocean Systems - Computer Equipment Leases*
Vendor Name Expires Equipment Description
- ----------- ------- ---------------------
Forsythe McArthur Assoc. August 7, 1998 VAX7620
VAX4100
MTI CIQBU adaptor
high capacity tape drive
Forsythe McArthur Assoc. August 31, 1998 VAX6610
Forsythe McArthur Assoc. August 31, 1998 MicroTechnology Raid Disk Farm
and associated devices
Forsythe McArthur Assoc. January 14, 1999 SUN Spark 20
Ocean Systems - Information Technology Service Agreements*
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Type of
Vendor Name Service Agreement Description Coverage Expires
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Xerox Corporation HW maintenance (208017080 printers) Maintenance 9/26/97
- ------------------------------------------------------------------------------------------------------------------------------------
Hewlett - Packard Workstation Operating System Maintenance Maintenance 9/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
Cabletron Systems Inc. Network Infrastructure maint (software) Maintenance 9/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
Omega Logistics Int Logistics software (DILSA) Maintenance 10/15/97
- ------------------------------------------------------------------------------------------------------------------------------------
Sterling Design Engineering Systems Vmetric - EDCAS - System Design Utility Maintenance 10/15/97
- ------------------------------------------------------------------------------------------------------------------------------------
Tornado Software Development toolkit Maintenance 10/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Parametric Technology Corp. Designer software (Pro-E) Maintenance 11/11/97
- ------------------------------------------------------------------------------------------------------------------------------------
Cincom MRP utilities USER FEE (QRW) Maintenance 11/20/97
- ------------------------------------------------------------------------------------------------------------------------------------
Micro-Frame Technologies PC based estimating (Microframe) Maintenance 12/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Executive Software Disk de-fragmentation (Diskeeper) Maintenance 12/14/97
- ------------------------------------------------------------------------------------------------------------------------------------
Intersolv Inc Software config mgmt (PVCS) Maintenance 12/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
Struct. Dyn. Res. Corp. CAD (IDeas) Maintenance 12/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
Digital Equipment Corp. HW & SW maintenance (VAXcluster) Maintenance 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
Silverado Software & Consultants Analysis SW maintenance (ANSYS) Maintenance 1/2/98
- ------------------------------------------------------------------------------------------------------------------------------------
Intercap Graphics System Technical Illustration (Intercap) Maintenance 1/8/98
- ------------------------------------------------------------------------------------------------------------------------------------
Barr Systems Remote Printer (XEROX) RJE-RS232 Maintenance 1/9/98
- ------------------------------------------------------------------------------------------------------------------------------------
West Coast Terminals, Inc. Xerox FAX machine maintenance Maintenance 1/23/98
- ------------------------------------------------------------------------------------------------------------------------------------
Talaris Systems INC. Printer HW maintenance (3290s) Maintenance 1/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
Zuken-Redac CAD (CADstar) Maintenance 2/20/98
- ------------------------------------------------------------------------------------------------------------------------------------
Datalok Off-site tape storage Maintenance 2/27/98
- ------------------------------------------------------------------------------------------------------------------------------------
Select Sfotware Tools, Inc. Select Yordon - FOR SSTO Maintenance 4/15/98
- ------------------------------------------------------------------------------------------------------------------------------------
Amtek HW maintenance (HP 9000) Maintenance 4/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
Lasersource/DCI HW maintenance (Talaris 1590s) Maintenance 4/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
QMS HW maintenance (QM5860 laser printer) Maintenance 4/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
Computer Upgrade Corporation AMASS SW maintenance Maintenance 4/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
Mathworks SW maintenance (MATLAB, float license) Maintenance 5/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
Cincom MRP software USER FEE (Control) Maintenance 6/24/98
- ------------------------------------------------------------------------------------------------------------------------------------
Cabletron Systems Inc. Network Infrastructure maint (hardware) Maintenance 6/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
Muzak Music on Hold Maintenance 6/30/98
- ------------------------------------------------------------------------------------------------------------------------------------
Interleaf Desktop publishing (Interleaf) Maintenance 8/28/98
- ------------------------------------------------------------------------------------------------------------------------------------
Micro-Technologies (SI) HW maintenance (CIQBA Controler) Maintenance 8/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
Exide HW maintenance on UPS system Maintenance 9/25/98
- ------------------------------------------------------------------------------------------------------------------------------------
Oracle Database software (Oracle) Corporate/ 2Q/each
Maintenance year
- ------------------------------------------------------------------------------------------------------------------------------------
Lasersource/DCI Blanket maintenance for HP printers Blanket 12/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
Software Spectrum Supplies (software blanket) Blanket 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
DIS Research Capital/Supplies (blanket) - replace HW Blanket 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
Graymar Business Systems Supplies (toner) Blanket 3/2/98
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
AP Labs Signal processing software (SUNs) Blanket 3/6/98
- ------------------------------------------------------------------------------------------------------------------------------------
Walker Richer and Quinn Reflection Blanket 3/10/98
- ------------------------------------------------------------------------------------------------------------------------------------
Xerox Corporation HW maintenance (4050,4075,3700) Blanket 3/31/98
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Ocean Systems - Confidentiality Agreements*
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Agreement Effective Term/ OS
Company Subject Number Date Expiry Contact
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADI Limited RAN ASSTASS SEA 11000 96-033 11/6/96 10 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
ADI Limited Underwater Warfare Business 95-007 4/10/95 3
- ------------------------------------------------------------------------------------------------------------------------------------
Aero International International Spares 95-010 3 years P.A. Boskovich
- ------------------------------------------------------------------------------------------------------------------------------------
Agusta/Italy Quality Assurance Survey 4/28/97 1 year L. Daniels
- ------------------------------------------------------------------------------------------------------------------------------------
Albion Group Intl. Inc. Hellenic Navy Offset 95-013 7/12/95 3 years J. Hall/
L. Daniels
- ------------------------------------------------------------------------------------------------------------------------------------
Alliant Techsys. Seismic data 96-027 10/16/97 3 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Atlantic Aero Elect Various 95-001 1/17/95 3 years A.J. Garber
Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
Australian Defense Undersea Warfare Business 95-007 5/10/95 3 years K.D. Adams
Industries
- ------------------------------------------------------------------------------------------------------------------------------------
Atlantic Aero Elect. Foreign Integrated Sonar Suites 95-017 8/21/95 3 years A.J. Garber
Corp.
- ------------------------------------------------------------------------------------------------------------------------------------
AT&T Various Information 8/7/95 2 years D. Samsury
- ------------------------------------------------------------------------------------------------------------------------------------
Babcock Intl. Sonar 2087 Feasibility Study 3/7/95 5 years J. Caughey
- ------------------------------------------------------------------------------------------------------------------------------------
BBN US Navy 6152 97-015 5/30/97 1 year A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Cambridge Bank Ltd. Sonar Equip. Brazil/Peru 96-017 5/28/96 5 years V. Riehl
- ------------------------------------------------------------------------------------------------------------------------------------
Celsius Tech Sys. Mine Counter Measurers 94-021 8/19/94 3 years L. Daniels
- ------------------------------------------------------------------------------------------------------------------------------------
Celsius Tech Sys. Proprietary Info. 11/14/97 5 years J. Devine
- ------------------------------------------------------------------------------------------------------------------------------------
Chesapeake Sciences TARS 95-018 8/28/95 3 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Chesapeake Sciences TB16/BQ 10/18/94 4 years R. Tomlinson
- ------------------------------------------------------------------------------------------------------------------------------------
Chevron Petroleum Bore Hole Seismic Multi Level Receiver 94-037 3/3/94 3 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Computing Devices Maritime Helicopter 95-014 7/14/95 3 years J. Anderson
- ------------------------------------------------------------------------------------------------------------------------------------
C-Tech YS2000 96-029 10/2/96 2 years J. Roscigno
- ------------------------------------------------------------------------------------------------------------------------------------
DAF Special Products NH-90 96-006 2/15/96 3 years D. Webb
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
DRA Hunt Class Mid Life 11/22/96 1 year A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Defense Evaluation Defense Hunt Class Mid Life 11/27/96 1 year A.J. Garber
Research Agency
- ------------------------------------------------------------------------------------------------------------------------------------
Devonport Management Ltd. Sonar 2087/Type 23 Frigates 96-007 2/13/96 3 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Durodyne, Inc. Epichlorohydrin rubber compound 88-014/DA 5/1/88 10 years J. Andersen
- ------------------------------------------------------------------------------------------------------------------------------------
Dynacon, Inc. LFATS Handling System 94-023 6/2/94 3 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
E-Systems Montek Siesmic Receiving 95-012 6/28/95 3 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Electramotive TB16 Towed Array 11/12/93 3 years J. Proko
- ------------------------------------------------------------------------------------------------------------------------------------
FIAR NH-90 96-005 1/18/96 3 years D. Webb
- ------------------------------------------------------------------------------------------------------------------------------------
Fokker Aviation EMD 97-008 2/4/97 1 year S. McDonald
- ------------------------------------------------------------------------------------------------------------------------------------
Greenblatt MCDV 95-004 3/27/95 3 years L. Daniels
- ------------------------------------------------------------------------------------------------------------------------------------
Goldstar ATE 11/24/82 5 years B. Polaski
- ------------------------------------------------------------------------------------------------------------------------------------
Geo Test Inc. AQS-18 Test Equipm 95-032 12/14/95 3 years L. Daniels
- ------------------------------------------------------------------------------------------------------------------------------------
Hughes Naval Marine Airborne Sonar Sys. 96-026/1 5/13/97 2 years R. Husar
- ------------------------------------------------------------------------------------------------------------------------------------
Hughes Naval Marine Surface Ship Programs 96-026 8/9/96 2 years R. Husar
- ------------------------------------------------------------------------------------------------------------------------------------
Hewlett Packard Weapons Replaceable Assy. Test Set 96-002 1/8/96 3 years L. Daniels
- ------------------------------------------------------------------------------------------------------------------------------------
Hollandse Signaalapparten Alkmaar class mine counter 97-007 1/23/97 2 years S. McDonald
- ------------------------------------------------------------------------------------------------------------------------------------
Kaman Aerospace AQS-18 Dipping Sonar SH-2G 94-019 7/19/95 5 years L. Daniels
- ------------------------------------------------------------------------------------------------------------------------------------
Loral Canada Maritime Helicopter Program 7/29/95 10 years J. McDermott
- ------------------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Canadian Remote Minehunting Sonar 95-024 12/19/95 3 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Loral ASIC B2TC 5/28/95 10 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Litton Sys. Acoustic Sensor Array Systems 5/24/96 5 years L. DiRienzo
- ------------------------------------------------------------------------------------------------------------------------------------
Northop Grumman Hybrids 95-020 9/15/95 3 years J.P. Andersen
- ------------------------------------------------------------------------------------------------------------------------------------
NUWC Wide-Band Omni Telemetry Sys. 10/31/96 A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Optiphase Fiber Optic Technologies 96-003 1/10/96 3 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Paulsson Geo Svc. Inc. Boreholde Seismic Systems 11/22/96 1 year
- ------------------------------------------------------------------------------------------------------------------------------------
Penn State LELFAS 96-034 12/17/96 3 years V. Riehl
- ------------------------------------------------------------------------------------------------------------------------------------
Raytheon Electronics LFATS/Taiwan/Australian/Spanish 10/25/96 2 years V. Riehl
- ------------------------------------------------------------------------------------------------------------------------------------
Raytheon Electronics Y52000/Italian Navy ASW Frig 7/2/96 5 years
- ------------------------------------------------------------------------------------------------------------------------------------
STN Atlas Undersea Warfare Business 95-006 4/25/95 3 years K. Adams
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
STN Atlas Australia ASSTASS LFAPS 2/11/97 1 year D. MacCulloch
- ------------------------------------------------------------------------------------------------------------------------------------
Signal Processing Sys. Norwegian Towed Array 97-014 5/23/97 3 years W. Tally
- ------------------------------------------------------------------------------------------------------------------------------------
Sikorsky Aircraft Job Shoppers 11/22/96 7 years D. Bennett
- ------------------------------------------------------------------------------------------------------------------------------------
Transfield Defense Sys. SEA 1000 Australian Surface Ship Towed 8/6/96 10 years J. Winters
- ------------------------------------------------------------------------------------------------------------------------------------
3M Specialty Optical Fiber Optic Technologies 95-029 11/30/95 3 years A.J. Garber
Fibers
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Int Standard S-70C Offset 96-010 5/11/96 5 years J. Corso/
Electronics Ltd. J. Winter
- ------------------------------------------------------------------------------------------------------------------------------------
Witten Technologies Mine Warfare 94-030 7/11/94 3 years A.J. Garber
- ------------------------------------------------------------------------------------------------------------------------------------
Whitehead Alenia Undersea Warfare Business 95-003 4/27/95 3 years S. Schorer
Sistemi Subacquei
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Ocean Systems - Retention Agreements*
o Retention Agreements with key management (V. Davisson, V. Riehl, A.
Logan, D. Dunlop, J. Roscigno, L. DiRienzo, M. Charley, B. Smith, S.
Erdman), aggregate contingent payment of $199,400 for all eight managers
(Purchaser responsibility).
o Retention Agreement with Steve Schorer (AlliedSignal responsibility).
ELAC - Retention Agreements*
o Retention Agreements with key management (L. Hogrefe, W. Tietz, G.
Jordt), aggregate contingent payment of $108,200 for all three managers
(Purchaser responsibility).
ELAC - Contracts Greater Than TDM 100.00
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
3.2 Contracts, Value > TDM 100.0 Status: Cut-off 09/97
- ------------------------------------------------------------------------------------------------------------------------------------
Customer Enduser Contents Date of Value of Remaining Last
Contract Contract Backlog Shipment/Service
TDM TDM
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BAZAN, Spain Spanish Navy 4 Echosounders for 9/4/95 442.0 331.5 August 1999
Minehunter
- ------------------------------------------------------------------------------------------------------------------------------------
Blohm und Voss, Turkish Navy 2 Echosounders for 8/15/96 251.0 131.1 May 1998
Germany MEKO
- ------------------------------------------------------------------------------------------------------------------------------------
Blohm und Voss, German Navy 1 Echosounder and UT 7/14/97 281.1 281.1 October 2005
Germany Equipment for F124
- ------------------------------------------------------------------------------------------------------------------------------------
BWB Koblenz, German Navy Target Simulator 2/29/96 11,217.4 4,581.8 December 2005
Germany (SUBTAS)
- ------------------------------------------------------------------------------------------------------------------------------------
BWB Koblenz, German Navy Advanced Data 9/23/97 398.5 398.5 December 1997
Germany Evaluation
System (SUBTAS)
- ------------------------------------------------------------------------------------------------------------------------------------
BWB Koblenz, German Navy Spares (Transducer) 8/20/97 340.6 340.6 December 1997
Germany
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
3.2 Contracts, Value > TDM 100.0 Status: Cut-off 09/97
- ------------------------------------------------------------------------------------------------------------------------------------
Customer Enduser Contents Date of Value of Remaining Last
Contract Contract Backlog Shipment/Service
TDM TDM
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BWB Koblenz, German Navy 1000 Transducers 8/28/97 2,047.0 1,647.8 December 1997
Germany LSE 800
- ------------------------------------------------------------------------------------------------------------------------------------
BWB Koblenz, German Navy LFTASS Development 8/7/95 712.5 0.0 December 1998
Germany and Delivery of 4 ea.
Reflexducerelements
- ------------------------------------------------------------------------------------------------------------------------------------
DLA, Korean Navy 2 UT Equipments 12/5/96 404.4 404.4 December 1997
Korea (Training)
- ------------------------------------------------------------------------------------------------------------------------------------
DLA, Korean Navy 2 Echosounders for 2/26/97 329.1 202.4 December 1998
Korea KDX Destroyers
- ------------------------------------------------------------------------------------------------------------------------------------
HDW, Korean Navy 3 Echosounders, 3/1/95 2,541.8 1,673.3 December 1998
Germany UT Equipments, Sonar
Beacon, Tape Recorder
for Subs U209
- ------------------------------------------------------------------------------------------------------------------------------------
HDW, Brazilian Navy Echosounder, UT's, 1/12/96 791.2 791.2 March 1999
Germany Sonar Beacon for Sub
Tupi mod
- ------------------------------------------------------------------------------------------------------------------------------------
HDW, German Navy 2 Echosounders and UT 8/14/97 1,757.5 1,757.5 December 2005
Germany Equipments incl. ILS
for Subs U212
- ------------------------------------------------------------------------------------------------------------------------------------
HDW, German Navy 1 Echosounder and UT 8/14/97 281.1 281.1 October 2002
Germany Equipment for F124
- ------------------------------------------------------------------------------------------------------------------------------------
HDW, Turkish Navy 2 Echosounders 7/1/95 861.9 14.4 February 1998
Germany 2 Sonar Beacons for
Submaries
- ------------------------------------------------------------------------------------------------------------------------------------
HDW/TNSW, Israel Navy 3 Sonar Beacons 12/17/93 842.0 20.5 June 1999
Germany for Submarine
"Dolphin-Class"
- ------------------------------------------------------------------------------------------------------------------------------------
HSA, Taiwan Navy Sonar Spares 4/1/97 111.9 111.9 November 1997
Netherlands
- ------------------------------------------------------------------------------------------------------------------------------------
Intermarine, Thai Navy 21 Echosounders for 6/17/97 225.0 225.0 July 1998
Italy Minehunter
- ------------------------------------------------------------------------------------------------------------------------------------
Lurssen, Turkish Navy 3 Sonar Beacons 10/10/95 321.8 9.3 October 1997
Germany for Patrolers
"Dogan-Class"
- ------------------------------------------------------------------------------------------------------------------------------------
NAMRIA, NAMRIA, BCC-SW MK II 8/14/97 791.0 791.0 November 1997
Phillipines Phillippines
- ------------------------------------------------------------------------------------------------------------------------------------
Naval Indian Navy Test Equipment 7/23/97 193.1 193.1 December 1997
Headquarters,
India
- ------------------------------------------------------------------------------------------------------------------------------------
ORCA, France French Navy 7 Diver Sonars 6/18/97 966.8 41.5 December 1997
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
3.2 Contracts, Value > TDM 100.0 Status: Cut-off 09/97
- ------------------------------------------------------------------------------------------------------------------------------------
Customer Enduser Contents Date of Value of Remaining Last
Contract Contract Backlog Shipment/Service
TDM TDM
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Racal Survey, Racal Survey, UK BCC-MW 3/6/97 693.1 90.0 December 1997
UK 3 Upgrades MK I - M II
- ------------------------------------------------------------------------------------------------------------------------------------
SeaBeam, INHO, India 4 SeaBeam 1180 4/17/97 1,784.9 888.7 April 1998
USA ($1=1,75DM)
- ------------------------------------------------------------------------------------------------------------------------------------
SeaBeam, NAMRIA, 2 SeaBeam 1180 MK II 7/31/97 792.2 792.2 November 1997
USA Phillippines
- ------------------------------------------------------------------------------------------------------------------------------------
STN ATLAS, German Navy 2 Echosounders 10/16/95 642.0 46.1 July 1998
Germany 2 UT Equipment for
Minehunter MJ332
- ------------------------------------------------------------------------------------------------------------------------------------
STN ATLAS, Israel Navy 4 UT Equipments for 11/24/93 1,070.3 10.2 June 1999
Germany Submarines
"Dolphin-Class"
- ------------------------------------------------------------------------------------------------------------------------------------
STN ATLAS, various 30 Echosounders 9/19/97 139.5 139.5 November 1997
Germany LAZ 5000
- ------------------------------------------------------------------------------------------------------------------------------------
STN ATLAS, various 30 Echosounders 9/24/97 139.5 139.5 February 1998
Germany LAZ 5000
- ------------------------------------------------------------------------------------------------------------------------------------
STN ATLAS, German Navy MTW - Mini Torpedo 12/6/95 430.0 30.0 December 1997
Germany Development and
Testvehicle
- ------------------------------------------------------------------------------------------------------------------------------------
TNSW, German Navy 2 Echosounders and UT 8/11/97 1,792.5 1,792.5 December 2005
Germany Equipments incl. ILS
for 2 Subs U212
- ------------------------------------------------------------------------------------------------------------------------------------
TNSW, German Navy 1 Echosounder and UT 9/29/97 296.0 296.0 October 2004
Germany Equipment for F124
- ------------------------------------------------------------------------------------------------------------------------------------
Technical Technical Development of 3/10/97 140.7 140.7 December 1997
University, University, High Frequency
Berlin, Germany Berlin, Germany Transducers
- ------------------------------------------------------------------------------------------------------------------------------------
Wilton-Fijenoord, Taiwan Navy Sonar Spares 1/22/97 815.6 815.6 December 1997
Netherlands
- ------------------------------------------------------------------------------------------------------------------------------------
WDA WSA Bremerhaven, BCC-SW MK II 9/10/97 428.4 428.4 November 1997
Bremerhaven, Germany
Germany
- ------------------------------------------------------------------------------------------------------------------------------------
WTV, Siegburg, Wahnbachtalsperre PIA 2000 Plancton 5/31/96 3,067.1 2,480.5 June 1999
Germany n Inactivation System
Verband Germany
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ELAC - Guarantees and Bank Bonds*
<PAGE>
<TABLE>
<CAPTION>
Deutsche Bank Bank Bonds 02.10.97
item type of guarantee customer no. amount DEM due date
<S> <C> <C> <C> <C> <C> <C>
1 A advance payment bond Atlas 431 221.490,00 28.02.1998
2 V performance bond Atlas 363 237.188,00 until further
3 V performance bond Atlas 396 63.945,67 01.03.1999
4 G warranty bond Atlas 463 33.690,00 until further
5 V performance bond Atlas 328 9.589.450,00
-1.436.000,00
-877.800,00
-501.600,00
-836.000,00
-627.000,00
-627.000,00
-1.379.400,00
-543.400,00
-1.170.400,00
-------------
1.590.850,00 31.12.1999
=============
6 A advance payment bond Blohm + Voss 460 18.300,00 31.08.1998
7 A advance payment bond Blohm + Voss 461 17.625,00 31.08.1997
8 V performance bond Blohm + Voss 395 26.470,00 until further
9 G warranty bond Blohm + Voss 459 6.110,00 31.08.2000
10 G warranty bond Blohm + Voss 462 7.248,00 31.08.2001
11 G warranty bond Blohm + Voss 485 16.164,00
until further
12 V performance bond Daewoo 353 1.079,00 31.10.1997
13 V performance bond Daewoo 354 1.122,00 31.10.1998
14 A advance payment bond Def. Proc. Agency 391 191.500,00 31.10.1996
15 A advance payment bond Def. Proc. Agency 478 221.600,000 30.09.1998
16 A advance payment bond Def. Proc. Agency 480 82.515,00 31.01.1999
17 V performance bond Def. Proc. Agency 390 38.300,00 30.09.1999
18 V performance bond Def. Proc. Agency 397 3.313,52 09.07.1996
19 G warranty bond Def. Proc. Agency 479 22.160,00 30.11.1999
20 G warranty bond Def. Proc. Agency 481 17.825,00 31.01.2003
21 A advance payment bond Empresa Nacional 423 19.050,00 01.08.1999
22 A advance payment band Empresa Nacional 425 19.050,00 01.05.1998
23 A advance payment bond Empresa Nacional 426 19.050,00 01.12.1998
24 G warranty bond Empresa Nacional 474 6.370,00 until further
25 A advance payment bond HDW, Kiel 464 41.988,80 until further
26 A advance payment bond HDW, Kiel 465 85.852,10 until further
27 A advance payment bond HDW, Kiel 466 32.223,00 until further
28 A advance payment bond HDW, Kiel 473 72.450,00 30.09.1998
29 A advance payment bond HDW, Kiel 475 88.255,60 until further
30 A advance payment bond HDW, Kiel 476 33.126,90 until further
31 A advance payment bond HDW, Kiel 477 43.164,10 until further
32 A advance payment bond HDW, Kiel 482 41.988,80 until further
33 A advance payment bond HDW, Kiel 483 32.223,00 until further
34 A advance payment bond HDW, Kiel 399 72.450,00 15.10.1998
35 A advance payment bond HDW, Kiel 446 41.988,80 31.01.1998
36 A advance payment bond HDW, Kiel 447 32.223,00 31.01.1998
37 A advance payment bond HDW, Kiel 448 85.852,10 31.01.1998
38 V+G performance bond HDW, Kiel 261 19.654,70 31.08.1998
39 V performance bond HDW, Kiel 388 238.050,00 15.10.1998
40 V+G performance bond HDW, Kid 401 42.926,00 30.11.2001
41 V+G performance bond HDW, Kid 402 41.757,00 30.11.2000
42 V+G performance bond HDW, Kiel 403 44.128,00 30.11.2002
43 V+G performance bond HDW, Kiel 404 15.673,00 30.11.2000
44 V+G performance bond HDW, Kiel 405 16.563,00 30.11.2002
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
45 V+G performance bond HDW, Kiel 406 16.112,00 30.11.2001
46 V+G performance bond HDW, Kiel 407 20.424,00 30.11.2000
47 V+G performance bond HDW, Kiel 408 20.990,00 30.11.2001
48 V+G performance bond HDW, Kiel 409 21.582,00 30.11.2002
49 V+G performance bond HDW, Kiel 410 25.726,00 30.11.2000
50 V+G performance bond HDW, Kiel 411 26.447,00 30.11.2001
51 V+G performance bond HDW, Kiel 412 27.187,00 30.11.2002
52 G warranty bond HDW, Kiel 369 36.397,50 31.01.2000
53 G warranty bond HDW, Kiel 442 36.337,00 31.01.1999
54 G warranty bond HDW, Kiel 443 15.111,00 31.01.1999
55 G warranty bond HDW, Kiel 444 36.967,00 31.12.1999
56 G warranty bond HDW, Kiel 445 15.364,00 31.12.1999
57 A advance payment bond Intermarine 484 35.550,00 until further
58 V performance bond Kockums 265 45.512,90 01.10.1998
59 V performance bond Kockums 275 13.500,00 01.10.1998
60 G warranty bond Lurssen Werft 456 18.750,00 30.06.1997
61 G warranty bond Lurssen Werft 468 13.214,00 01.05.1999
62 G warranty bond Lurssen Werft 469 13.214,00 01.12.1999
63 G warranty bond P.T. PAL Indonesia 457 38.500,00 3 1.12.1996
64 G warranty bond President of India 435 4.721,75 until further
65 V performance bond Saudi Arabien 366 17.793,50 10.01.1998
66 G warranty bond Societe d'Armement 379 8.487,50 12.09.1997
67 G warranty bond Societe d'Armement 486 73.433,85 11.07.1998
68 V performance bond Thyssen 385 238.050,00 15.09.1999
69 G warranty bond Thyssen 368 27.772,50 30.06.1999
70 A advance payment bond Wilton 472 400.000,00 until further
total 5.251.697,59
Foreign currency
item type of guarantee customer no. amount Ablauf
1 V performance bond Taneer, Karacki 48.044,00 Pak.R until further
2 V performance band Def.Proc.Agency, 441 1.870,39 USD 31.05.1997
Korea
3 V performance bond SeaBeam 482 49.371,00 USD 31.07.1999
</TABLE>
ELAC - Confidentiality Agreements*
Date Party
---- -----
95-01-01 Marimatek
95-01-02 SeaBeam
95-01-03 Qubit
95-01-04
95-01-05 Ultra Electronics
95-01-06 BASYS Marine Ltd.
95-01-07 BAeSEMA
95-01-08 Westinghouse
96-01-01 Evia
96-01-02 Mjellum & Carlson
96-01-03 Reson
96-01-04 Raytheon Anschtitz
96-01-05 HDW
96-01-06 Elektro-Optik GmbH
97-01-01 SEPA
97-01-02
<PAGE>
97-01-06 Sonatech
97-01-07 Nautronix
97-01-08 EdgeTech
97-01-09 Kongsberg
97-01-10 Camber Corp.
ELAC - Other Contracts*
o ELAC Lease, between Honeywell Regelsysteme GMBH and Honeywell
ELAC-Nautik, dated April 1, 1994
o Intercompany note between Ocean Systems and ELAC with respect to the
cash in the AlliedSignal German cash pool, and related agreements
o Stock Purchase Agreement by and among AlliedSignal Deutchland GmbH,
AlliedSignal, Inc., Honeywell AG and Honeywell, Inc., dated March 30, 1994
o Lease agreement by and between ELAC and Christian-Albrecht Universitat,
Kiel, dated April 1995
o Long term agreement for cable repair with AS Aerospace GmbH
Ocean Systems - Other Contracts
o The following pages contain information regarding certain contracts
signed between August 1, 1997 and December 19, 1997.
o Effective December 19, 1997, Ocean Systems is under contract with the
Turkish Navy to provide 4 AQS-18A dipping sonar systems plus spares,
ground support equipment and performance testing.
o Ocean Systems has an opportunity to propose a significant contract with
Egypt. In the event that OS moves forward to compete on that contract, it
is likely that OS will retain an in-country representative and will sign a
letter of intent with that representative to retain post-contact award
services which would likely exceed $250,000.
- ------------------------
* Included without regard to dollar amount. May or may not exceed $75,000 or
DM100,000.
<PAGE>
CONTRACTS RECEIVED
8/97 Through 12/97
(Over $250K)
CUSTOMER SALES ORDER CONTRACT # DESCRIPTION VALUE
- -------- ----------- ---------- ----------- -----
NAVSEA SS3442 N00024-92-C-8502 TB-23 Spares $279.3K
NUWC SU3498 N66604-7225-4BF7 AMTS Upgrade $100.8K
ITOCHU SY3591 5S277 Q18M Spares $268K
ITOCHU SY3714 5S272 Q18M Spares $3700K
ITOCHU SY3717 5SS275 Q18M Spares $1800K
ITOCHU SY3725 1F528 Ql8M Spares $368K
HELLENIC NAVY 1 Q18V System $2200K
NAVSEA ECP320/325 TB16 Upgrade $6600K
NAVSEA TB23 Repairs $300K
<PAGE>
<TABLE>
<CAPTION>
ASOS-58-R010 ALLIEDSIGNAL OCEAN SYSTEMS PAGE NO: 197
PURCHASING STATISTIC AWARD REPORT RUN DATE: 12/19/97
ALL PURCHASE ORDERS
FROM 06/01/97 THRU 12/15/97
BUYER VENDOR VENDOR VENDOR AWARD TECH PO LINE DEPT/ACCT/JOB COMM TOTAL
ID NAME NUMBER CLASS CODE CODE NUMBER ITEM CODE DOLLARS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12 CONSOLIDATED 23230 SB 1A 1A DP5064 007 3000-031-01-0-0000-0-0-0 5002 47,600.00
PRODUCTS CORP.
12 CONSOLIDATED 23230 SB 1A 1A DP5064 008 3000-031-01-0-0000-0-0-0 5002 68,000.00
PRODUCTS CORP.
12 CONSOLIDATED 23230 SB 1A 1A DP5064 009 3000-031-01-0-0000-0-0-0 5002 54,400.00
PRODUCTS CORP.
TOTAL DOLLARS FOR THIS PO 462,400.00
$ 500,000 AND UP
TOTAL DOLLARS FOR THIS BUCKET 462,809.30
TOTAL NUMBER OF PO'S FOR THIS BUCKET 4
</TABLE>
<PAGE>
Schedule 4.8 - Titles and Leases
No items to schedule.
<PAGE>
Schedule 4.9 - Litigation
See also Schedules 4.21(a) and 4.21(b).
Ocean Systems
Sellers are presently aware of two pending suits:
Brown v. AlliedSignal, case no. 15826, filed in the Superior Court
of the State of California, County of Los Angeles, North Valley
Judicial District on May 28, 1996.
Tomlinson V. AlliedSignal, case no. BC 163670, filed in the Superior
Court of the State of California, County of Los Angeles, North
Valley Judicial District on May 23, 1997.
Sellers are presently aware of an international sales matter, which
Purchaser acknowledges having had the opportunity to discuss with Sellers'
counsel (voluntary disclosure #329, relating to sales to the government of
Greece and the United States).
ELAC
There is one contractual dispute related to a German Government contract.
ELAC intends to solve the dispute prior to January 21, 1998.
Contract Data:
Customer: BWB, Koblenz, Germany
Content: Development and delivery of 4 ea. Reflexducers
Date of Contract: 8/7/1995
Value: DM 712.5 k
Last Shipment: Dec. 1998
Current Status:
An agreement with the customer was settled on 5th November, 1997, to close
the contract end of December 1997 without shipment of transducers. ELAC agreed
to pay back 438 k DM of the total payment of 712.5 k DM that was received end of
1996. BWB accepts the development results.
Payback has to be transferred 30 days after written approval of BWB. ELAC
confirmed agreement in writing 7th of November, BWB approval expected in the
last week of December, 1997, payment to be released January 1998.
<PAGE>
Schedule 4.10 - Environmental Disclosure
The following documents, which have been delivered to Purchaser, are
incorporated herein by reference:
1. Environmental, Health and Safety Disclosure Document
AlliedSignal Ocean Systems, Sylmar, CA Prepared for
AlliedSignal Electronic Systems June 30 to July 2, 1997
2. Phase I Environmental Site Assessment 15825 Roxford Street,
Sylmar, CA July 1997
3. Health, Safety and Environmental Disclosure AlliedSignal
Electronic Systems - ELAC Nautik GmbH September 29, 1997
4. ELAC Environmental Disclosure Statement
Ocean Systems Permits
City of Los Angeles, Department of Building and Safety, Certificates of
Occupancy
Permit No.'s: LA76447/60 VN00435/73 VN50140/76
LA76448/60 LA64337/73 VN39348/76
VN92138/66 LA77430/73 VN89736/79
VN98941/66 VN16035/74 VN93597/79
LA72477/68 LAl6583/75 VN40476/82
LA72479/68 LA16584/75 LA20231/85
VN87685/72 VN44208/76 VN98937/86
VN83102/72 VN41832/76 VN15222162
VN81765/72 VN43697/76 VN13124-62
VN968742/73 VN39986/76
City of Los Angeles, Department of Building and Safety Water Conservation
Program
Certificate of Compliance No. 310437
City of Los Angeles Fire Permit
Permit No.'s 777456-33/F/701
777456-33/F/828
City of Los Angeles Office of the City Clerk, Tax and Permit Division
<PAGE>
Hazardous Material Certificate Renewal No. 587720-23/F/803
City of Los Angeles Certificates of Disclosure of Hazardous Substances
Account No. 587720-23/F/206
City of Los Angeles, Department of Building and Safety and Division of
Occupational Safety and Health of the State of California, Certificates of
Inspection and Permit to Operate Steam Boiler or Pressure Vessel
Permit No.'s AC09411
AC09412
AC4018
AC4019
AC4020
City of Los Angeles, Department of Public Works and Bureau of Sanitation,
Industrial Wastewater Permit
User No. 1U000068
Permit No. W482195
City of Los Angeles, Department of Public Works and Bureau of Sanitation,
Industrial Waste Permit No. 482195
County of Los Angeles, Hazardous Waste License No. 103 453285
County of Los Angeles, Public Health License, SIC# 3699 13
South Coast Air Quality Management District
Permit No.'s M35231 Spray Booth
M09716 Spray Booth
P19724 Bake Oven
D29049 Surface Prep. Tank
Application No.'s 327865 Spray Booth/UV Cure
327866 Degreaser
ELAC
ELAC approval to release waste water dated June 25, 1997
ELAC business and local licenses are listed in Schedule 4.17
See also Schedule 4.15.
<PAGE>
Schedule 4.11 - Benefit Plans and Policies
See also Schedule 6.6.
U.S. Pension, Savings and Stock Option Plans
Salaried Employees Pension Plan of AlliedSignal, Inc.
AlliedSignal, Inc. Pension Plan for Hourly Employees
AlliedSignal, Inc. Retirement Program
AlliedSignal, Inc. Supplemental Retirement Plan
AlliedSignal, Inc. Savings Plan
AlliedSignal, Inc. Thrift Plan
AlliedSignal, Inc. Supplemental Savings Plan
1993 Stock Plan for Employees of AlliedSignal, Inc. and its Affiliates
(option plan for certain managers)
U.S. Health and Welfare Plans
Medical-Managed Care-HCC-Salaried
Blue Cross/Blue Shield - Hourly
Dental Plan
Vision Plan-VSP-Salaried
Sick Days
Life Insurance
Group Universal Life Insurance
Long Term Disability (Salaried provided through pension plan)
Short Term Disability
Severance Plan
Drug Testing
Supplemental Unemployment Benefit per UAW Labor Agreement (hourly)
Personal Accident Insurance (voluntary)
Employment Laws in Germany and Agreements at ELAC
German Government Laws
Every employee must have insurance for:
Health
Unemployment
Pension (retirement)
* Daily working time is limited to 10 hours.
* Each employee is entitled to a minimum of 4 weeks vacation annually.
* Significant restrictions apply to employee lay-offs, including, without
limitation, a 4 week minimum notice requirement prior to lay-off and
restrictions on layoffs for pregnant women and employees over 56 years
old.
<PAGE>
Wage and Salary Agreements
Agreements between the Metal and Electro Employer Association and the
German Metal Union cover the following:
Standard wages and salaries.
Amount of extra payment for Christmas (50% of monthly salary)
Amount of extra payment for holidays (30% of monthly salary)
Payment during illness (6 weeks)
Annual vacation time (6 weeks)
These agreements have the status of laws.
Company Agreements
There are additional agreements between Sellers and the ELAC work council
covering the following:
Daily and weekly working time
Working rules
Pension plan
Redundancy payment plan (severance)
Employers contribution plans (savings plan)
Other German Benefit Programs
ELAC Pension Plan
Worldwide AlliedSignal Stock Purchase Plan
Statutory German Health and Welfare Plans
Company Automobiles
U.S. Other Programs
Education Assistance
Holidays
Vacation
Student Loan Program
Matching Gifts
Savings Bonds
Credit Union
Employee Mortgage Program
Ride Sharing Incentives
Reward and Recognition
Financial Planning Seminars
Service Awards
Bereavement Pay
Family Leave
Military Pay
<PAGE>
Jury Duty
Adoption Assistance
Employee Assistance
Company Automobiles
Ocean Systems - Retention Agreements
* Retention Agreements with Key Management (V. Davisson, V. Riehl, A.
Logan, D. Dunlop, J. Roscigno, L. DiRienzo, M. Charley, B. Smith, S.
Erdman), aggregate contingent payment of $199,400 (Purchaser
responsibility).
* Retention Agreement with Steve Schorer (AlliedSignal responsibility)
ELAC - Employment Agreements
All ELAC employees have employment agreements including temporary
employees and Apprentices. Most employees have "standard" agreements
("Anstellungsvereinbarung"). As of November 1, 1997, there were 170 employees,
as follows:
Category Employment Agreement Form Number
-------- ------------------------- ------
Employees Standard 136
Temporary Temporary 3
Apprentices Apprentice 4
Managers AT - Individual 26
Senior Manager GT - Individual 1
The following individuals have "AT-Individual" agreements: Bjornsen, Bohm,
Bornhorst, Brundel, Bumbe, Diehl, Eigenbrod, Gumpel, Gnutzmann, Gorl, Heir,
Holm, Jordt, Knoop, Kuhn, Maschmann, Olden Gueg, Raether, Schaefer, Schultz,
Seibkin, Tietz, Timm, Westerbeck, Wieczorek, Ziegenbein. Dr. Luder Hogrefe has
the "GT-Individual" agreement.
The following individuals are parties to retention agreements with an
aggregate contingent payment of $108,200: Dr L. Hogrefe, W. Tietz, G. Jordt
(Purchaser responsibility).
<PAGE>
Schedule 4.12 - Material Changes
Pre - Closing Committments
ELAC
ELAC and STN-ATLAS will sign a Teaming Agreement for the joint development
and marketing of a Mine Avoidance Sonar for Submarines
Ocean Systems
* Effective December 19, 1997, Ocean Systems is under contract with the
Turkish Navy to provide 4 AQS-18A dipping sonar systems plus spares,
ground support equipment and performance testing.
* Ocean Systems has an opportunity to propose a significant contract with
Egypt. In the event that OS moves forward to compete on that contract, it
is likely that OS will retain an in-country representative and will sign a
letter of intent with that representative to retain post-contact award
services which would likely exceed $250,000.
* Additionally, Greece System 6 contract ($2.2M Sales value) effectivity
expected by December 31, 1997, and a $6 million booking is expected on the
TB-23 Refurbishment program.
* See also Schedule 4.7, containing recent contract information.
Pre-Closing Changes in Employment, Compensation and Benefits
ELAC
ELAC is covered by the "Tarifvertrag" of IG Metall Schleswig-Holstein.
This law covers all major employee issues such as salary, vacation, illness,
etc. The "Tarifvertrag" is valid for a certain time period and is a topic of
collective bargaining events between the Union and industrial representatives.
The basic salary is always an important topic for upcoming negotiations. ELAC
expects a salary increase of 2.5%, becoming effective on the 1st of April 1998.
This increase is covered within the 1998 AOP.
Recent Hirings -ELAC
ELAC expects to hire a replacement sales manager in December 1997
One additional marketing consultant was contracted in November 1997
Positions Currently Open at Ocean Systems
Sr. Transducer Engineer
Systems Engineer
Advanced Manufacturing Engineer (2)
Sr. Staff Electrical Design Engineer (2)
<PAGE>
Sr. Mechanical Engineer
Program Manager
Planner, Sr.
Sr. Engineer - Tech
Process Lead - Towed Array
Manager, Contracts
Sr. Cost Control Analyst
Sr. Financial Analyst
Human Resource Generalist
<PAGE>
Schedule 4.14 - Compliance with Law
See Schedules 49, 4.10, 4.21(a) and 4.21(b).
<PAGE>
Schedule 4.15 - Consents
The following may not be assigned without the written consent of the
contracting party:
* Service Agreement #SER00006, dated June 1, 1995, between
AlliedSignal and C.I.E.R.
Service Agreement #SER00007, dated June 1, 1995, between
AlliedSignal and Sigma International
Memorandum of Agreement dated October 31, 1996, between AlliedSignal
and Celsius Tech Systems AB
Teaming Agreement dated February 11, 1997, between AlliedSignal and
STN Atlas PTY, Limited
The following may be terminated by either party upon the sale of the other
party:
Cooperation Agreement dated February 19, 1996, between AlliedSignal
and FIAR
The following may be assigned upon a sale of assets, but Lockheed Martin
Librascope Corp. must be notified of the assignment and sale of assets:
Teaming Agreement, dated May 31, 1996, by and between AlliedSignal
and Lockheed Martin Librascope Corporation.
* The lease between Honeywell and ELAC, dated March 31, 1994, may not be
assigned without the consent of Honeywell, which may not be unreasonably
withheld.
Any and all government contracts, U.S. or foreign, may not be assignable
without the consent of the government party.
Certain of the confidentiality agreements, software licenses, equipment
leases, and equipment service agreements listed on Schedule 4.6(a) may not
be assignable without the consent of the contracting party.
The export licences set forth on schedule 4.17 may not be assignable
without consent.
The permits, licenses, certificates and registrations referenced in
Schedules 4.10 and 4.17 may require action by the Buyer in the form of
notification, reapplication or otherwise, upon a change in ownership.
- ------------------------
* Material consent.
<PAGE>
Schedule 4.16 - ELAC Taxes
* Tax audit executed by the Tax Authorities of Kiel for the years 1989
through 1993. During the last tax audit, covering the period ending
December 31, 1993, the tax authorities made minor routine findings which
are not expected to have a significant impact in subsequent years. Years
after 1993 are still open but no specific tax exposure is known.
* ELAC is a party to the profit pooling agreement with AlliedSignal
Deutchland GmbH for the period 1995 to 1997.
* Annual audit of the General Ledger executed by Price Waterhouse for the
year 1996.
<PAGE>
Schedule 4.17 - Permits and Licenses
Ocean Systems - Permits
City of Los Angeles, Department of Building and Safety, Certificates of
Occupancy
Permit No.s: LA76447/60 VN00435/73 VN50140/76
LA76448/60 LA64337/73 VN39348/76
VN92138/66 LA77430/73 VN89736/79
VN98941/66 VN16035/74 VN93597/79
LA72477/68 LA16583/75 VN40476/82
LA72479/68 LA16584/75 LA20231/85
VN87685/72 VN44208/76 VN98937/86
VN83102/72 VN41832/76 VN15222/62
VN81765/72 VN43697/76 VN13124-62
VN968742/73 VN39986/76
City of Los Angeles, Department of Building and Safety Water Conservation
Program
Certificate of Compliance No. 310437
City of Los Angeles Fire Permit
Permit No.s 777456-33/F/701
777456-33/F/828
City of Los Angeles Office of the City Clerk, Tax and Permit Division
Hazardous Material Certificate Renewal No. 587720-23/F/803
City of Los Angeles Business Tax Registration Certificates
Cert. No.s 435532-82/L/190 Profs/Occupations
435532-82/L/167 Retail Sales
435532-82/L/166 Wholesale Sales
City of Los Angeles Certificates of Disclosure of Hazardous Substances
Account No. 587720-23/F/206
City of Los Angeles, Department of Building and Safety and Division of
Occupational Safety and Health of the State of California, Certificates of
Inspection and Permit to Operate Steam Boiler or Pressure Vessel
Permit No.s AC09411
AC09412
AC4018
AC4019
AC4020
<PAGE>
City of Los Angeles, Department of Public Works and Bureau of Sanitation,
Industrial Wastewater Permit
User No. IU000068
Permit No. W482195
City of Los Angeles, Department of Public Works and Bureau of Sanitation,
Industrial Waste Permit No. 482195
County of Los Angeles, Hazardous Waste License No. 103 453285
County of Los Angeles, Public Health License, SIC# 3699 13
South Coast Air Quality Management District
Permit No.s M35231 Spray Booth
M09716 Spray Booth
P19724 Bake Oven
D29049 Surface Prep. Tank
Application No.s 327865 Spray Booth/UV Cure
327866 Degreaser
Ocean Systems - Vessel Registrations
U.S. Department of Transportation and U.S. Coast Guard Certificates of
Documentation
Vessel Official Number
------ ---------------
3 Acres 600022
Sonar Queen 511517
Ocean Systems - Vehicle Registrations (License Plate Numbers)
1PXL241 5A19782 2SDR083
2MRJ696 1FN4696 2SI5252
2SDR082 3BGK180 1JOE389
ELAC - Permit
Approval to release waste water, dated June 25, 1997
<PAGE>
Ocean Systems - Export Licenses
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Abu Dhabi Middle East T071358 8/16/93 Temporary Hardware Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Algeria N. Africa 454071 6/28/90 Technical Data Unclassified Expired AS AQS-18(V)1 No
- ------------------------------------------------------------------------------------------------------------------------------------
Argentina S. America 707475 7/24/97 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Argentina S. America 612612 8/1/94 Technical Data Unclassified 4 years AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 696980 4/4/97 Technical Data Unclassified Pending SSLF LFAPS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 696980 4/4/97 Technical Data Unclassified 4 years SSLF LFAPS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 684669 1/17/97 Technical Data Unclassified 4 years SSLF LFAPS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific C17445 10/25/95 Technical Data Classified 4 years TA TB-23 No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 641004 9/20/95 Technical Data Unclassified 4 years SSLF LFATS No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-l9 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 622537 12/23/94 Technical Data Unclassified 4 years TA TB-23 No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 579069 11/16/93 Technical Data Unclassified 4 years WPN LCAW No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific T069558 4/12/93 Temporary Hardware Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific T068072 12/23/92 Temporary Hardware Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific T067456 12/7/92 Temporary Hardware Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 405452 5/2/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 350699 10/23/87 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 350699 l0/23/87 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific 041582 10/5/77 Technical Data Unclassified Expired AS AQS-13E No
- ------------------------------------------------------------------------------------------------------------------------------------
Australia Asia/Pacific C04056 10/5/77 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Bahrain Middle East 659935 3/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Bahrain Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Bahrain Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Belgium Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Belgium Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Belgium Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Belgium Europe 568038 6/28/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Belgium Europe 568038 6/28/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Belgium Europe 450681 5/9/90 Technical Data Unclassified Expired WPN LCAW No
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil S. America 706261 7/24/97 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil S. America - 7/14/97 Technical Data Unclassified Pending AS AQS-18(V)1 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil S. America AG 1322-96 2/6/97 TAA DSAM 10 years AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil S. America 647890 9/21/95 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil S. America 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil S. America 450834 5/24/90 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil S. America 450834 5/24/90 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil S. America 405450 5/2/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Brazil S. America 344027 9/24/87 Technical Data Unclassified Expired AS AQS-18(V)1 No
- ------------------------------------------------------------------------------------------------------------------------------------
Brunei Asia/Pacific 568037 7/12/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Brunei Asia/Pacific 568037 7/12/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Canada N. America C04640 Unknown Technical Data Classified Expired AS AQS-13E No
- ------------------------------------------------------------------------------------------------------------------------------------
Canada N. America C17445 10/25/95 Technical Data Classified 4 years TA TB-23 No
- ------------------------------------------------------------------------------------------------------------------------------------
Canada N. America 622537 12/23/94 Technical Data Unclassified 4 years TA TB-23 No
- ------------------------------------------------------------------------------------------------------------------------------------
Canada N. America 553757 2/22/93 Technical Data Unclassified Expired SURV ARCSSS No
- ------------------------------------------------------------------------------------------------------------------------------------
Canada N. America C012075 6/21/88 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Canada N. America C05342 4/23/79 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Chile S. America - 7/21/97 Technical Data Unclassified Pending SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Chile S. America 679402 10/11/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Chile S. America 569850 7/22/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Chile S. America 569850 7/22/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Chile S. America 499932 8/28/91 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
China PRC Asia/Pacific 342257 8/27/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Colombia S. America 707475 7/24/97 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Colombia S. America 556072 4/1/93 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Denmark Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Denmark Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Denmark Europe 618752 l2/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Denmark Europe 568038 6/28/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Denmark Europe 568038 6/28/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Ecuador S. America 663624 3/13/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Ecuador S. America 651988 11/28/95 Technical Data Unclassified 4 years AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Ecuador S. America 344027 9/24/87 Technical Data Unclassified Expired AS AQS-18(V)1 No
- ------------------------------------------------------------------------------------------------------------------------------------
Egypt Middle East T081685 8/27/96 Temporary Hardware 4 years ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Egypt Middle East 666411 3/14/96 Technical Data Unclassified 4 years SSLF SADS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Egypt Middle East 663626 3/13/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Egypt Middle East 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Egypt Middle East 480606 1/23/91 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Egypt Middle East 480606 1/23/91 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Egypt Middle East 344235 8/14/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Finland Europe 337560 8/14/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
France Europe 641139 7/12/95 Technical Data Unclassified 4 years AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
France Europe 641139 7/12/95 Technical Data Unclassified 4 years AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
France Europe 618752 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
France Europe 559494 4/30/93 Technical Data Unclassified Expired CMSR ADC EX-11 No
- ------------------------------------------------------------------------------------------------------------------------------------
France Europe CO12678 5/2/89 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
France Europe 356157 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
France Europe T043212 6/1/87 Temporary Hardware Expired AS AQS-l8 No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 703020 5/5/97 Technical Data Unclassified 4 years ASLF HELRAS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 693546 2/19/97 Technical Data Unclassified 4 years MWF EMD Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 693546 2/19/97 Technical Data Unclassified 4 years MWF LMHS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe T082205 9/25/96 Temporary Hardware 4 years AS XDUCER Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe T078950 10/17/95 Temporary Hardware 4 years AS XDUCER Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe AG 124-95C 6/6/95 MLA ELAC 10 years AS AQS-18 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe AG 124-95C 6/6/95 MLA ELAC 10 years AS AQS-18(V) Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe AG 124-95C 6/6/95 MLA ELAC lO years AS AQS-18A Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe AG 124-95C 6/6/95 MLA ELAC 10 years ASLF HELRAS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe AG 124-95C 6/6/95 MLA ELAC 10 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe AG 124-95C 6/6/95 MLA ELAC 10 years SSLF SADS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 620446 2/14/95 Technical Data Unclassified 4 years SSLF Sonar 90 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Germany Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe T072207 11/3/93 Temporary Hardware Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 551381 1/6/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 551381 1/6/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 551381 1/6/93 Technical Data Unclassified Expired MWF SLS No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 533052 7/16/92 Technical Data Unclassified Expired WPN LCAW No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 522678 3/3/92 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 522678 3/3/92 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 450681 5/9/90 Technical Data Unclassified Expired WPN LCAW No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 408204 4/26/89 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 356157 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 318506 1/12/87 Technical Data Unclassified Expired ASLF XDUCER No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 318505 10/31/86 Technical Data Unclassified Expired ASLF XDUCER No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe C011096 10/20/86 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe C010909 8/27/86 Technical Data Classified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 306318 8/26/86 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 300089 5/5/86 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 200603 6/14/83 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe C07892 3/31/82 Technical Data Classified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe C07473 10/19/81 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe 136259 4/21/81 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Germany Europe C04056 10/5/77 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Greece Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Greece Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Greece Europe 618752 l2/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Greece Europe 568038 6/28/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Greece Europe 568038 6/28/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Greece Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Greece Europe 405451 4/19/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Greece Europe 397934 1/10/89 Technical Data Unclassified Expired AS AQS-18(V)6 No
- ------------------------------------------------------------------------------------------------------------------------------------
Greece Europe 356156 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Greece Europe 344235 8/14/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
India Asia/Pacific 344238 8/7/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
India Asia/Pacific 191510 2/24/83 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
India Asia/Pacific T023031 3/22/82 Temporary Hardware Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Indonesia Asia/Pacific 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Indonesia Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Indonesia Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Indonesia Asia/Pacific 405450 5/2/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Indonesia Asia/Pacific 296001 5/9/86 Technical Data Unclassified Expired AS AQS-18(V)3 No
- ------------------------------------------------------------------------------------------------------------------------------------
Israel Middle East 713415 9/12/97 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Israel Middle East 344235 8/14/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Israel Middle East 165784 4/15/82 Technical Data Unclassified Expired AS AQS-13E No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe 707479 7/24/97 Technical Data Unclassified 4 years AS AQS-18A Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe AG 496-96 7/26/96 MLA FIAR 10 years AS AQS-18 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe AG 496-96 7/26/96 MLA FIAR 10 years AS AQS-18(V) Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe AG 496-96 7/26/96 MLA FIAR 10 years AS AQS-18A Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe AG 496-96 7/26/96 MLA FIAR 10 years ASLF HELRAS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe 674284 7/12/96 Technical Data Unclassified 4 years ASLF HELRAS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe 641314 9/20/95 Technical Data Unclassified 4 years SSLF LFATS No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe T078240 7/19/95 Temporary Hardware 4 years ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe T077737 6/9/95 Temporary Hardware 4 years ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe T067349 10/1/92 Temporary Hardware Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe 450834 5/24/90 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe 450834 5/24/90 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe C013453 1l/17/89 Technical Data Classified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe 405451 4/l9/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Italy Europe 341967 8/12/87 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe T032482 12/10/84 Temporary Hardware Expired AS AQS-13F No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe 162852 5/27/82 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe Unknown 3/10/82 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Italy Europe C04856 10/2/78 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Asia/Pacific 703026 7/11/97 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Asia/Pacific 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Asia/Pacific 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Asia/Pacific 405452 5/2/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Asia/Pacific 399819 1/24/89 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Asia/Pacific 396862 10/29/88 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Asia/Pacific 396862 10/29/88 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Asia/Pacific 383356 9/19/88 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Japan Asia/Pacific 123720 1/26/80 Technical Data Unclassified Expired AS AQS-13E No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 703026 7/11/97 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 694217 2/6/97 Technical Data Unclassified 4 years AS AQS-18A Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 584759 12/20/93 Technical Data Unclassified 4 years TA SQR-19 No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific T071257 8/3/93 Temporary Hardware Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific T069585 5/3/93 Temporary Hardware Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific T068073 3/24/93 Temporary Hardware Expired AST AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 551512 1/25/93 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 547067 12/2/92 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 405452 5/2/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 347285 9/30/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 335191 6/15/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Korea Asia/Pacific 196264 6/9/83 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Kuwait Middle East 707480 5/15/97 Technical Data Unclassified Pending AS AQS-18A Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Kuwait Middle East 700687 4/8/97 Technical Data Unclassified 4 years ASLF HELRAS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Kuwait Middle East 659935 3/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Kuwait Middle East 641140 7/12/95 Technical Data Unclassified 4 years AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Kuwait Middle East 641140 7/12/95 Technical Data Unclassified 4 years AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Kuwait Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Kuwait Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Malaysia Asia/Pacific 682259 10/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Malaysia Asia/Pacific 579069 11/16/93 Technical Data Unclassified 4 years WPN LCAW No
- ------------------------------------------------------------------------------------------------------------------------------------
Malaysia Asia/Pacific 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Malaysia Asia/Pacific 422198 8/31/89 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Malaysia Asia/Pacific 422198 8/31/89 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Malaysia Asia/Pacific 344233 9/24/87 Technical Data Unclassified Expired As AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Morocco N. Africa 707478 7/24/97 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Morocco N. Africa 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Morocco N. Africa 467183 9/27/90 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Nato HQ NATO 318505 l/l2/87 Technical Data Unclassified Expired ASLF XDUCER No
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Europe 662765 3/21/96 Technical Data Unclassified 4 years ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Europe 568038 6/28/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Europe 568038 6/28/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Europe 357187 11/24/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Europe 165784 4/15/82 Technical Data Unclassified Expired AS AQS-13E No
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands Europe C04056 10/5/77 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
New Zealand Asia/Pacific 568040 7/12/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
New Zealand Asia/Pacific 568040 7/12/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
New Zealand Asia/Pacific 559491 5/10/93 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Nigeria N. Africa 139824 6/3/81 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Norway Europe 707474 8/18/97 Technical Data Unclassified 4 years TA TBE Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Norway Europe 641314 9/20/95 Technical Data Unclassified 4 years SSLF LFATS No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Norway Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Norway Europe 618752 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Norway Europe T074459 6/13/94 Temporary Hardware 4 years SSLF SADS No
- ------------------------------------------------------------------------------------------------------------------------------------
Norway Europe 533052 7/16/92 Technical Data Unclassified Expired WPN LCAW No
- ------------------------------------------------------------------------------------------------------------------------------------
Norway Europe 389416 8/26/88 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Norway Europe 389416 8/26/88 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Norway Europe 356157 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Norway Europe C04856 10/2/78 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Oman Middle East 622177 10/4/95 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Oman Middle East 597362 5/27/94 Technical Data Unclassified 4 years SSLF SADS No
- ------------------------------------------------------------------------------------------------------------------------------------
Oman Middle East 537957 9/1/92 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Oman Middle East 537957 9/1/92 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Oman Middle East 537957 9/1/92 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Pakistan Asia/Pacific 418823 5/9/89 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Pakistan Asia/Pacific 418823 5/9/89 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Pakistan Asia/Pacific 405450 5/2/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Pakistan Asia/Pacific 380693 9/9/88 Technical Data Unclassified Expired AS AQS-18(V)3 No
- ------------------------------------------------------------------------------------------------------------------------------------
Pakistan Asia/Pacific 344028 6/19/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Pakistan Asia/Pacific 227320 9/24/84 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Peru S. America 707481 8/21/97 Technical Data Unclassified 4 years AS AQS-18A Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Peru S. America 658908 3/21/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Peru S. America 662443 3/13/96 Technical Data Unclassified 4 years AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Peru S. America 405450 5/2/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Peru S. America 344027 9/24/87 Technical Data Unclassified Expired AS AQS-l8(V)1 No
- ------------------------------------------------------------------------------------------------------------------------------------
Philippines Asia/Pacific 568037 7/12/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Philippines Asia/Pacific 568037 7/12/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe T072026 10/22/93 Temporary Hardware Expired AST AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe 568038 6/28/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portugal Europe 568038 6/28/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe 530482 4/14/92 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe 530482 4/14/92 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe 405451 4/19/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe 367625 2/8/88 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Portugal Europe 143053 7/15/81 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Qatar Middle East 659935 3/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Saudi Arabia Middle East 707480 5/15/97 Technical Data Unclassified Pending AS AQS-18A Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Saudi Arabia Middle East 673977 8/27/96 Technical Data Unclassified 4 years ASLF HELRAS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Saudi Arabia Middle East 659935 3/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Saudi Arabia Middle East 572591 7/1/93 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Saudi Arabia Middle East 568039 6/29/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Saudi Arabia Middle East 568039 6/29/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore Asia/Pacific 682259 10/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore Asia/Pacific T077151 2/16/95 Temporary Hardware 4 years ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore Asia/Pacific 616626 9/13/94 Technical Data Unclassified 4 years ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore Asia/Pacific 579069 11/16/93 Technical Data Unclassified 4 years WPN LCAW No
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore Asia/Pacific T045433 11/9/87 Temporary Hardware Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore Asia/Pacific 344233 9/24/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore Asia/Pacific 227322 9/24/84 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 618756 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 450834 5/24/90 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 450834 5/24/90 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 436195 2/16/90 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 423778 9/18/89 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Spain Europe 394948 10/13/88 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 371131 3/11/88 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 357187 11/24/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Spain Europe 165784 4/15/82 Technical Data Unclassified Expired AS AQS-13E No
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden Europe T081685 8/27/96 Temporary Hardware 4 years ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden Europe 654582 8/15/96 Technical Data Unclassified 4 years TA Y52000 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden Europe 641313 9/20/95 Technical Data Unclassified 4 years SSLF LFATS No
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden Europe 394942 10/31/88 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden Europe 394942 10/31/88 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden Europe 356158 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific - 7/30/97 Technical Data Unclassified Pending SSTD SLQ-25B Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific 679403 2/5/97 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific 640109 8/4/95 Technical Data Unclassified 4 years AS AQS-18(V)3 No
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific T068073 3/24/93 Temporary Hardware Expired AST AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific 5443038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific 413670 3/31/89 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific 413670 3/31/89 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific 398329 11/14/88 Technical Data Unclassified Expired AS AQS-l8(V)3 No
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific 288454 3/11/86 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific 215206 3/8/84 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific 196265 6/21/83 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Taiwan Asia/Pacific 161678 7/14/82 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand Asia/Pacific 694217 2/6/97 Technical Data Unclassified 4 years AS AQS-18A Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand Asia/Pacific 682259 10/4/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand Asia/Pacific 637851 5/26/95 Technical Data Unclassified 4 years SSLF SADS No
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand Asia/Pacific 543038 10/30/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand Asia/Pacific 413671 6/15/89 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand Asia/Pacific 344233 9/24/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
Thailand Asia/Pacific 227321 9/24/84 Technical Data Unclassified Expired AS AQS-18 No
- ------------------------------------------------------------------------------------------------------------------------------------
Turkey Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Turkey Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Turkey Europe 618752 12/16/94 Technical Data Unclassified 4 years TA B-T-P Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Turkey Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
Turkey Europe 456852 6/29/90 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Turkey Europe 456852 6/29/90 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Turkey Europe 405451 4/19/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Turkey Europe 344235 8/14/87 Technical Data Unclassified Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
UAE Middle East 647889 10/13/95 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
UAE Middle East 637849 8/4/95 Technical Data Unclassified 4 years SSLF SADS No
- ------------------------------------------------------------------------------------------------------------------------------------
UAE Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
UAE Middle East 568039 6/28/93 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
UAE Middle East 550980 1/21/93 Technical Data Unclassified Expired AS AQS-18(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 658925 1/23/96 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe C17445 10/25/95 Technical Data Classified 4 years TA TB-23 No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 617076 2/14/95 Technical Data Unclassified 4 years SSLF Sonar 2087 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 622832 1/24/95 Technical Data Unclassified 4 years TA SQR-19 Yes
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 622537 12/23/94 Technical Data Unclassified 4 years TA TB-23 No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 607252 7/7/94 Technical Data Unclassified 4 years SSLF Sonar 2087 No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe T071358 8/16/93 Temporary Hardware Expired AS AQS-18(V) No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 559130 5/18/93 Technical Data Unclassified Expired TA B-T-P No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 543037 10/22/92 Technical Data Unclassified Expired AS AQS-l8(V)1A No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 533052 7/16/92 Technical Data Unclassified Expired WPN LCAW No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 468501 10/16/90 Technical Data Unclassified Expired FO FO Array No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 455675 6/1/90 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 450681 5/9/90 Technical Data Unclassified Expired WPN LCAW No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe T053927 8/16/89 Temporary Hardware Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe CO12679 8/8/88 Technical Data Classified Expired SSTD SSTD No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe C012021 3/3/88 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 356157 1/19/88 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 350682 11/23/87 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 350696 10/27/87 Technical Data Unclassified Expired MWF AQS-17 No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Region License# Date Type Subtype Status Product System ELAC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UK Europe 350696 10/27/87 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe Various 7/9/86 Temporary Hardware Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 207510 12/8/83 Technical Data Unclassified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe 165784 4/15/82 Technical Data Unclassified Expired AS AQS-13E No
- ------------------------------------------------------------------------------------------------------------------------------------
UK Europe C04056 10/5/77 Technical Data Classified Expired ASLF HELRAS No
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela S. America 707475 7/24/97 Technical Data Unclassified 4 years SSLF LFATS Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela S. America 450834 5/24/90 Technical Data Unclassified Expired MWF EMD No
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela S. America 450834 5/24/90 Technical Data Unclassified Expired MWF LMHS No
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela S. America 405450 5/2/89 Technical Data Unclassified Expired AS AST No
- ------------------------------------------------------------------------------------------------------------------------------------
Venezuela S. America 344027 9/24/87 Technical Data Unclassified Expired AS AQS-18(V)1 No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ELAC- Export Licenses
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
4.1.2 EXPORT LICENSES Status: Sep. 30. 1997
- --------------------------------------------------------------------------------------------------
No. Validity Consignee Goods Value DM
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DE / 253 7046 27.12.97 Wilton-Fijenoord Sonar Spares 1.075.000,00
Schiedam / Netherlands
for export Taiwan
- --------------------------------------------------------------------------------------------------
DE / 264 8651 21.01.98 Defence Procurement Agency Underwater Telephone 443.200,00
Seoul, Rep. of Sudkorea UT 2000
- --------------------------------------------------------------------------------------------------
DE / 264 8654 11.02.98 Hollandse Signaalapparaten BV Sonar Cables 231.015,00
Hengelo / Netherlands
for export Taiwan
- --------------------------------------------------------------------------------------------------
DE / 253 7049 14.02.98 Merkaz Aspaka Spares for Echosounder 8.596,00
Tel Aviv / Israel VE 59
- --------------------------------------------------------------------------------------------------
DE / 264 8660 12.03.98 Chilean Navy Spares for Echosounder 144.679,81
Taleahauno / Chile VE 59
- --------------------------------------------------------------------------------------------------
DE / 264 8659 17.03.98 Naval Headquarters Spares for Echosounder 68.239,30
India VE 59
- --------------------------------------------------------------------------------------------------
DE / 253 7044 24.04.99 Marinha Repair of Dipping Sonar up to
Almada / Portugal 1.500.000,00
- --------------------------------------------------------------------------------------------------
DE / 253 7021 29.10.98 Ministeria de Defensa Armada Repair of Dipping Sonar up to
Spain 200.000,00
- --------------------------------------------------------------------------------------------------
DE / 253 7036 14.03.99 AlliedSignal Aerospace Spares for Echosounder up to
Canada VE 59 1.500.000,00
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Zehner Zehner
Tausender Hunderster 13579 Tausender Hunderster 24680 [illegible]
- -----------------------------------------------------------------------------------------------------------------------------------
Vorstan
Personlich haftende
Grundoder Gesellschafter a) Tag der Eintragung
Stammkapital Geschafesfuhrer und Unterschrut
[illegible] Unternehmens DM Abwickler Prokura Rechtsverhaltniste b) Bemerkungen
- -----------------------------------------------------------------------------------------------------------------------------------
2 3 4 5 6 7
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
[illegible] GmbH 20.000 -- DM Dr. Ing. Reinhard Gesellschaft mit a) 9.Februar 1978
Ludwig in Kiel. beschrunkter Haftung.
[illegible] und der Ver- Der Gesellschaftsvertrag
Erzeugnissen auf der Burkhard Kubisch in ist am 7. Februar 1978 /s/ [illegible]
Elektroakustic, [illegible] Hamburg. errichtet.
der allgemeinen [illegible]
und des Ma- [illegible] Die Geschuftsfuhrer Dr.
insbesondere [illegible] Reinhard Ludwig und
der Mautik [illegible] Burkhard Kubisch
vertreten die
Gesellschaft gemeinsam.
- -----------------------------------------------------------------------------------------------------------------------------------
[illegible] Elac-Nautik Dr. Helmut Hoss Gesellsehaft
naft mit be- in Birstein. Durch den Beschluss der a) 22.Juni 1978
[illegible] Haftung Gesellschafterversammlung
vom 17 Mai 1978 ist der
Gesllschaftsvertrag in /s/ [illegible]
ss.1 (Firma) geundert
worden.
Burkhard Kubisch ist
nicht mehr
Geschaftsfuhrer.
Dr. Helmut Hoss ist zum
weiteren Geschuftsfuhrer
bestellt worden ; er ist
alleinvertretungs-
berechtigt.
Der Geschuftsfuhrer Dr.
Ing. Reinhard Ludwig
vertritt die Gesellschaft
gemeinsam mit einem
anderen Geschuftsfuhrer.
- -----------------------------------------------------------------------------------------------------------------------------------
Dr.Ing. Norbert a) 27.Juli 1978
Schmitt, Otten-
dorf. /s/ [illegible]
Dipl.-Ing. Uwe
Miers, Strande.
Dr. rer.nat.
Fritz Horing.
Kiel.
ist derert Prokura
erteilt. dess jeder
von ihnen gemeinsam
mit einem
Ceschaftsfuhrer
vertretungaber-
ochtight ist.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Ruckselte von Blatt [ILLEGIBLE]
-----------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Vorstand
Personlich haftende
Grundoder Gesellschafter a) Tag der Eintragung
Stammkapital Geschaftsfuhrer und Unterschrift
Unternehmens DM Abwickler Prokura Rechtsverhaltnisse b) Bemerkungen
- -----------------------------------------------------------------------------------------------------------------------
2 3 4 5 6 7
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3.000.000,- Durch den Beschluss a) 31.August 1978
DM. der Gesellschafter- /s/ [ILLEGIBLE]
versammlung vom
4.August 1978 ist der
Gesellschaftsvertrag
in ss. 3 (Stammkapital)
geandert und das
Stammkapital der
Gesellschaft auf
3.000.000,- DM erhoht
worden.
- -----------------------------------------------------------------------------------------------------------------------
Kaufman Manfred Diplom-Kaufman Kaufmann Manfred a) 8.Februar 1979
Fiedler, Neustadt Manfred Stolzle, Fiedler, Kronberg
i.H. Kronberg/Ts, ist Neustadt i.H. Ts., ist b) Manfred Fiedler
derart Prokura zum Geschaftsfuhrer wohnt in Neu-
erteilt, dass er bestellt. Er ist stadt i.H.
gemeinsam mit gemeinsam mit einem Shreibfehler
einem Ge- anderen Geschafts- berichtigt
schaftsfuhrer fuhrer oder zusammen am 22. Februar 1979
vertretungs- mit einem Prokuristen
berechtigt ist. vertretungsberechtigt. /s/ [ILLEGIBLE]
Ist er alleiniger
Geschaftsfuhrer, so
ist er alleinvertretungs
berechtigt.
- -----------------------------------------------------------------------------------------------------------------------
Die Prokura Dr. a) 17.Januar 1980
Ing. Norbert /s/ [ILLEGIBLE]
Schmitt. Ottendorf
ist erloschen.
- -----------------------------------------------------------------------------------------------------------------------
Die Prokura Uwe a) 21.August 1980
Miers, Strande, /s/ [ILLEGIBLE]
ist erlsochen.
- -----------------------------------------------------------------------------------------------------------------------
Dipl.-Ing. Peter a) 25.Juni 1981
Hoehne, Hamburg, /s/ [ILLEGIBLE]
Ing, grad, Rolf
Obermuller, Kiel
und Dipl.-Ing, Helmut
Spahn, Kipl. ist
derart Prokura erteilt,
dass jeder von ihnen
gameinsam mit einem
Geschaftsfuhrer
vertretungsberechtigt
ist.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Fortsetzung auf dem ____ ten Blett.
<PAGE>
<TABLE>
<CAPTION>
Zehner Zehner
Tausender Hunderster 13579 Tausender Hunderster 34680 [ILLEGIBLE]
- -----------------------------------------------------------------------------------------------------------------------------------
Vorstan
Personlich haftende
Grundoder Gesellschafter a) Tag der Eintragung
Stammkapital Geschafesfuhrer und Unterschrut
Unternchmens DM Abwickler Prokura Rechtsverhaltniste b) Bemerkungen
- -----------------------------------------------------------------------------------------------------------------------------------
2 3 4 5 6 7
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5.710.000,- Gunter Boeckmann in Durch den Beschluss der a) 16.Dezember 198
Hamburg ist derart Gesellschafterversammlung [ILLEGIBLE]
Prokura erteilt, dass vom 15. Juli 1982 ist das /s/ [ILLEGIBLE]
er die Gesellschaft Stammkapital der Gesellschaft
gemeinsam mit einem um 2.710.000,--DM auf
Geschaftsfuhrer ............... 5.710.000,--
vertritt. DM erhoht und ss. 3 des
Die Prokura Manfred Gesellschaftsvertrages
Stolzle ist erloschen. entsprechend geandert worden.
- -----------------------------------------------------------------------------------------------------------------------------------
Dipl. Ing. Peter Dr. Helmut Hoss ist Dipl,-Ing. Peter Gielen Dr. a) 8. August 1985
Gielen, Bruch- nicht mehr Geschafts- Helmut Hoss und Ilmer G. /s/ [ILLEGIBLE]
kobel, Ing, Ilmar fuhrer. Raudsep sind zu
G. Raudsep, Dipl, Ing, Peter Gielen, Geschaftafuhrern bestellt
Maintal Bruchkobel. worden.
Ing. Ilmar G. Raudsep, Jeder von Ihnen
Maintal vertritt die Gesellschaft
gemeinsam mit einem anderen
Geschaftsfuhrer oder einem
Prokuristen.
Dr. Helmut Hoss ist nicht mehr
Geschaftsfuhrer.
- -----------------------------------------------------------------------------------------------------------------------------------
Harald Book in Kronshagen a) 28.November 1985
ist derart Prokura erteilt, /s/ [ILLEGIBLE]
dass er gemeinsam mit einem
Geschaftsfuhrer
vertretungsberechtigt ist.
- -----------------------------------------------------------------------------------------------------------------------------------
15.070.000,- Durch den Beschluss der a) 13. Februar 1986
Gesellschafterversammlung /s/ [ILLEGIBLE]
vom 26. November 1985 ist das
Stammkapital der
Gesellschaft um 9.360.000,--
DM auf 15.070.000,-- DM erhoht
und ss. 3 des
Gesellschaftsvertrages
entsprechend geandert worden.
- -----------------------------------------------------------------------------------------------------------------------------------
Harald Book Die. Prokura Harald Harald Book [ILLEGIBLE] ist a) 17. Dez. 1987
in Kronshagen. Book ist erloschen. zum stellvertretenden /s/ [ILLEGIBLE]
Geschaftsfuhrer bestellt
worden. Er ist gemeinsam mit
einem anderen Geschaftsfuhrer
vertretungsberechtigt.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Ruckselte von Blatt 2 HR B 1221
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Vorstand
Personlich
haftende a) Tag der Eintragung und
Grundoder Gesellschafter Unterschrift
Stammkapital Geschaftsfuhrer
Unternchmens DM Abwickler Prokura Reditsverhaltalsse b) Bemerkungen
- ------------------------------------------------------------------------------------------------------------------------------------
3 4 5 6 7
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Manfred Fiedler ist a) 4. September 1986
nicht merh
Geschaftsfuhrer.
Der Geschaftsfuhrer Dr.
Ing. Reinhard Ludwig
vertritt die
Gasellschaft zusammen
Die Prokuren Petor mit einem enderen
Hoehne und Gunter Geschaftsfuhrer oder
Boeckmann sind zusammen mit ainem
erloschen. Prokuristen. /s/ [Illegible]
- ------------------------------------------------------------------------------------------------------------------------------------
Mit der Honeywell
Aktiengesellschaft in a) 12. Februar 1987
Offenbach am Main ist
ein Beherrachungs-und
Gewinnabfuhrungsvertrag
geschlossen worden. /s/ [Illegible]
- ------------------------------------------------------------------------------------------------------------------------------------
Dr. Jorg Boscher in Ingenieur Illmar a) 23. April 1987
Preetz und Lutz G. Raudsep ist nicht
Hoffmann in Kiel ist mehr Geschaftsfuhrer.
derart Prokura erteilt,
dass jeder von ihnen
gemeinschaftlich mit
einem Geschaftsfuhrer
vertretungsberechtigt
ist. /s/ [Illegible]
- ------------------------------------------------------------------------------------------------------------------------------------
Harald Book in
Kronshagen ist zum
atellvertretenden
Geschaftsfuhrer a) 17. Dez. 1987
bestellt worden. Er ist
gemeinsem mit einem
Harald Book in Die Prokura Harad Book anderen Geschaftsfuhrer
Kronshagen. ist erloschen. vertretungsberechtigt. /s/ [Illegible]
- ------------------------------------------------------------------------------------------------------------------------------------
Der bisherige
stellvertretende
Geschaftsfuhrer Harald
Book ist zum
Geschaftsfuhrer
bestellt worden; er ist a) 23.Febr. 1989
gemeinsem mit einem
Die Prokura fur Ing. anderen Geschaftsfuhrer
grad. Rolf Obermuller oder einum Prokuristen
ist erloschen. vertretungsberechtight. /s/ [Illegible]
- ------------------------------------------------------------------------------------------------------------------------------------
Dipl.-Ing. Ivar Eldring
in Altanholz ist derart a) 20. Juli 1989
Prokura erteilt, dass
er gemeinschaftlich mit
einem Geschaftsfuhrer
vertretungsberechtigtist. /s/ [Illegible]
- ------------------------------------------------------------------------------------------------------------------------------------
Heino Glimm in
Revensdorf ist derart
Prokura erteilt, dass a) 05. Juli 1990
er gemeinschaftlich mit
einem Geschaftafuhrer
vertretungberechtigt
ist. /s/ [Illegible]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Zehner Zehner
Tausender Hunderster 13579 Tausender Hunderster 24680 [ILLEGIBLE]
- -----------------------------------------------------------------------------------------------------------------------------------
Vorstand
Personlich haftende
Grundoder Gesellschafter a) Tag der Eintragung
Stammkapital Geschaftsfuhrer und Unterschrift
[ILLEGIBLE] Unternehmens DM Abwickler Prokura Rechtsverhaltnisse b) Bemerkungen
- -----------------------------------------------------------------------------------------------------------------------------------
2 3 4 5 6 7
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Diplomphysiker Dr. Folgende Prokuren sind Dr. Reinhard Ludwig a) 14. Jan. 1993
Egon Tyssen in erloschen: Heino Glimm, ist nicht mehr /s/ [ILLEGIBLE]
Alzenau Lutz Hoffman, Ivar Geschaftsfuhrer.
Eldring, Helmut Spahn.
Wilfried Berghmann in Der Diplomphysiker Dr. b) 04. Marz 1993
Grosskbrotzenburg und Egon Tyssen in Alzenau /s/ [ILLEGIBLE]
Franz Werthmann in ist zum Geschaftsfuhrer
Erlensee ist derart bestellt worden. Er
Prokura erteilt, dass vertritt die
jeder von ihnen Gesellschaft gemeinsam
gemeinsam mit einem mit einem anderen
Geschaftsfuhrer Geschaftsfuhrer oder in
vertratungsharechtigt Gemeinschaft mit einem
ist. Prokuristen.
- -----------------------------------------------------------------------------------------------------------------------------------
Dr Luder Hogrefe Herald Book ist nicht
in Kiel mehr Geschaftsfuhrer.
Dr Luder Hogrefe in
Kiel ist zum
stellvertretendon
Geschaftsfuhrer
bestellt worden; er ist
gemeisam mit einem
anderen Geschaftsfurhrer
oder in Gemeinschaft
mit einem Prokuristen
vertretungsberechtigt.
- -----------------------------------------------------------------------------------------------------------------------------------
Gesamtprokuristen: a) 28. Okt. 1993
/s/ [ILLEGIBLE]
Gerhard Jordt in
Schonberg, Willi
Tietz in Wattenbek.
Jeder von ihnen ist
gemeinsam mit einem
Geschaftsfuhrer
vertretungsberechtigt.
Die Gesamtprokuren
Franz Worthmann und
Wilfried Bergmann
sind erloschen.
- -----------------------------------------------------------------------------------------------------------------------------------
Die Prokura Dr. Jorg a) 07. April 1994
Boscher ist erloschen. /s/ [ILLEGIBLE]
- -----------------------------------------------------------------------------------------------------------------------------------
[Illegible] Durch die Beschlusse a) 09. Juni 1994
ELAC Nautik der Gesellschafterver- /s/ [ILLEGIBLE]
sammlungen vom 13./27.
April 1994 ist der
Gesellschaftsvertrag in
ss.1 (Firma)
geandert worden.
Dr. Egon Tysse und
Peter Gielen sind nicht
mehr Geschaftsfuhrer.
Der Beherrschungs- und
Gewinnabfuhrungs-
vertrag vom 21./25.
November 1986 ist
durch Aufhebungsvertrag
vom 31. Marz 1994 zum
Ablauf des 31. Marz
1994 beendet worden.
- -----------------------------------------------------------------------------------------------------------------------------------
Fortseizung Ruckselte
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Rictselte von Blatt
Vorstand
Personlich haftende
Grundoder Gesellschafter a) Tag der Eintragung
Stammkapital Geschaftsfuhrer und Unterschrift
[ILLEGIBLE] Unternehmens DM Abwickler Prokura Rechtsverhaltnisse b) Bemerkungen
- -----------------------------------------------------------------------------------------------------------------------------------
2 3 4 5 6 7
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert A. Scrofano, Der Kaufmann Robert a) 03. Nov. 1994
Kaufmann in Agoura, A. Scrofano in /s/ [ILLEGIBLE]
CA 91301, USA Agoura, CA 91301,
USA, ist zum
Geschaftsfuhrer
bestallt worden; er
ist alle-
invertretungs-
berechtigt
- -----------------------------------------------------------------------------------------------------------------------------------
Die Gesellschaft hat a) 26. Jan. 1995
als beherrschte /s/ [ILLEGIBLE]
Gesellschaft mit
Unternehmensvertrag
vom 01./08. Dezember
1994 einen
Beherrschungs- und
Gewinnabfuhrungs-
vertrag mit der
Allied-Signal
Deutschland GmbH in
Raunheim
abgeschlossen, dem
die Gesellschafter-
versammlung am 14.
Dezember 1994
zugestimmt hat.
</TABLE>
<PAGE>
[Illegible] HR B 1221 Blatt 4
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
a) Firma Vorstand
Personlich
b) Sitz haftende a) Tag der Eintragung und
Grundoder Gesellschafter/In Unterschrift
c) Cegenstand des Stammkapital Geschaftsfuhrer/In
Unternchmens DM Abwickler/In Prokura Reditsverhaltalsse b) Bemerkungen
- ------------------------------------------------------------------------------------------------------------------------------------
2 3 4 5 6 7
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rovert A. Scrofano ist a) 15. Aug. 1996
nicht mehr
Die Prokura Dr. Fritz Geschaftsfuhrer.
Horing ist erloschen.
/s/ [Illegible]
Wilhelm Gorl in
Grossbarkau ist derart
Prokura erteilt, dass er
gemeinschaftlich mit Der Geschaftsfuhrer Dr.
einem Geschaftsfuhrer Loder Hogrefe ist
vertretunsberechtigt ist. alleinvertretungsberechtigt.
- ------------------------------------------------------------------------------------------------------------------------------------
Die Prokuren Gerhard
Jordt, Willi Tietz und
Wilhelm Corl sind
dahingehend geandert,
dass jeder der
Prokuristen die a) 29. Aug. 1996
Gesellschaft in
Gemeinschaft mit einem
Geschaftsfuhrer oder
Prokuristen vertritt. /s/ [Illegible]
- ------------------------------------------------------------------------------------------------------------------------------------
Es wird ausdrucklich darauf hingewiesen, dass die
unterstrichenen Teile der Eintragung in der
nachstehenden Fotokopie in Verbindung mit den
Veranderungs- und Loschungsvermerken geloscht sind.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Fortsetzung Ruckseite
<PAGE>
- --------------------------------------------------------------------------------
DE/203 7050 07.07.99 Hellenic Navy Spares for Echosounder 107.344,00
Piraeus/Greece VE 59
- --------------------------------------------------------------------------------
DE/264 8662 10.09.99 ORCA Instrumentation Diver Sonar DSE 1 909.829,40
Brest/France
- --------------------------------------------------------------------------------
ELAC - Vehicle Registrations
--------------------------------------------------------------------
Kfz-Kennzeichen Fahrer KSt. Nr. des Kfz-Briefes
- --------------------------------------------------------------------------------
1 K1 - DC 409 EX 710
- --------------------------------------------------------------------------------
2 K1 - AS 554 EX 710
- --------------------------------------------------------------------------------
3 K1 - AS 908 EX 710 BB810307
- --------------------------------------------------------------------------------
4 K1 - AS 885 EX 710 BB805514
- --------------------------------------------------------------------------------
5 K1 - DA 605 Dr. L. Hogrefe 210
- --------------------------------------------------------------------------------
6 K1 - AS 760 G. Jordt 210 BB849466
- --------------------------------------------------------------------------------
7 K1 - AS 403 W. Tietz 300 BB847854
- --------------------------------------------------------------------------------
8 K1 - AS 1O5 H.-J. Maschmann 400 BB911508
- --------------------------------------------------------------------------------
9 K1 - AS 121 EX 710
- --------------------------------------------------------------------------------
Erprobungsschiff MS "Skjoldnaes"
- --------------------------------------------------------------------------------
ELAC - Business and Local Licenses
ELAC business and local licenses are listed on the following pages.
<PAGE>
ELAC - Vessel Registrations
ELAC vessel registrations are provided on the following pages.
<PAGE>
[Letterhead of Honeywell ELAC]
27. Januar 1982
ERKLARUNG
Hiermit erklaren wir, Honeywell-ELAC-Nautik GmbH, Kiel, Eigentumer der MS
"Skjoldnaes" zu sein. Wir haben das MS "Skjoldnaes" im Mai 1978 im Rahmen der
Obernahme des gesamten nautischen Bereichs der fruheren Electroacustic GmbH i.K.
kauflich erworben.
Honeywell [Illegible]
Nautik Gesellschaft mbH
Westring 425-429 o Tel. [Illegible]
D 2300 Kiel
/s/ [Illegible]
BESTATIGUNG
Wir, die Fa. Electroacustic GmbH i.K.,
Kiel, bestatigen hiermit, dass die Fa.
Honeywell-ELAC-Nautik GmbH, Kiel, das MS
"Skjoldnaes" im Mai 1978 im Rahmen der
Obernahme des gesamten nautischen
Bereichs unserer Gesellschaft kauflich
erworben hat.
ELECTROACUSTIC
Gesellschaft mit beschrankter Haftung
KONKURSVERWALTUNG
GUNTHER GUSTAFSEN
/s/ [Illegible]
<PAGE>
IM(3) lyst nr. 1105/1
- --------------------------------------------------------------------------------
[SEAL OF DENMARK] INTERNATIONALT MALEBREV
(International Tonnage Certificate)
udfaerdiget i overensstemmelse med den Internationale konvention
(issued in accordance with the International Convention
afsluttet i Oslo den 10. juni 1947 (Regel I)
concluded in Oslo the 10th of June 1947 (Rule I)
Skibets navn
(Name of ship) "SKJOLDNAES"
--------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Skibets art Nationalltet Hjemsted Kendingssignal Fremdrivnings-middel
(Description of ship) (Nationality) (Port of registry) (Signal letters) (Propelled by)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Heldaekket lystfartoj Dansk Skovshoved. -- Sejl &.Skrus.
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Aflabsdato Hvor og nar bygget Navn og adresse pa byggevserftet Navn og adresse pa reder[Illegible]
(Date of launching) (Where and when built) (Name and address of builders) (Name and address of owners)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
-- Danmark i 1936 Nordbjaergs Baadevaerft A/S, Kobenhavn Jabrikant J. Allench[Illegible]
Raadmandsgade 6, N.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Antal daek Et Forskib Middelfyldigt -glat staevn Antal skruer En
__________________ Agterskib Spidsgattet Maskineriets art Motor
Antal master En Byggemateriale Teak _______________________
Rigning Kutter __________________________________ Antal skorstene________
- --------------------------------------------------------------------------------
Kendingsmal (Identification dimensions) Feet Meter
- --------------------------------------------------------------------------------
Laengde (Length) fra forkant af den overste ende af
forstaevnen til agterkant af den overste ende af rorstaevnen . 38,1 11,61
Bredde (Bredth), storste udenbords ........................... 13,2 4,02
Dybde, midtskibs pa halv laengde fra undersiden af
malingsdaekket til overkant af bundstokke .................... 5,6 1,69
Laengde overalt (Overall length) ............................. 38,3 11,68
<TABLE>
<CAPTION>
Registertons Kubikmeter Registertons Kubikmeter
<S> <C> <C> <C> <C>
Underdaekstonnage [Illegible] [Illegible] [Illegible] [Illegible]
</TABLE>
<PAGE>
Registertons Kubikmeter
-----------------------------------
Underdaekstonnage
(Space below tonnage [Illegible] 13,09 37,08
- --------------------------------------------------------------------------------
Rum over malingsdaek
Mellemdaeksrum
(Tween-deck space) ..........................
- --------------------------------------------------------------------------------
Rum i abne overdaeksrum
(Round houses etc.) .........................
- --------------------------------------------------------------------------------
Bak (Forecastle) ............................
- --------------------------------------------------------------------------------
Rum i aben bak (R'd h. etc) .................
- --------------------------------------------------------------------------------
Brohus (Bridge) .............................
- --------------------------------------------------------------------------------
Rum i abent brohus (R'd h.) .................
- --------------------------------------------------------------------------------
Loftet Daek
(Raised Deck) ...............................
- --------------------------------------------------------------------------------
Hytte (Poop) ................................
- --------------------------------------------------------------------------------
Rum i aben hytte (R'd h. etc) ...............
- --------------------------------------------------------------------------------
Trunk (Trunk space) .........................
- --------------------------------------------------------------------------------
Ruf (Deck houses) (2) ...................... 1,16 3,29
- --------------------------------------------------------------------------------
Maskinruf (Machinery space
above upper deck) ...........................
- --------------------------------------------------------------------------------
Tillaeg for luger
(Excess of hatchways) .......................
- --------------------------------------------------------------------------------
Brutto (Gross) tonnage ...................... 14,25 40,37
================================================================================
[Illegible] tonnage overfort [Illegible]
Fradrag (deductions)
Registertons
Forer (Master)
Mandskab (Crew) ........... 3,09
- ---------------------------------------
Provlantrum
(Provision room) ..........
- ---------------------------------------
Navigeringsrum
(Navigation spaces) ....... 1,58
- ---------------------------------------
Pumperum
(Pump rooms) ..............
- ---------------------------------------
Kabelrum
(Boatswains stores) .......
- ---------------------------------------
Vandballastrum
(Water ballast
spaces) ................... [Illegible]
- ------------------------------------------------------
Netto tonnage som sejkskib
(If a sailing vessel) [Illegible]
- ------------------------------------------------------
Fradrag for maskinrum
(Machinery space)
25,40% af BRT. [Illegible]
- ------------------------------------------------------
Netto (Net) tonnage [Illegible]
======================================================
Det attesteres herved, at det ovennaevnte skib er blevet malt i overensstemmelse
med de internationale [Illegible]
(This is to certify that above-names ship has been measured in conformity with
the International Regulations for the [Illegible]
tonnagemaling af skibe i henhold til den i Oslo den 10. juni 1947 afsluttede
konvention,
of Ships in accordance with the International Convention concluded in Oslo the
10th of June 1947)
og at brutto tonnagen er: Kubikmeter
and that the gross tonnage is: - 14,25 - Registertons - 40,37 - (cubic meters)
og at netto tonnagen er: Kubikmeter
and that the net tonnage is: - 5,96 - Registertons - 16,89 - (cubic meters)
STATENS SKIBSTILSYN Kobenhavn den 3. juni 19[Illegible]
[Illegible]
[Seal] /s/ [Illegible]
<PAGE>
[SCHEMATIC OF SHIP]
Bow Short
Midship Section: Light, Normal, Heavy Displ.
------
Stern: Doubleender
Fitted with Bowsplit Yes.
L.W.L. [Illegible] Designed Lloyd's Register Measured
--------
Hull form: Day Racing Ocean Racing Cruising Heavy Cruising Commercial
--------
Designer [Illegible] Builder [Illegible] Date built 1936
Ballast Keel Lead. Weight ab. 7000 kg. Internal Ballast 70 Weight 0
Mainmast: hollow, built-up, solid hollow built up Material Oregon Pines
AUXILIARY INSTALLATION Petrol, Paraffin, Diesel, Semi-Diesel Engine
------
Maker's Name and Address Ford marine Diesel F.M.D.T.
Model No. 55863 R. H.P. 52 No. of Cylinders 4
Is Reverse Gear fitted Yes. Is Reduction Gear fitted Yes Ratio 1:2.1
Weight of Installation without Propeller and Shafting ab. 563 kg.
Position of Engine in Hull [Illegible] in Centerline.
<TABLE>
<S> <C> <C> <C> <C>
Propeller: Solid 2 blade On centre line in aperture Propeller diam. 1.650
----- --------------------------
Feathering 3 blade On centre line not in aperture Distance of prop.
------- hub off centre
Folding On quarter P/S B/20
count as ON/OFF centre
</TABLE>
Internal fittings and equipment, etc. -- Light, normal, heavy.
------
Details of Raised Deck, if any
__________________________________________________________ R.D.B.
Measurer's Recommendation as to Division _______________
Any other comments:
KONGELIG DANSK YACHTKLUB
/s/ [Illegible]
RATING CERTIFICATE
According to the RORC rule of 1957
Metric Measurements
[SEAL of Deutscher Segler-Verband]
Yacht Skjoldnas
Owner Fabr. J. Allesch
Address Raadmandsgade. 6. Copenhagen
------------------- -------------
RATING T.C.P.
7.365 M. 24.157 FT 0.6915
------------------- -------------
WHEN RACING WITH THIS CERTIFICATE THE POL[ILLEGIBLE]
MUST NOT BE EXCEEDED
1. Length of spinnaker boom, including cup or goose neck fitting ..........
2. Maximum width of largest spinnaker set .................................
3. Luff or leech of any spinnaker set .....................................
4. Width of the foot of any spinnaker set
in which the width at 3/4-height is less than 3/4 of the foot ........
5. Foot of genoa or yankee--measured horizontally
from tack to a perpendicular dropped from the clew ...................
6. Height above main deck of highest block
on wihch any headsail or spinnaker can be set ........................
7. Height above main deck of highest block ................................
upon which mizzen staysail can be set ................................
N.B. (Yawls and Ketebes only). A.mizzen staysail (may, may not) be [illegible]
<PAGE>
L.O.A. ......................... 11.600
F.G.O. ......................... .285
A.G.O. ......................... .450
L.B.G. ......................... 16.865
F.F. ........................... 1.450
F.A. ........................... 1.000
G.S.D.f. ....................... 0.310
G.S.D.a. ....................... 0.115
F.S.F.D. ....................... 0.060
A.S.F.D. ....................... 0.022
G.D. ........................... ______
y. ............................. ______
F.O.C. ......................... 0.249
A.O.C. ......................... 0
L. ............................. 10.616
B. ............................. 4.000
Q.B.D. ......................... 1.380
F.D. ........................... 1.600
t. ............................. 0.045
F.M.D. ......................... 0.740
F.F.D. ......................... 0.980
D. ............................. 2.053
Draft
excl. Centre board ______
Draft
Centre board down ______
Mast height
to highest point
of measurement 16.050
Rating Formula for Measured Rating =
M.R. = 0,15*L*(sq.root)S / (sq.root)(B*D) + 0,2(L+(sq.root)S)
SAIL AREA
FORETRIANGLE Sq. M.
Height I 12.10 Base J. 6.10
Penalty _____ Penalty 0.550 Meas'd Area 34.515
Allowance 0.945
I cor. _____ J cor. 5.705
MAINSAIL (MIZZEN of W'BONE KETCH)
b 7.400 p 14.650 Meas'd Area 54.205
h _______ d ______ g ______
TOPSAIL l______ p-h_____ Meas'd Area ______
MIZZEN b miz ____, p miz ____ b(1) _____
h miz ____ d miz ____ g miz ____ p(a) __ Meas'd Area ______
WISHBONE KETCH
SCHOONER BETWEEN MASTS
p(1) ______ b(1) _______ p(9) ______ Meas'd Area ______
Other Areas ________________ Meas'd Area ______
------
Measured Sail Area (M.S.A.) ..................... Sum 88.720
A.R.A. 10.093 Rated Sail Area (S.) 70.893
------
(sq. root)S .......................................... 8.420
Mast Height Penalty .................................. ______
Sum ______
------
MEASURED RATING ...................................... 8.485
------
Length of Bowsprit 2.500
Penalties are carried on _____________________________
______________________________________________________
SCANTLINGS
All Dimensions are mm
Main Frames of ore Scantlings or
Thickness (if metal) _________________ sizes of angles [Illegible]
Intermediate Frames of ore Scantlings or
Reversed Frames, thickn. _____________ sizes of angles [Illegible]
Reinforcement or addt. Scantlings or
Frames or Stringers of _______________ sizes of angles ________
Deck Beams of ore Scantlings or
Thickness (if metal) _________________ sizes of angles [Illegible]
Topsides of Teak. Thickness 0.045 [Illegible]
Deck of Teak Thickness 0.045 [Illegible]
W 6.156 R.D.B. __________ 0,5 Bk 0.225 [Illegible]
STABILITY ALLOWANCE
Scantling Component .......... 16.057
Shallow Draft Component ...... ______
Iron Ballast Component ....... ______
Wt. of Engine Component ...... 2.060
------ [RIGHT COLUMN ILLEGIBLE]
Sum 18.117
------
Light Alloy Mast Component ... ______
------
S.T.A. = 18.119 Difference ______
If Positive, STA corrected ... 9.506%
------
Measured at Copenhagen
Date [Illegible] Measured by /s/ [Illegible]
<PAGE>
Schedule 4.19 - Labor Relations
See also Schedules 4.11, 4.19(x).
Ocean Systems
Collective Bargaining Agreements
Local Agreement between AlliedSignal Government Electronic Systems,
Sylmar, Ca., and UAW Local No. 179, dated May 3, 1995
Master Agreement between Divisions of AlliedSignal, Inc. and UAW,
dated May 3, 1995
Supplemental Agreement between AlliedSignal Government Electronic
Systems,
Sylmar, Ca. and UAW Local No. 179, dated March 4, 1995
Letters of Understanding No.s 1-35, covering Supplemental Agreement
dated May 4, 1995
Written Personnel Policies
Employee Handbook for Employees Covered Under the Master Bargaining
Agreement
Salaried Employee Handbook
Retention Agreements
Retention Agreements with key management, V. Davisson, V .Riehl,
A. Logan, D. Dunlop, J. Roscigno, L. DiRienzo, M. Charley, B.
Smith, S. Erdman), aggregate contingent payment of $199,400 for
all eight managers.
ELAC
ELAC is covered by the "Tarifvertrag" of IG Metall Schleswig-Holstein.
This law covers all major employee issues such as salary, vacation, illness,
etc. The "Tarifvertrag" is valid for a certain time period and is a topic of
collective bargaining events between the Union and industrial representatives.
Collective Bargaining Agreements
Gultige Betriebsvereinbarungen
Nr. Betreff Tag des
Inkrafttretens
6/79 Inteme Richtlinien fur innerbetriebliche
Stellanausschreibungen 01.01.80
1/83 Stoirzeiten-Erfassungsgerate an den CNC-Maschinen 01.03.83
1/89 Bildschirm-Arbeitsplatze 12.10.89
1/90 Vorholzeiten 01.04.90
3/90 Schichtzulagen 25.06.90
<PAGE>
2/95 Zeiterfassungssystem "Zepem" 01.03.95
3/95 Arbeitszeitabsenkung 01.09.95
4/95 Neuregelung der Arbeitszeit ab 01.10.95 25.09.95
5/95 Einrichtung eines Arbeitszeitkontos fur die
Verteilung der regelaBigen wochentlichen Arbeitszeit 01.10.95
7/95 Gleitende Arbeitszeit 01.11.95
8/95 Arbeitszeit der Auszubildenden 01.11.95
1/96 IUK-Nutzung BDE 15.07.96
2/96 Vorholzeiten und arbeitsfreie Tage 1997 07.11.96
3/96 Einrichtung einer flexiblen Arbeitszeitregelung 01.12.96
01/97 Betriebliches Vorschlagswesen 01.09.97
Written Personnel Policies
Handbuch fur Mitarbeiter, dated May 26, 1997
Retention Agreements
Retention Agreements with key management (L. Hogrefe, W. Tietz, G.
Jordt), aggregate contingent payment of $108,200 for all three
managers (Purchaser responsibility).
Labor Strikes, Slowdowns or Work Stoppages - ELAC
No significant strikes have taken place in the past five years. Only
two hours work stoppage in 1993-1995.
Liabilities for Severance Pay - ELAG
Lay off payment in 1997 DM 271.285,--
liability for 1998 DM 251,660,--
Layoffs - ELAC
--------------
1993 7
1994 15
1995 27
1996 14
1997 12
All layoffs beginning in 1994 were in accordance with the Honeywell ELAC
Social Plan provided in the data room.
Ocean Systems
1997 Incentive Compensation has not been paid in full. Prior years'
incentive compensation was deferred at employee's request.
Payments for vested, non-exercised stock options remain outstanding.
<PAGE>
Schedule 4.19(x) - Labor Relations
See also Schedule 4.19.
Layoffs - ELAC
--------------
1993 7
1994 15
1995 27
1996 14
1997 12
All layoffs beginning in 1994 were in accordance with the Honeywell ELAC
Social Plan provided in the data room.
Ocean Systems
A production facility in Vista, California was closed effective June,
1997.
Involuntary RIF's occurred on the following dates:
June 23, 1993 November 5, 1993 March 4, 1993 March 1, 1993
July 1995 August 1995 January 1, 1996 February 1996
July 1996 October 1996
Voluntary RIF's occurred on the following dates:
September 1996 November 1996 June 1997 August 1997
See also Local Agreement and Master Agreement between AlliedSignal and
the UAW, Article III, Paragraph 21 & 22, Representation of the UAW Master
Agreement, provided in data room.
<PAGE>
Schedule 4.21(a) - Government Contracts
Sellers are presently aware of an international sales matter, which
Purchaser acknowledges having had the opportunity to discuss with Sellers'
counsel (voluntary disclosure #329, relating to sales to the government of
Greece and the United States).
A dispute relating to the Maritime Coastal Defense Vessel involving the
Canadian Navy has recently been settled.
There is one contractual dispute related to a German Government contract.
ELAC intends to solve the dispute prior to January 21, 1998.
Contract Data:
Customer: BWB, Koblenz, Germany
Content: Development and delivery of 4 ea. Reflexducers
Date of Contract: 8/7/1995
Value: DM 712.5 k
Last Shipment: Dec. 1998
Current Status:
An agreement with the customer was settled on 5th November, 1997, to
close the contract end of December 1997 without shipment of transducers. ELAC
agreed to pay back 438 k DM of the total payment of 712.5 k DM that was received
end of 1996. BWB accepts the development results.
Payback has to be transferred 30 days after written approval of BWB. ELAC
confirmed agreement in writing 7th of November, BWB approval expected in the
last week of December, 1997, payment to be released January 1998.
See also Schedules 4.9 and 4.21(b).
<PAGE>
Schedule 4.21(b) - Government Contracts
See also Schedule 4.21(a).
Investigations or Audits - Ocean Systems
AlliedSignal Government Compliance Assurance report dated October 27, 1997.
AlliedSignal Internal Audit Sell-Side Due Diligence Review of Ocean Systems in
connection with the proposed sale of the Business (Summer 1997) (no written
report prepared, except as reflected in Schedule 4.4.).
An Estimating System Audit was performed by DCAA in November 1997 and a draft
report has been delivered to Ocean Systems.
The Sylmar site is subject to DCAA audits and fact finding in connection
with all forward pricing rate proposals, contract proposals and contract awards
with the US Government.
The only unusual costs which have not yet been approved for forward
pricing rate purposes for the Sylmar site include the Vista, California facility
closure severance payments; the 1996 Sylmar Involuntary RIF severance payments
and the 1994 earthquake expenses.
ELAC
Cost estimate audit of hourly pay rates and estimation rates executed by the
Federal Authorities for Defense and Procurement (German Government) in Koblenz
for the year 1997
Actual cost audit and audit of various cost plus contracts executed by the State
Authorities for Economy, Technology and Traffic of the State of Schleswig-
Holstein for the years prior to 1995.
<PAGE>
Schedule 4.21(c) - Government Contracts
See Schedules 4.21(a) and 4.21(b).
<PAGE>
Schedule 4.21(d) - Government Contracts
See Schedules 4.21(a) and (b).
<PAGE>
Schedule 4.21(e) - Government Contracts
See Schedules 4.21(a) and (b).
<PAGE>
Schedule 4.22 - Government Furnished Equipment
See following pages.
<PAGE>
PROPERTY ADMINISTRATOR WORKSHEET
- --------------------------------------------------------------------------------
DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
Prime Contracts
<TABLE>
<CAPTION>
==========================================================================================================================
Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 1
- --------------------------------------------------------------------------------------------------------------------------
Estimated Total Value Special Other Agency Indust Material
Control Number Completion Government Special Test Plant Peculiar Plant
Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N00019-97-C-0008 821 LI 550 250 21 SDC, AWM-24B
------------------------------------------------------------------------------------------
FP $967,601 $ 148373 654284 134944
- -----------------------------------------------------------------------------------------------------------------------
N00024-84-C-6O74 352 LI 305 47 TB-23
------------------------------------------------------------------------------------------
FP $216,167 $ 65269 150898
- -----------------------------------------------------------------------------------------------------------------------
N00024-85-C-8236 207 LI 21 186 TB-23, BQ ASA
------------------------------------------------------------------------------------------
FP $920,305 $ 39323 380982
- -----------------------------------------------------------------------------------------------------------------------
N00024-89-G-6098 2 LI 2 TARC
------------------------------------------------------------------------------------------
FP $3,775 $ 3775
- -----------------------------------------------------------------------------------------------------------------------
N00024-89-C-6066 48 LI 46 2 ADC MK3
------------------------------------------------------------------------------------------
FP $43,551 $ 41431 2120
- -----------------------------------------------------------------------------------------------------------------------
N00383-88-G-K301 446 LI 307 139 Q13B
------------------------------------------------------------------------------------------
FP $ 84488 275242
- -----------------------------------------------------------------------------------------------------------------------
N00024-94-C-6152 LI ADC MK3
------------------------------------------------------------------------------------------
FP $
- -----------------------------------------------------------------------------------------------------------------------
Total LI 1229 626 21 0 0 0 0
------------------------------------------------------------------------------------------
Total $ 378,884 1,997,301 134,944 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
GRAND TOTAL LINE ITEMS 1876 GRAND TOTAL $$ 2,511,129
========================================================================================================================
</TABLE>
<PAGE>
PROPERTY ADMINISTRATOR WORKSHEET
DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
<TABLE>
<CAPTION>
==========================================================================================================================
Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 2
- --------------------------------------------------------------------------------------------------------------------------
Estimated Total Value Special Other Agency Indust Material
Control Number Completion Government Special Test Plant Peculiar Plant
Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N00019-92-G-O195 30 LI 30 Q13-F
---------------------------------------------------------------------------------------------
FP $24,672 $ 24672
- --------------------------------------------------------------------------------------------------------------------------
N00024-92-C-65O1 34 LI 34 Q13-F R/M
---------------------------------------------------------------------------------------------
FP $13,227 $ 13227
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
Total LI 64 0 0 0 0 0 0
---------------------------------------------------------------------------------------------
Total $ 37,899 0 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL LINE ITEMS 64 GRAND TOTAL $$ 37,899
==========================================================================================================================
</TABLE>
<PAGE>
PROPERTY ADMINISTRATOR WORKSHEET
DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
<TABLE>
<CAPTION>
==========================================================================================================================
Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 3
- --------------------------------------------------------------------------------------------------------------------------
Estimated Total Value Special Other Agency Indust Material
Control Number Completion Government Special Test Plant Peculiar Plant
Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
Total LI 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------
Total $ 0 0 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL LINE ITEMS 0 GRAND TOTAL $$ 0
==========================================================================================================================
</TABLE>
<PAGE>
PROPERTY ADMINISTRATOR WORKSHEET
DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
<TABLE>
<CAPTION>
==========================================================================================================================
Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 4
- --------------------------------------------------------------------------------------------------------------------------
Estimated Total Value Special Other Agency Indust Material
Control Number Completion Government Special Test Plant Peculiar Plant
Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
Total LI 1293 626 21 0 0 0 0
---------------------------------------------------------------------------------------------
Total $ 416783 1997301 134944 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL LINE ITEMS 1940 GRAND TOTAL $$ 2,549,028
==========================================================================================================================
</TABLE>
<PAGE>
PROPERTY ADMINISTRATOR WORKSHEET
DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
<TABLE>
<CAPTION>
==========================================================================================================================
Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 4
- --------------------------------------------------------------------------------------------------------------------------
Estimated Total Value Special Other Agency Indust Material
Control Number Completion Government Special Test Plant Peculiar Plant
Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
Total LI 1357 626 21 0 0 0 0
---------------------------------------------------------------------------------------------
Total $ 454682 1997301 134944 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL LINE ITEMS 2004 GRAND TOTAL $$ 2,586,927
==========================================================================================================================
</TABLE>
<PAGE>
PROPERTY ADMINISTRATOR WORKSHEET
DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
<TABLE>
<CAPTION>
==========================================================================================================================
Contractor CAGE: 60225 Allied Signal Ocean Systems As of Date: 03/03/97 Page: 4
- --------------------------------------------------------------------------------------------------------------------------
Estimated Total Value Special Other Agency Indust Material
Control Number Completion Government Special Test Plant Peculiar Plant
Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
LI
---------------------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------------------------------------------------
Total LI 2650 1252 42 0 0 0 0
---------------------------------------------------------------------------------------------
Total $ 871465 3994602 269888 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL LINE ITEMS 3944 GRAND TOTAL $$ 5,135,955
==========================================================================================================================
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER Page:
Contract Number: N00019-97-0008 Description: ST/STE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
218510 F2A 03/07/97 07/12/96 N CABLE BOARD P7 3326505-402 2 411 822
218511 F2A 03/10/97 07/12/96 N CABLE BOARD P8 3326505-403 2 413 826
218512 F3F 02/17/92 07/15/96 N CABLE BOARD J1 3326501-401 1 729 729
3326505-401
218515 F3A 03/10/97 07/15/96 N CABLE BOARD J5 3326501-404 2 118 236
218516 F2A 03/10/97 07/12/96 N CABLE BOARD J6 3326501-405 2 155 310
218518 F2A 03/10/97 07/12/96 N CABLE BOARD J7 3326501-407 2 422 844
218520 F2F 03/10/97 07/15/96 N CABLE BOARD, A37 PWR ASSY 3326501-409 2 244 488
218527-1 C6C REPR 06/29/93 07/15/96 N FIXTURE, ENCLOSURE ASSY 8013475-1-801 1 987 987
3326501-801
218527-2 C6C 05/31/96 05/31/96 N FIXTURE, ENCLOSURE ASSY 3326501-801 1 987 987
8013475-1-801
218527-3 C6C 05/31/96 05/31/96 N FIXTURE, ENCLOSURE ASSY 8013475-1-801 1 987 987
3326501-801
218527-4 CSC REPR 08/29/93 07/09/96 N FIXTURE, ENCLOSURE ASSY 8013475-1-801 1 987 987
3326501-801
218527-5 CICON ENG 03/25/97 06/11/96 N FIXTURE, ENCLOSURE ASSY 8013475-1-801 1 987 987
3326501-801
218527-6 C6C 12/18/96 07/09/96 N FIXTURE, ENCLOSURE ASSY 8013475-1-801 1 987 987
3326501-801
218527-7 C6C REPR 07/09/96 07/09/96 N FIXTURE, ENCLOSURE ASSY 3326501-801 1 987 987
8013475-1-801
2186741 C58 03/09/92 07/01/95 N TEMPLATE 3822114-1 1 52 52
2186742 C5B 03/09/92 07/01/96 N TEMPLATE 3322114-2 1 52 52
218675A/B C7E5 02/24/92 07/10/96 N TEMPLATE 3320165-1 1 379 379
218676 C7E4 02/24/92 07/19/96 N ROUTER PLATE 3320165-1 1 240 240
218677 C7E9 02/26/92 07/10/96 N TEMPLATE 3320165-2 1 135 135
218678 C7E7 02/26/92 07/10/96 N ROUTER PLATE 3320165-2 1 20 20
218679 C6E22 02/24/92 07/09/96 N PANTO MASTER 3320182 1 117 117
218680 C6E22 02/24/92 07/09/96 N PANTO MASTER 3320162 1 435 435
218681 C6E22 02/24/92 07/09/96 N PANTO MASTER 3325162 1 328 328
218682 C5B 03/09/92 07/01/96 N TEMPLATE 3320184-5 1 69 69
3320184-6
218683 C6E7 02/21/92 07/09/96 N TEMPLATE 3320184-1 1 647 647
218684 C5B 03/09/92 07/01/96 N DRILL TEMPLATE 3320142 1 326 326
218685 C6E7 02/21/92 07/09/96 N DRILL TEMPLATE 3310793 1 1084 1084
218686 C5B 03/09/92 07/01/96 N DRILL TEMPLATE 3310794 1 739 739
218687-A F3F 02/10/92 07/15/96 N CABLE BOARD 3320250 1 707 707
218687-B F3F 02/10/92 07/15/96 N CABLE BOARD 3320250 1 707 707
218687-C F2B 02/10/92 07/12/96 N CABLE BOARD, XFMR REV C 3320250-403 1 707 707
218688 C5B 03/09/92 07/01/96 N DRILL PATTERN 3322013 1 1025 1025
218689 C6E14 02/24/92 07/09/96 N DRILL PATTERN 3320164-1 1 532 532
218690 C6E15 02/24/92 07/09/96 N ROUTER BLOCK 3320164-1 1 278 278
218691 C6E13 02/24/92 07/09/96 N ROUTER BLOCK 3320184-1 1 258 258
218692 C6E8 02/21/92 07/09/96 N ROUTER BLOCK 3320184-2 1 191 191
218693 C6E8 02/21/92 07/09/96 N ROUTER BLOCK 3320184-3 1 103 103
218694 C6E13 02/24/92 07/09/96 N ROUTER BLOCK 3320184-5 1 265 265
3320184-6
218695 C6E10 02/24/92 07/09/96 N ROUTER BLOCK(2 PC SET) 3322015 1 136 136
218696 C7E9 02/24/92 07/10/96 N DRILL TEMP 3320248 1 295 295
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER Page:
Contract Number: N00019-97-0008 Description: ST/STE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
218697 C7E9 02/24/92 07/10/96 N DRILL TEMP 3320249 1 244 244
218698 C5B 03/09/92 07/01/96 N SAW&DRILL TEMP 3320259 1 87 87
218699 C5B 03/09/92 07/01/96 N DRILL TEMP 3320259 1 122 122
218700 C5B 03/10/92 07/01/96 N DRILL TEMP 3320257 1 70 70
218701 C5B 03/10/92 07/01/96 N DRILL TEMP 3320255 1 267 267
218702 C7E3 02/18/92 07/10/96 N DRILL TEMP 3322033 1 848 848
218703 C6E12 02/24/92 07/09/96 N WALES TEMP 3820254-2 1 331 331
218704 C6E10 02/24/92 07/09/96 N WALES TEMP 3320254-4 1 405 405
218705 C6E16 02/24/92 07/09/96 N ROUTER PLATE 3320254-3 1 355 355
218706 C6E16 02/24/92 07/09/96 N HOLE TEMP 3320254-3 1 1190 1190
218707 C7F 07/10/96 07/10/96 N DRILL TEMP 3322039-1 1 591 591
218708 C4A 02/18/92 06/27/96 N NCL TAPE 3320254-1 1 1590 1590
218709 C6E16 02/24/92 07/09/96 N TEMPLATE 3320164-1 1 1029 1029
218710 C5B 03/10/92 07/01/96 N TEMPLATE 3320184-2 1 105 105
218711 C4A 02/18/92 06/27/98 N NCL TAPE 3322039-1 1 709 709
218712 C5B 03/10/92 07/01/96 N TEMPLATE 3322015 1 66 66
218713 C6E23 02/24/92 06/09/96 N ENGRAVE PLATE 3320254-1 1 103 103
218714 C5B 03/10/92 07/01/96 N TEMPLATE 3320184-3 1 103 103
218747 C5B 03/10/92 07/01/96 N WALES TEMP 3310763 1 202 202
218751 C6E5 05/17/93 07/09/96 N TEMPLATE 3320197-1 1 258 258
3320197-2
218752 C5E 02/24/92 07/09/96 N ROUTER 3320197-2 1 367 367
3320197-1
218753 C5B 03/10/92 07/01/96 N PMF TEMPLATE 3322093 1 540 540
218757 C7E10 02/26/92 07/10/96 N TEMPLATE 3320166-1 1 85 85
218758 C5B 03/10/92 07/01/96 N TEMPLATE 3320166-2 1 53 53
218759 C5B 03/10/92 07/01/96 N TEMPLATE 3320168 1 128 128
218760 C5B 03/10/92 07/01/96 N TEMPLATE 3320171 1 49 49
218772A/B C6E17 02/24/92 07/09/96 N TEMPLATE 3320165-4 1 192 192
3320165-3
218773 C5B 03/10/92 07/01/96 N TEMPLATE 3320165-5 1 179 179
218774 C5B 03/10/92 07/01/96 N TEMPLATE 3320165-6 1 63 63
218775 C5B 03/10/92 07/01/96 N TEMPLATE 3326104-2 1 60 60
218776 C5B 03/10/92 07/01/96 N TEMPLATE 3320184-4 1 149 149
218777 C5B 03/10/92 07/01/96 N TEMPLATE 3324814 1 66 66
218778 C5B 03/10/92 07/01/96 N TEMPLATE 3320198 1 50 50
218779 C5B 03/10/92 07/01/96 N TEMPLATE 3322037 1 119 119
218780 C5B 03/10/92 07/01/96 N TEMPLATE 3310765 1 75 75
218781 MECH-TRONICS 02/11/81 04/27/93 N CHASSIS TOOLING 3326502 1 6000 6000
218783 C6E7 02/21/92 07/09/96 N DRILL TEMP 3320242 1 75 75
218784 C6E7 02/21/92 07/09/96 N ROUTER PLATE 3320242 1 155 155
218791 C7E10 02/26/92 07/10/96 N TEMPLATE 3320167 1 99 99
218796 C5B 07/22/94 07/01/96 N ROUTER BLOCK 3310776 1 99 99
218797 C5B 03/10/92 07/01/96 N TEMPLATE 3820186 1 86 86
218199 C5B 03/10/92 07/01/96 N TEMPLATE 3320172-1 1 135 135
218800 C5B 03/11/92 07/01/96 N TEMPLATE 3320173 1 102 102
218801 F3C 02/11/92 07/15/96 N CABLE BOARD 3322050 1 511 511
218809 F2B 02/10/92 07/12/96 N CABLE BOARD, W10 3322061 1 1173 1173
218810 F2B 02/10/92 07/12/96 N CABLE BOARD, W13 3322062 1 109 109
218814 C5B 03/11/92 07/01/96 N TEMPLATE 3322039-2 1 75 75
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER Page:
Contract Number: N00019-97-0008 Description: ST/STE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
218815 C6E15 02/24/92 07/09/96 N TEMPLATE 3322039-3 1 75 75
218816 C5B 03/11/92 07/01/96 N TEMPLATE 3320254-8 1 75 75
218819 C5B 03/11/92 07/01/96 N TEMPLATE 3320254-9 1 75 75
218820 C5B 01/03/94 07/01/96 N DRILL TEMPLATE 3316024-2 1 171 171
3316024-1
218821 C6E14 02/24/92 07/09/96 N ROUTER PLATE 3316023 1 195 195
218822 C5B 03/11/92 07/01/96 N DRILL TEMPLATE 3316023 1 142 142
218823 C5B 03/11/92 07/01/96 N DRILL & ROUTER FIXTURE 3316022 1 182 182
218824 C5B 03/11/92 07/01/96 N DRILL TEMPLATE 3315902 1 145 145
218825 C5B 03/11/92 07/01/96 N DRILL TEMPLATE 3315959 1 222 222
218826 C5B 05/20/94 07/01/96 N DRILL & ROUTER FIXTURE 3315913 1 245 245
218827 C5B 03/11/92 07/01/96 N DRILL & ROUTER FIXTURE 3315929 1 436 436
218828 C5B 03/01/93 07/01/96 N DRILL TEMPLATE 3316038 1 92 92
218829 C5B 10/29/93 07/01/96 N PUNCH/DIE FIXTURE 3315896 1 519 519
218831 C5B 03/11/92 07/01/96 N TEMPLATE 3320184-3 1 0 0
218833 C5B 03/11/92 07/01/96 N DRILL TEMPLATE 3316022 1 169 169
218839 C5E6 05/20/94 01/09/96 N TEMPLATE 3326468 1 192 192
218840 C5B 09/30/92 07/01/96 N TEMPLATE 3326506-3 1 112 112
218841 C5B 10/06/92 07/01/96 N TEMPLATE 3326506-2 1 69 69
218842 C4A 10/20/92 06/27/96 N STRIPPIT TAPE, W110-1,-2 3326506-1 1 1356 1356
218843 C5B 03/11/92 07/01/96 N TEMPLATE 3320184-4 1 0 0
218844 C5B 04/14/93 07/01/96 N TEMPLATE 3326471 1 23 23
218846 C5B 01/20/93 07/01/96 N TEMPLATE 3316136 1 129 129
218847 C5B 03/11/92 07/01/96 N DRILL TEMPLATE 3316133 1 155 155
218848 C5B 03/01/93 07/01/96 N FORM DIE 3316132 1 641 641
2188531 TOWSON 04/26/94 09/13/96 N SOLDER FIXTURE 20 155 3100
218854 F2B 02/10/92 07/12/96 N HARNESS BOARD, W52 3322052 1 112 112
218856 F3F 02/17/92 07/15/96 N HARNESS BRD 3320170-405 1 2741 18 2759
218857 F3C 02/11/92 07/15/96 N HARNESS BRD 3320160-401 1 1295 1295
218858 F2B 02/10/92 07/12/96 N HARNESS BRD, J18 3320160-402 1 714 714
218859 F3F 02/18/92 07/15/96 N HARNESS BRD,PI6A,68,7A,7B 3320160-404 1 446 446
218860 F3C 02/11/92 07/15/96 N HARNESS BOARD 3320160-405 1 522 522
218881 F3C 02/11/92 07/15/96 N HARNESS BRD 3320170-402 1 4315 4315
218862 F2B 02/10/92 07/12/96 N HARNESS BRD, K1 (1/6) 3320160-406 1 657 657
218863 F2B 02/10/92 01/12/96 N HARNESS BRD, K1 (7/12) 3320160-407 1 843 843
218865 9855A 09/04/80 08/08/96 N LOUVER DIE 3326468 1 1031 1031
218870 F3F 02/17/92 07/15/96 N HARNESS BOARD 3322056 1 1737 1737
218871 F2C 02/11/92 07/12/96 N HARNESS BOARD 3322057 1 224 224
218872 F2C 02/11/92 07/12/96 N HARNESS BOARD 3322059 1 221 221
218873 F3C 02/11/92 07/15/96 N HARNESS BOARD 3322083-407 1 1405 1405
218874 F3C 02/11/92 07/15/96 N HARNESS BOARD 3322053 1 545 545
218875 F2C 02/11/92 07/12/96 N HARNESS BOARD 3322054 1 450 450
218876 F2C 02/11/92 07/12/96 N HARNESS BOARD 3322055 1 109 109
218877 C4B 03/11/92 06/28/96 N HOLDING FIXT 3320169 1 842 842
218878 C7E12 02/26/92 07/10/96 N TEMPLATE 3322089-6 1 150 150
218880 C6E11 08/03/94 07/09/96 N TEMPLATE B/P REV A 3326488-1 1 238 238
218881 C6E15 08/03/94 07/09/96 N ROUTING FIXTURE B/P REV A 3326488-1 1 248 248
218882 C6E11 03/21/94 07/09/96 N TEMPLATE B/P REV A 3326484-1 1 152 152
218883 C6E19 06/07/94 07/09/96 N TEMPLATE B/P REV A 3326484-2 1 73 73
218884 C6E11 08/19/94 07/09/96 N ROUTING FIXTURE B/P REV A 3326488-2 1 337 337
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER Page:
Contract Number: N00019-97-0008 Description: ST/STE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
218885 C6E11 08/03/94 07/09/96 N TEMPLATE B/P REV A 3326488-2 1 178 178
218887 C6E9 10/17/94 07/09/96 N SCREEN, METAL MARKING 3326500 1 170 170
3326506
218890-1 C4A 005 06/07/94 06/27/96 Y GAGE, HEIGHT, MFG REV A 3326400 1 22 22
218890-2 TOWSON 05/05/94 06/05/94 Y GAGE, HEIGHT, MFG REV A 3326400 1 22 22
218891-1 TOWSON 05/05/94 05/05/94 Y GAGE, HEIGHT, INSP REV A 3326400 1 22 22
218891-2 C4A 005 05/20/94 06/27/96 Y GAGE, HEIGHT, INSP REV A 3326400 1 22 22
218892-1 C4A 009 06/06/94 06/27/96 Y HEIGHT GAGE 3326455 1 169 169
218892-2 C4A 0O5 03/17/95 06/27/96 Y HEIGHT GAGE 3326455 1 169 169
218893-1 C4A 005 06/06/94 06/27/96 Y HEIGHT GAGE 3326455 1 104 104
218893-2 C4A 005 06/06/94 06/27/96 Y HEIGHT GAGE 3326455 1 104 184
218894-1 C4A 005 06/06/94 06/27/96 Y HEIGHT GAGE 3326475 1 153 153
218894-2 C4A 005 06/06/94 06/27/96 Y HEIGKT GAGE 3326475 1 153 153
218895-1 C4A 005 06/06/94 06/27/96 Y INSP HEIGHT GAGE REV A 3326475 1 228 228
218895-2 C4A 005 06/06/94 06/27/96 Y INSP HEIGHT CAGE REV A 3326475 1 228 228
218896-1 C4A 005 11/15/94 06/27/98 Y HEIGHT GAGE 3326485 1 169 169
218896-2 C4A 005 12/05/94 06/27/96 Y HEIGHT GAGE 3326485 1 169 169
218897-1 C4A 005 06/06/94 06/27/96 Y HEIGHT GAGE 1 316 316
218897-2 C4A 005 06/06/94 06/27/96 Y HEIGHT GAGE 3326485 1 316 316
218898 C5B 10/19/93 07/01/96 N TEMPLATE 3326483-1 1 116 116
218899 C5B 06/07/94 07/01/96 N TEMPLATE 3326483-2 1 165 165
218902-1 D6F POS 02/14/97 08/23/96 Y GAGE, LEAD PROTRUSION 3326500 1 76 76
218902-2 D6F POS 02/14/97 08/23/96 Y GAGE, LEAD PROTRUSION 3326500 1 76 76
218904 C5B 03/11/92 07/01/96 N LEAD CUT PLATE 3326500 1 854 854
218905 C5B 03/11/92 07/01/96 N LEAD CUT PLATE 1 646 646
218909-1 D6F P08 02/14/97 07/15/96 N PLUGGING FIXT, P7 & P8 3326505-302 1 117 117
218909-2 D6F P03 02/14/97 07/15/96 N PLUGGING FIXT, P7 & P8 3326506-302 1 117 117
218910 F2C 02/11/92 01/12/96 N HARNESS BOARD 3320170-401 1 36 36
218919 F2C 02/11/92 07/12/96 N CABLE BOARD 3322083-405 1 1007 1007
218920 C5B 10/06/92 07/01/96 N WALES TEMPLATE 3326498-1 1 128 128
218921 D6F 08/23/96 07/15/96 N COMP PREP BRD,R29 & R30 3310775-601 1 109 109
3310775-1
218929 TOWSON 04/26/94 09/13/96 N COMP PREP FIXTURE REV A 1 255 255
219028 C6A 03/03/92 07/08/96 N DRILL FIXT 3325371-3 1 215 215
219029 C6A 03/03/92 07/08/96 N ROUTE FIXT 3325371-3 1 215 215
219030 C6A 03/03/92 07/08/98 N DRILL FIXT 3325372-4 1 215 215
219031 C6A 03/03/92 07/08/96 N ROUTE FIXT 3325372-4 1 215 215
219032 C6A 03/03/92 07/08/96 N ROUTE FIXT 3325370-2 1 215 215
219033 C6A 03/03/92 07/08/96 N DRILL FIXT 3325310-2 1 215 215
219038-1 9852B 06/17/96 06/17/96 N ESP HARNESS FIXTURE 3328601-801 1 1076 1076
219038-2 C4D 12/18/95 06/28/96 N ESP HARNESS FIXTURE 3326501-801 1 1076 1076
219051 D6F P08 02/14/97 07/10/96 N SOLDER FIXT 2 240 18 4320
219052 9852B 02/24/95 09/26/96 N NUT DRIVER 3315895 1 4 4
219117-1 C4A 005 12/04/92 06/27/96 Y QA HEIGHT GAGE 3326515 1 171 171
219117-2 C4A 005 12/04/92 06/27/96 Y QA HEIGHT GAGE 3326515 1 171 171
219135-3 9852B 06/17/96 06/17/96 N ALIGN TOOL, A33 INTERCONN 3326501 1 148 148
219135-4 9852B 06/17/96 06/17/98 N ALIGN TOOL, A33 INTERCONN 3326501 1 148 148
219135-5 9852B 06/17/96 06/11/96 N ALIGN TOOL, A33 INTERCONN 3826501 1 148 148
219135-6 9852B 06/17/96 06/17/96 N ALIGN TOOL, A33 INTERCONN 3326501 1 148 148
219136-3 9852B 06/18/96 06/18/96 N ALIGN TOOL,A31,32 INTERCN 3326501 1 144 144
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER Page:
Contract Number: N00019-97-0008 Description: ST/STE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
219136-4 9852B 06/18/96 06/18/96 N ALIGN TOOL,A31,32 INTERCN 3326501 1 144 144
219136-5 9852B 06/18/96 06/18/96 N ALIGN TOOL,A31,32 INTERCN 3326501 1 144 144
219136-6 9852B 06/17/96 06/18/96 N ALIGN TOOL,A31,32 INTERCN 3326501 1 144 144
219153-1 9852B 06/12/96 06/12/96 N ESP WIRING FIXT FRT PNL 1 179 179
219153-2 9852B 06/12/96 08/12/96 N ESP WIRING FIXT FRT PNL 1 179 179
219153-3 0852B 07/16/96 08/14/96 N ESP WIRING FIXT FRT PNL 1 179 179
219189 F3F 02/18/92 07/15/96 N PREP BOARD, REV 8 3326501-804 1 167 167
219471 C6A 03/03/92 07/08/96 N WALES TEMP 3312344-1 1 127 127
219472 C6A 03/03/92 07/08/96 N WALES TEMP 3312339-1 1 127 127
219473 C7E13 03/02/92 07/10/96 N WALES TEMP 3312345-1 1 475 475
219474 C6A 03/04/92 07/08/96 N DRILL TEMP 3312346-2 1 212 212
219475 C7E13 03/02/92 07/10/96 N WALES TEMP 3312346-1 1 410 96 506
219476 C6E24 02/24/92 07/09/96 N WALES TEMP 3312346-2 1 171 171
219477 C6A 03/03/92 07/08/96 N WALES TEMP 3312346-3 1 65 65
219478 C6A 03/03/92 07/08/96 N WALES TEMP BRKT 3312346-4 1 86 86
219479 C6A 03/03/92 07/08/96 N DRILL FIXT 3312346-5 1 271 277
219480 C6E24 02/24/92 07/09/96 N WALES TEMP 3312344-1 1 407 407
219481 C6A 03/04/92 07/08/96 N WALES TEMP 3312344-2 1 127 127
219482 C6A 03/03/92 07/08/96 N WALES TEMP 3312344-3 1 88 88
219483 C6A 03/03/92 07/08/96 N WALES TEMP 3312344-4 1 106 106
219484 C6A 03/04/92 07/08/96 N DRILL FIXT 3312344-7 1 44 44
220182A C4E 03/03/96 07/01/96 N DRILL TEMP R/S ITEM 8014431 1 266 266
220182B C4E 08/13/96 07/01/96 N DRILL TEMP R/S ITEM 8014431 1 274 140 414
220182C C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 3 8014431 1 239 239
220182D C4E 08/13/96 07/01/96 N TEMP BKSD CTOUT ITEM 1 8014431 1 265 265
220182E C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 5 8014431 1 304 304
220182F C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 6 8014431 1 183 183
220182G C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 2 8014431 1 161 41 202
220182H C4E 08/13/96 07/01/96 N TEMP CUTOUT ITEM 2 8014431 1 187 187
220182J C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 9 & 10 8014431 1 204 139 393
220182K C4E 00/13/96 07/01/96 N DRILL TEMP ITEM 2 8014431 1 135 64 199
220182L C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 3 & 7 8014431 1 174 174
220182M C4E 08/13/98 07/01/96 N DRILL TEMP ITEM 3 & 8 8014431 1 174 174
220182N C4E 08/13/96 07/01/96 N DRILL TEMP R/S ITEM 1 8014431 1 134 134
220182P C4E 08/13/96 07/01/96 N DRILL TEMPLATE 8014431 1 136 136
220182R C4E 08/13/96 07/01/96 N DRILL TEMPLATE 8014431 1 262 262
220182S C4E 08/13/96 07/01/96 N DRILL TEMPLATE 8014431 1 262 262
220182T C4E 08/13/96 07/01/96 N WALES TEMP 8014431-13 1 234 234
220182U C4E 08/13/96 07/01/96 N DRILL TEIWLATE 8014431 1 234 234
220183A C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 1 8016664 1 483 483
220183B C4E 08/13/96 07/01/96 N DRILL TEMP, ITEM 1 8016664 1 136 136
220183C C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 1 8016664 1 70 70
220183E C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 3 8016664 1 392 392
220183F C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 2 8016664 1 226 104 330
220183G C4E 08/13/96 07/01/96 N DRILL TEMPLATE 8016664-6 1 320 320
220183H C4E 08/13/96 07/01/96 N DRILL TEMPLATE 8016664-A6 1 207 207
220184A C4E 08/13/96 07/01/96 N DRILL TEMP ITEM 4 8016683 1 395 395
220184B C4E 08/13/96 07/01/96 N DRILL TEMP L/S ITEM 1 8016683 1 157 157
220184C C4E 08/13/96 07/01/96 N DRILL TEMP L/S ITEM 1 8016683 1 448 448
220184D C4E 08/13/96 07/01/96 N DRILL TEMP TOP ITEM 1 8016683 1 152 152
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER PAGE:
CONTRACT NUMBER: N00019-97-G-0008 DESCRIPTION: ST/STE CUSTOMER: USN
<TABLE>
<CAPTION>
Tool Location/ Tot.
Number Vender Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Cost
- ---------- --------- -------- -------- --- -------------------------- ----------- --- --------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
220191 F3B 03/10/97 05/31/96 N HARNESS BRD, PANEL MATRIX 8014470-406 1 1026 1026
220192 F3B 03/10/97 05/31/96 N HARNESS BOARD, J1 CONN 8014470-401 1 572 572
220193 F3B 03/10/97 07/10/96 N HARN BRD. J2 CONN REV B 8014470-402 1 788 223 1011
220194 F2B 03/10/97 05/31/96 N HARNESS BRD, J3 CONN REV B 8014470-403 1 808 218 1026
220195 F3C 03/10/97 05/31/96 N HARNESS BOARD, J4 CONN 8014470-404 1 2223 2223
220196 F2B 03/10/97 05/31/96 N HARNESS BOARD, J5 CONN 8014470-405 1 56 56
220198 CICON ENG 04/30/96 04/30/96 N HARNESS BRD, FACE PLATE 8016659-401 1 207 207
220199 F3C 03/10/97 05/31/96 N HARNESS BRD, P1 REV C 8016720-401 1 1190 437 1627
220200 F3C 03/10/97 05/31/96 N HARN BRD, XA1 & TB1 REV A 8016720-402 1 1305 158 1463
220201 F2B 03/10/97 07/15/96 N HARNESS BOARD, T2, REV B 8016120-403 1 567 320 887
220203 CICON ENG 04/30/96 04/30/96 N HARNESS BRD, J3 8016660-403 1 683 683
220205 F3C 03/10/97 05/31/96 N HARNESS BRD, PANEL 8016665-401 1 657 657
220206 F2B 03/10/97 07/15/96 N HARNESS BRD, S1 8016665-402 I 634 634
220207 C6A 03/04/92 07/08/96 N WALES TEMPLATE 3310737 1 704 704
220209 C6A 03/04/92 07/08/96 N PUNCH TEMPLATE 8016687 1 252 252
220214 C6A 03/04/92 07/08/96 N DRILL/ROUTING TEMPLATE 3183843 1 509 509
220221 F3C 03/10/97 07/15/96 N HARN BRD, PATCH PNL 8016600-402 1 1694 1694
220222 F3C 03/10/97 05/31/96 N HARN BRD, P16 & P17 8016600-404 1 1551 1551
220223 F3C 03/10/97 05/31/96 N HARN BRD, P14 & P15 REV B 8016600-405 1 1930 68 1998
220224 F2B 03/10/97 07/15/96 N HARN, TEST POINT PANEL 8014440-402 1 2091 282 2373
[ILLEGIBLE]
[ILLEGIBLE]
220227 F3F 05/31/96 05/31/96 N HARN BRD, FRNT PNL REV B 8014470-407 1 1739 135 1874
220233 F2B 03/10/97 07/15/96 N HARN BRD, TB2 THRU TB33 8014440-401 1 1567 1567
220234 F3E 05/31/96 O5/31/96 N HARN BRD, FRONT PANEL 8014440-403 1 639 639
220235 TOWSON 04/21/94 09/13/96 N CONN LEAD TRIM FIXT REV A 3324670 1 2613 2613
3320485
220235A-1 TOWSON 04/21/94 09/13/96 N CONN LEAD TRIM PLT REV A 1 0 0
220235A-2 TOWSON 04/21/94 09/13/96 N CONN LEAD TRIM PLT REV A 1 0 0
220235B-1 TOWSON 04/21/94 09/13/96 N CONN LEAD TRIM PLT REV A 1 0 0
220235B-2 TOWSON 04/21/94 09/13/96 N CONN LEAD TRIM PLT REV A 1 0 0
220237 F3C 08/10/97 05/31/96 N HARN BRD/ P14A, P14B, P15 8014470-408 1 1998 1998
220238 F3C 03/10/97 05/31/96 N HARN BRD, P16A & P16B 8014470-412 1 1635 1635
220239 C7E22 09/09/96 06/25/96 N DRILL TEMPLATE, FRAME 8016750 1 591 591
220240 C7E23 09/09/96 06/25/96 N DRILL TEMPLATE, FRAME 8016750 1 632 632
220241 C7E18 09/09/96 06/25/96 N DRILL TEMP, RIGHT SIDE 8016750 1 413 413
220243 CICON ENG 07/16/96 05/31/96 N HARN BRD, J1 & J2 REV A 8016705-401 1 531 531
220244 CICON ENG 08/22/96 05/31/96 N HARN BRD, J3 REV B 8016705-403 1 212 155 367
220245 CICON ENG 08/22/96 05/31/96 N HARN BRD, J4 REV NC 8016705-404 1 266 266
220246 F2C 03/10/97 07/15/96 N HARN BRD, P1 8016705-402 1 207 207
220247 CICON ENG 08/22/96 05/31/96 N HARN BRD, LAY-IN REV NC 8016705-406 1 531 531
220248 C7E24 01/16/97 06/24/96 N WIRING FIXT, XDCR TEST 8016705 1 1351 486 1837
220249 F2C 03/10/97 05/31/96 N HARN BRD, CHASSIS LAYIN 8014470-415 1 322 322
220253 F2C 03/10/97 05/31/96 N HARN BRD, TB WIRES/TOP 8014440-404 1 513 513
220256 CICON ENG 04/30/96 04/30/96 N HARN BRD, CAB 2 LAY IN 8016660-401 1 419 419
220257 CICON ENG 09/06/96 05/31/96 N HARN BRD, #1 FRONT PNL 8014530-401 1 648 36 684
220258 CICON ENG 08/22/96 05/31/96 N HARN BRD, #2 FRONT PNL 8014530-405 1 513 513
220308-1 9852E 08/24/95 06/21/96 N ALIGNMENT TOOL 8016600 1 284 284
220308-2 9852E 08/24/95 06/21/96 N ALIGNMENT TOOL 8016600 1 284 284
220309-1 9852E 09/14/95 06/21/96 N ALIGNMENT TOOL 8016600 1 428 428
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER PAGE:
CONTRACT NUMBER: N00019-97-G-0008 DESCRIPTION: ST/STE CUSTOMER: USN
<TABLE>
<CAPTION>
Tool Location/ Tot.
Number Vender Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Cost
- ---------- --------- -------- -------- --- -------------------------- ----------- --- --------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
220309-2 9852E 09/14/95 06/21/96 N ALIGNMENT TOOL 8016600 1 428 428
220359 CICON ENG 03/10/93 07/10/96 N MOLD, CABLE ASSY 8017072(A) 1 441 441
E252953 9852B 06/18/96 06/18/96 TEST FIXT BD ASSY A7 3320140 1 3000 3000
3320190
E252954 9852E 09/19/95 06/21/96 N TEST FIXT, TONE DECODER A8 3320140 1 2000 2000
3320205
E252955 D6B 02/25/92 07/11/96 N TEST FIXT, TONE DECDR LOG 3320201 1 2500 2500
3320140
E252956 9852B 06/18/96 06/18/96 TEST FIXT 3320140 1 3000 3000
3320210
E252957 9852B 06/18/96 06/18/96 N TEST FIXT FREQ SEL BD A2 3320140 1 2000 2000
3320175
E252959 9852B 06/18/96 06/18/96 TEST FIXT 3820140 1 1800 1800
3322030
E252960 9852B 06/18/96 06/18/96 N TEST FIXT 3320140 1 1800 1800
3320225
E252964 9852B 06/18/96 06/18/96 TEST FIXT 3320180 1 2000 2000
E252965 9852B 06/18/96 06/18/96 TEST FIXT 3320187 1 2000 2000
E252966 9852B 09/19/95 06/21/96 TEST FIXT 3320215 1 2000 2000
E252969 9852B 09/08/92 06/14/96 N TEST FIXT 3320230 1 2000 2000
[ILLEGIBLE]
[ILLEGIBLE]
[ILLEGIBLE]
E252976 D6B 07/13/92 07/11/96 N TEST FIXT A4A4 3322085 1 2000 2000
E252977-1 D5B 07/18/96 06/13/96 N TEST FIXT W-56 1 250 250
E252977-2 D5B 05/24/96 07/10/96 N TEST FIXT W-56 1 250 250
E252977-3 D5B 05/24/96 05/24/96 N TEST FIXT W-56 1 250 250
E252977-4 D5B 07/18/96 06/13/96 N TEST FIXI W-56 1 250 250
E252977-5 D5B 07/18/96 06/13/96 N TEST FIXT W-56 1 250 250
E252977-6 D5B 07/18/96 06/13/96 N TEST FIXT W-56 1 250 250
E262978 D3F P0S 02/06/97 07/10/96 N ESP FIXTURE 1 3500 3500
E252979 D5B 06/30/93 07/10/96 N TEST FIXT AB 3320178 1 1500 1500
E2629831 9852B 06/01/81 08/09/96 N CABLE ISOLATOR 3320127-2 1 100 100
E2529832 9852B 06/01/81 08/09/96 N CABLE ISOLATOR 3320127-3 1 75 75
E2529833 9862B 06/01/81 08/09/96 N CABLE ISOLATOR 3320127-4 1 90 90
E252984 D4B 07/18/96 06/13/96 N TEST FIXT A3A14-18 1 2000 2000
E263001 9852B 06/18/96 06/18/96 Y TEST STATION 1 3000 3000
E2530011 9852B 06/19/96 06/19/96 Y OSCILLOSCOPE 1 4365 4365
E25300110 9852B 06/19/96 06/19/96 Y FREQUENCY GENERATOR 1 3545 3545
E25300111 9852EL 05/01/84 08/08/96 CRT TERMINAL 1 1450 1450
E25300112 9852 EL 05/01/83 08/12/96 POWER PANEL 1 750 750
E25300114 9852EL 07/23/96 07/23/96 POWER SUPPLY 1 1532 1532
E26300115 9852B 06/19/96 06/19/96 BLOWER 1 150 150
E25300116 9852B 06/19/96 06/19/96 BLOWER 1 150 150
E25300117 9852B 06/19/96 06/19/96 TAC/NAV PANEL 1 2000 2000
E25300119 9852B 06/19/96 06/19/96 A/B CARD CAGE 1 10000 10000
E25300120 9852B 06/19/96 06/19/96 Q13B SIMULATOR PANEL 1 2000 2000
E25300121 9852EL 05/05/83 08/09/96 RANGE BEARING PANEL 1 600 600
E25300122 9852EL 07/23/96 07/23/96 SWITCH CONTROL 1 3695 3695
E25300124 9852B 06/19/96 06/19/96 400HZ POWER CONTROL 1 800 800
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER PAGE:
CONTRACT NUMBER: N00019-97-O-0008 DESCRIPTION: ST/STE CUSTOMER: USN
<TABLE>
<CAPTION>
Tool Location/ Tot.
Number Vender Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Cost
- ---------- --------- -------- -------- --- -------------------------- ----------- --- --------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
E25300125 9852B 06/19/96 06/19/96 POWER SUPPLY 1 1300 1300
E25300126 9852B 06/19/96 06/19/96 POWER CONTROL 1 900 900
E25300129 9852EL 05/05/83 08/02/96 T BAR RELAY PANEL 1 16000 16000
E2530013 9852B 06/19/96 06/19/96 SIMULATOR CARD CAGE 1 15000 15000
E25300130 9852EL 05/05/83 08/12/96 CABLE INTERFACE 1 2000 2000
E25300132 9852EL 05/06/82 08/02/96 COMMON BUSS 1 800 800
E25300133 9852EL 05/05/83 08/12/96 POWER INTERFACE PANEL 1 650 650
E2530014 9852B 06/19/96 06/19/96 BUOY SIMULATOR PANEL 1 6000 6000
E2530015 9852B 06/19/96 06/19/96 MULTIMETER . 1 3570 3570
E253O016 9852EL 05/06/83 08/02/96 CRT DISPLAY 1 2870 2875
E2530017 9852B 06/19/96 06/19/96 BITE CONTROL PANEL 1 8000 8000
E2530018 9852B 06/19/96 06/19/96 COMPUTOR 1 18395 18395
E2530019 TOR REP 05/27/97 08/12/96 Y COUNTER TIMER 1 3289 3289
E253002 9852B 06/19/96 06/19/96 Y TEST STATION 1 4000 4000
E2530021 9852B 06/19/96 06/19/96 N BLOWER 1 150 150
E25300210 9852B 06/19/96 06/19/96 Y POWER SUPPLY PANEL 1 1395 1395
E25300211 9852B 06/19/96 06/19/96 Y POWER SUPPLY PANEL 1 1395 1395
E25300212 D7E 06/30/93 07/11/96 N COMPUTER 1 10500 10500
E25300214 D7E 06/30/93 07/12/96 N TERMINAL DISPLAY 1 1241 1241
E25300215 9852B 06/19/96 06/19/96 SWITCH CONTROLLER 1 3695 3895
E25300216 9852B 04/09/80 08/12/96 MODULAR SWITCH 1 7000 7000
E25300217 9852B 06/09/80 06/09/96 SIGNAL GENERATOR 1 3545 3545
E25300218 9852B 06/19/96 06/19/96 SIGNAL GENERATOR 1 3545 3545
E25300219 D7F POS 02/06/97 08/12/96 Y COUNTER TIMER 1 3289 3289
E2530022 98628 06/19/96 06/19/96 N BLOWER 1 150 150
E25300220 9852B 06/19/96 06/19/96 PHASE METER 1 3415 3415
E25300221 9852B 06/19/96 06/19/96 Y DIGITAL MULTIMETER 1 3570 3570
E25300222 C/L IFR 08/12/96 08/12/96 Y WAVEFORM ANALYZER 1 18750 18750
E25300224 9852B 08/19/96 08/19/96 DECADE RESISTOR BOX 1 2050 2050
E25300225 9852B 06/19/96 06/19/96 DECADE RESISTOR BOX 1 2050 2050
E2530023 9852B 06/19/96 06/19/96 N BLOWER 1 150 150
E2530024 9852B 06/19/96 06/19/96 N BLOWER 1 150 150
E2530025 9852B 06/19/96 08/19/96 N POWER PANEL 1 1000 1000
E2530028 9852B 06/19/96 06/19/96 Y POWER SUPPLY ASSY 1 1612 1612
E2530027 9852B 06/19/96 06/19/96 Y POWER SUPPLY PANEL 1 4265 4265
E2530028 9852B 06/19/96 06/19/96 Y POWER SUPPLY PANEL 1 1395 1395
E2530029 9952B 06/19/96 06/19/96 Y POWER SUPPLY PANEL 1 1395 1395
E253003 9852B 08/19/96 06/19/96 RUN-IN TEST SET 3328500 1 25000 25000
E253003-12 9852B 06/19/96 08/19/96 PANEL MANUAL OVERRIDE 1 900 900
E253003-13 9852B 06/19/96 06/19/96 PANEL MANUAL OVERRIDE 1 600 600
E2530031 9852B 08/19/96 08/19/96 CRT DISPLAY 1 2875 2875
E25300310 9852B 08/19/96 08/19/96 BLOWER 1 150 150
E25300311 9852EL 07/23/96 07/23/96 POWER SUPPLY 1 1572 1572
E25300314 9852EL 07/23/96 07/23/96 A/B CARD CAGE 1 9000 9000
E25300315 9852B 06/19/96 08/19/96 400HZ POWER 1 800 800
E25300316 VENDORRP 02/10/97 08/13/96 Y COUNTER TIMER 1 3289 3289
E25300317 9852B 06/19/96 06/17/96 AUDIO OUTPUT PANEL 1 1000 1000
E2530032 9862B 06/19/96 06/19/96 BITE CONTROL 1 8000 8000
E2530033 9852B 06/20/96 06/20/96 POWER SUPPLY 1 1532 1532
E2530034 9862B 06/20/96 06/20/96 POWER PANEL 1 750 750
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER Page:
Contract Number: N00019--97-G-0008 Description: ST/STE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
E2530035 9852EL 08/28/80 08/13/96 BLOWER 1 150 150
E2530036 9852B 06/20/96 05/20/96 COMPUTER 1 18395 18395
E2530037 9852B 06/20/96 06/20/96 OSCILLOSCOPE 1 4365 4365
E2530038 9852EL 07/07/87 09/26/96 N CRT TERMINAL 1 1450 1450
E253004 9852EL 06/12/81 07/23/96 AGREE TEST SET 3326500 1 60000 60000
E25300410 9852EL 07/21/81 08/14/96 POWER SUPPLY 3326430 1 1532 1532
E25300411 9852EL 07/21/81 05/24/96 BLOWER 3326435 1 150 150
E25300413 VENDORRP 02/10/97 08/13/96 Y COUNTER TIMER 3326445 1 3289 3289
E25300414 9852ELOS 08/13/96 08/13/96 Y FREQUENCY GENERATOR 3326450 1 3545 3545
E25300416 9852EL 07/21/81 07/23/96 BLOWER 3326460 1 150 150
E25300417 9852EL 07/21/81 06/24/96 TAC/NAV PANEL 3326465 1 2000 2000
E25300418 9852EL 05/26/81 06/24/96 MODULAR SWITCH 3326470 1 7000 7000
E25300419 9852EL 10/10/81 06/25/96 CARD CAGE 1 10000 10000
E25300420 9852EL 06/04/81 06/24/96 Q13 SIMULATOR PANEL 1 2000 2000
E25300421 9852EL 07/21/89 06/24/96 RANGE BEARING CURSER 1 600 600
E25300422 9852EL 06/30/93 08/14/96 SWITCH CONTROL 1 3695 3695
E25300423 9852EL 07/21/80 06/24/96 POWER SUPPLY 1 1572 1572
E25300424 9852EL 07/23/81 06/24/96 480 HZ POWER 1 800 800
E25300425 9852EL 09/10/80 06/24/96 POWER SUPPLY 1 1300 1300
E25300426 9852EL 06/30/93 06/24/96 MANUAL OVER RIDE PANEL 1 900 900
E25300427 9852EL 07/23/81 06/24/96 C/B PANEL 1 1000 1000
E25300428 9852EL 07/23/81 06/24/96 PANIC 28V PANEL 1 500 50O
E25300429 9852EL 06/04/81 06/24/96 RELAY RES PANEL 1 900 900
E2530043 9852EL 06/03/81 06/24/96 SIMULATOR CARD CAGE 1 15000 15000
E25300430 9852EL 06/04/81 06/24/96 400HZ DUCER PANEL 1 1000 1000
E25300431 9852EL 06/04/81 96/24/96 INTERFACE PANEL 1 6000 6000
E25300432 9852EL 06/04/81 08/13/96 POWER INTERFACE PANEL 1 650 650
E25300433 9852EL 06/04/81 08/14/96 AGREE CHAMBER INT 1 2000 2000
E25300434 9852EL 06/04/81 06/24/96 COMMON BUSS 1 800 800
E25300435 9852EL 06/04/81 06/24/96 T-BAR RELAY PANEL 1 25000 25000
E2530044 9852EL 08/03/81 06/24/96 BUOY SIMULATOR PANEL 1 6000 6000
E2530045 9852EL 06/03/81 06/24/96 60 HZ POWER PANEL 1 500 500
E2530047 9852EL 04/09/94 08/14/96 Y DIGITAL MULTIMETER 1 3570 3570
E2530048 9852EL 06/30/93 08/14/96 CRT DISPLAY 1 2875 2875
E2530049 9852EL 07/13/81 06/24/96 BITE CONTROL PANEL 1 8000 8000
E253005 9852B 05/05/88 08/13/96 N VERTICLE FRAME ADAPTER 1 10000 10000
E25300510 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 1400 1400
E25300511 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 1300 1300
E25300512 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 930 930
E25300513 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 1250 1250
E25300514 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 1200 1200
E25300515 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 940 940
E25300516 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 800 800
E25300517 9852B 06/20/96 06/20/96 INTERFACE MODULE 1 800 800
E25300518 9852B 07/22/96 07/22/96 INTERFACE MODULE 1 900 900
E2530053 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326400 1 1500 1500
E2530054 D4C 08/14/96 08/14/96 INTERFACE MOD 10 A 38 1 1300 1300
E2530055 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326405 1 1200 1200
E2530056 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326410 1 1400 1400
E2530057 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326415 1 800 800
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER Page:
Contract Number: N00019--97-G-0008 Description: ST/STE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
E2530058 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326420 1 940 940
E2530059 9852B 06/20/96 06/20/96 INTERFACE MODULE 3326425 1 1000 1000
E253006 9852B 06/20/96 08/13/96 VERTICLE FRAME ADAPTER 1 10000 10000
E2530061 9852B 06/20/96 06/20/96 N IPM CARD CAGE 1 12000 12000
E25300610 98528 06/20/96 06/20/96 STATIC PERSON. MODULE 3326495 1 1450 1450
E25300612 D4A 09/26/96 09/26/96 DYNAMIC PERSON. MODULE 3326480 1 2000 2000
E25300613 D4A 09/26/96 09/26/96 DYNAMIC PERSON. MODULE 3326486 1 2000 2000
E25300614 D4A 09/26/96 09/26/96 DYNAMIC PERSON. MODULE 3326490 1 2000 2000
E25300617 9852B 06/20/96 06/20/96 N W6 CABLE 1 300 300
E25300618 9852B 08/20/96 06/20/96 N W7 CABLE 1 400 400
E2530062 D4A 09/26/96 09/26/96 DPM/SELF TEST 1 1400 1400
E2530063 9852B 07/22/96 07/22/96 N W1 CABLE 1 300 300
E2530064 9852B 05/05/88 08/13/96 N W2 CABLE 1 320 320
E2530065 9852B 04/04/81 08/12/96 N W3 CABLE 1 340 340
E2530067 9852B 03/25/81 08/13/96 N INTERFACE MODULE 3326480 1 1500 1500
E2530068 9852B 06/20/96 06/20/96 STACTIC PERSON. MODULE 3326485 1 1400 1400
E2530069 9852B 07/22/96 07/22/96 STACTIC PERSON. NODULE 3326490 1 1400 1400
E253025 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A9 3326435 1 2300 2300
E253026 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A1O 3326440 1 2300 2300
E253027 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A8 3326430 1 2300 2300
E253028 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A38 3326415 1 2400 2400
E253029 D3F POS 02/06/97 07/11/96 N TEST FIXTURE ESP 3326405 2400 2400
E253030 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A33 3326410 1 2800 2800
3326510
E253031 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A12 3326450 1 2400 2400
E253032 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A14,A17 3326460 1 2500 2500
E253033 D3F P0S 02/06/97 07/11/96 N TEST FIXTURE A26,A29 3326475 1 2900 2900
E253034 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A31 3325360 1 2500 2500
E253035 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A5 3326415 1 2500 2500
E253036 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A16 A19 3326470 1 2500 2500
E253037 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A32 3325365 1 2700 2700
E253038 D3F POS 02/06/97 07/11/96 N TEST FIXTURE A30 3326495 1 2600 2600
E253060 D3F POS 02/06/97 07/11/96 N ESP TEST FIXT A13 3326455 1 2500 2500
E253061 D3F POS 02/06/97 07/11/96 N ESP TEST FIXT A15 3326465 1 2100 2100
E253062 D3F POS 02/06/97 07/11/96 N ESP TEST FIXT A27 3326480 1 2200 2200
E253063 D3F POS 02/06/97 06/13/96 ESP TEST FIXT BUS BAR 3315924 1 500 500
E253064 D3F POS 02/06/97 07/11/96 N ESP TEST FIXT A28 3326485 1 2800 2800
E253075 D6C 02/26/92 07/11/96 N MANUAL CONTROLLER 1 1500 1500
E253083 9852B 05/24/96 07/22/96 E PROM ERASER 1 2200 2200
E254077 D7C DOS 03/24/92 07/11/96 Y LOAD FIXT PWR SUPPLY 3326403-4 1 3000 3000
3326403-2
E254077-1 D4A 02/18/92 07/10/96 N RES LOAD BOX -2 P/S 3326403-2 1 150 150
E254077-2 D4A 02/18/92 07/10/96 N RES LOAD BOX -4 P/S 3326403-4 1 160 160
E254080-1 D7B 03/24/92 07/11/96 N BURN-IN TEST SET 3326403-2 1 4000 4000
E254080-2 D7D 03/24/92 07/11/96 N BURN-IN FIXTURE 3326403-2 1 1000 1000
E254081-1 D7B 03/24/92 07/11/96 N BURN-IN TEST SET 3326403-4 1 4000 4000
E254081-2 D6D 03/24/92 07/11/96 N BURN-IN FIXTURE 3326403-4 1 1000 1000
E254085 C/L IFR 08/13/96 08/13/96 Y BRD BURN-IN STATION 1 15000 15000
E254085-1 9852EL 04/04/84 08/24/96 Y POWER SUPPLY 1 565 565
E254085-10 D6A 02/19/92 07/11/96 N BURN-IN FIXT #4 1 1000 1000
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER Page:
Contract Number: N00019--97-G-0008 Description: ST/STE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE254085-11 D6A 02/19/92 07/11/96 N BURN-IN FIXT #5 1 1000 1000
TE254085-12 D4C 02/19/92 07/10/96 N BURN-IN FIXT #6 1 1500 1500
TE254085-13 D4C 02/19/92 07/10/96 N BURN-IN FIXT #7 1 1500 1500
TE254085-14 D4C 02/19/92 07/01/96 N BURN-IN FIXT #8 1 1500 1500
TE254085-15 DAC 02/19/92 07/10/96 N BURN-IN FIXT #9 1 1500 1500
TE254085-16 9852EL 08/08/84 06/24/96 N INTERFACE CABLE 8X8 3 150 450
TE254085-17 9852EL 08/08/84 06/24/96 N INTERFACE CABLE SM BD 9 155 1395
TE254085-2 9852EL 04/04/84 06/24/96 POWER SUPPLY 1 565 565
TE254085-3 9852EL 04/04/84 06/25/96 POWER SUPPLY 1 690 690
TE254085-4 9852EL 04/04/84 06/25/96 POWER SUPPLY 1 1175 1175
TE254085-5 9852EL 04/04/84 06/25/96 CONTROL PANEL 1 2000 2000
TE254085-6 9852EL 04/04/84 06/25/96 POWER PANEL 1 500 500
TE254085-7 D6A 02/19/92 07/11/96 N BURN-IN FIXT #1 1 1000 1000
TE254085-8 D4C 02/19/92 07/10/96 N BURN-IN FIXT #2 2 1000 2000
TE254085-9 D6A 02/19/92 07/11/96 N BURN-IN FIXT #3 1 1000 1000
TE254088 D3F P0S 02/06/97 07/10/96 N ESP FIXTURE 3331630 1 2700 2700
TE254090 9852EL 04/04/84 06/25/96 INTERFACE MOD A28 BD 1 2500 2500
TE254099 9852B 06/20/96 06/20/96 SELECT LEVEL METER 1 9400 9400
TE254262 9852B 06/14/96 06/14/96 N ESP CABLE 20E 1 200 200
TE254263 9852B 06/14/96 06/14/96 N ESP CABLE 21E 1 200 200
TE254264 9852B 06/14/96 06/14/96 N ESP CABLE 22E 1 200 200
TE254266 9852B 06/14/96 06/14/96 N ESP CABLE 26H 1 80 80
TE254267 9852B 06/14/96 06/14/96 N ESP CABLE 31E 1 160 160
TE254268 9852E 10/24/95 09/25/96 N SONAR SIMULATOR T/F 8014470 1 3000 3000
TE254269 9852B 06/14/96 06/14/96 N ESP CABLE 29E 1 125 125
TE254270 9852B 06/14/96 06/14/96 N ESP CABLE 30E 1 130 130
TE254272 9852E 10/27/95 06/21/96 N TEST FIXTURE CAB #2 1 400 400
TE254272-1 9852E 10/30/95 06/21/96 N POWER RESISTOR 8014530-401 1 120 120
TE254273 9852B 06/14/96 06/14/96 N ESP CABLE 33E 1 180 180
TE254274 9852B 12/15/88 09/26/96 N ESP CABLE 34E 1 200 200
TE254275 9852 05/22/90 06/20/96 N TEST FIXTURE, A3 BRD 1 1900 1900
TE254276 9852E 10/31/95 06/21/96 N POWER SUPPLY TEST FIXT 8016720 1 1600 1600
TE254277 9852 03/31/92 06/20/96 N TEST FIXT, A2 BRD ASSY 8016620 1 2200 2200
TE254278 9852B 06/14/96 06/14/96 N ESP CABLE 35E 1 75 75
TE254281 9852E 11/03/95 06/21/96 N TEST FIXT SONOBY SIMU 8016600 1 3500 3500
TE254291 9852 05/15/90 06/20/96 N TEST FIXT,TONE DCDR A9 8016610 1 2500 2500
TE254337 9854B 04/12/94 06/20/96 N T/F DEPTH RT SIMU A1A1O 3326030 1 1800 1800
TE254338 9852B 05/18/94 06/20/96 N T/F UTILITY LP DVR A1A11 8029230 1 1900 1900
TE254339 9852E 07/13/95 06/21/96 N T/F CABLE CONTROL A1A12 3326040 2 2300 2300
TE254340 9852E 04/27/94 06/21/96 N T/F CABLE TENSION A1A13 8029195 2 2200 2200
TE254341 9852E 04/26/95 06/21/96 N T/F RELAY CO ASSY A1A14 3326050 1 1700 1700
TE254342 9852B 06/14/96 06/14/96 N T/F CBL PAYOUT DVR A1A15 8029225 1 1900 1900
TE254350 9852B 06/14/96 06/14/96 N ESP CABLE, 55 E 1 350 350
TE254351 9852B 06/14/96 06/14/96 N ESP CABLE, 56 E 1 280 280
TE254352 9852B 06/04/91 06/14/96 N ESP CABLE, 57 E 1 420 420
TE254353 9852B 06/14/96 08/14/96 N ESP CABLE, 58 E 1 250 250
TE254354 9852B 06/14/96 06/14/96 N ESP CABLE, 59 E 1 260 260
TE254355 9852B 06/14/96 06/14/96 N ESP CABLE, 60 E 1 300 300
TE2S4356 9852B 06/14/96 06/14/96 N ESP CABLE, 61 E 1 280 280
TE254357 9852B 06/14/96 06/14/96 N ESP CABLE, 62 E 1 210 210
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER Page:
Contract Number: N00019--97-G-0008 Description: ST/STE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE254366 9852E 08/02/95 06/21/96 N T/F RMTS ICAS SWITCH BOX 8029170 1 800 800
TE254417 D5D 02/28/97 06/04/96 N TEST FIXTURE (CASTS) 8015029 1 2000 2000
Tooling 550 148373
Test Equip. 250 684284
Total 800 832657
</TABLE>
<PAGE>
5-JUN-97 TOOL MASTER Page:
Contract Number: N00019--97-G-0008OPE Description: OPE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
E253080 9852EL 08/22/80 06/24/96 VIBRATION CONTROL SYS 1 1000 1000
E253080-10 9852EL 01/22/81 66/24/96 N COMPUDESK 1 506 506
E253080-11 9852EL 01/22/81 06/24/96 N CHAIR 1 123 123
E253080-2 9852EL 08/22/80 06/24/96 BLANK PANEL 1 100 100
E253080-3 9852EL 08/22/80 06/24/96 X-Y DISPLAY 1 2500 2500
E253080-4 9852EL 08/22/80 06/24/96 SYSTEM CONTROL 1 6000 6000
E253080-5 9852EL 08/22/80 06/24/96 PROCESSOR 1 22879 22879
E253080-6 9852EL 08/22/80 06/24/96 SYSTEM INTERFACE 1 8300 8300
E253080-7 9852EL 08/22/80 06/24/96 FLEX DISK DRIVE 1 3171 3171
E253080-8 9852EL 08/22/80 06/24/96 GRAPHICS TERMINAL 1 6000 6000
E253080-9 8852EL 08/22/80 06/24/96 KEYBOARD FOR 2648A 1 1000 1000
E253081 9852EL 02/28/81 06/24/96 VIBRATION TEST SYSTEM 1 48510 48510
E253081-1 9852EL 02/28/81 06/24/96 CONTROL RACK 1 23000 23000
E253081-10 9852EL 04/10/87 08/12/96 BLOWER ASSEMBLY 1 490 490
E253081-2 9852EL 05/09/81 06/24/96 CHARGE AMP/D22PMJ(0) 1 2820 2820
E253081-3 9852EL 05/09/81 06/24/96 CHARGE AMP/D22PMJ(0) 1 2820 2820
E253081-4 9852EL 05/09/81 06/24/96 VIB MON/LIMIT AM-123 1 5125 5125
E253081-5 9852EL 08/08/84 06/24/96 Y ACCELEROMETER S/N1405 1 150 150
E253081-6 CAL LAB 11/04/96 09/27/96 Y ACCELEROMETER S/N2484 1 150 150
E253081-8 CAL LAB 11/04/96 09/27/96 Y ACCELEROMETER S/N1408 1 150 150
E253081-9 9852EL 09/26/96 06/24/96 Y ACCELEROMETER S/N1704 1 150 150
Tooling 0 0
Test Equip. 21 134944
Total 21 134944
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page:
Contract Number: N00024--84-C-6074 Description: ST/STE Customer: USN
<TABLE>
<CAPTION>
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T219879 F2C 03/01/96 07/12/96 N HARNESS BRD, J1 REV B 8007248-401 1 131 113 244
T219880 F2B 03/10/97 07/12/96 N HARNESS BRD, J2 REV B 8007248-402 1 124 198 322
T219881 F2B 03/10/97 07/12/96 N HARNESS BRD, J3 REV B 8007248-403 1 687 455 1142
T219882 F3B 03/10/97 05/31/96 N HARNESS BRD, P1 REV B 8007255-401 1 1154 257 1411
T219883 F3B 03/10/97 05/31/96 N HARNESS BRD, P2 REV C 8007255-402 1 4827 244 5071
T219884 F2B 03/10/97 05/31/96 N HARNESS BRD, P3 REV C 8007255-403 1 946 153 1099
T219885 F3B 03/10/97 05/31/96 N HARNESS BRD, TB1 REV C 8007255-404 1 2003 163 2166
T219886 F3B 03/10/97 05/31/96 N HARNESS BRD, J1-J5 REV E 8007255-405 1 3279 321 3600
T220014 C5D 02/03/95 07/02/96 Y MOLD, PI W1 CBL ASSY 8007263 1 272 272
T220015-1 9852C 08/23/95 08/14/96 Y MOLD, P1 P2 W2 CBL ASSY 8007264 1 257 257
T220015-2 9852C 08/23/95 08/14/96 Y MOLD, P1 P2 W2 CBL ASSY 8007264 1 257 257
T220016-1 9232C 02/06/95 06/14/96 Y MOLD, P2 W3 W4 CBL ASSY 8007265 1 261 261
8007266
T220016-2 9232C 02/06/95 06/14/96 Y MOLD, P2 W3 W4 CBL ASSY 8007265 1 261 261
8007266
T220040-1 9852E 03/18/97 06/21/96 N ALIGN TOOL, CARD CAGE 8007248 1 195 195
T220040-2 9852E 03/18/97 06/21/96 N ALIGN TOOL, CARD CAGE 8007248 1 195 195
T220052-1 9852E 06/25/96 06/25/96 N HOLD FIXT, AMTS PNL ASSY 8007255 1 136 136
T220052-2 C7F 04/06/95 07/10/96 N HOLD FIXT, AMTS PNL ASSY 8007255 1 136 136
T220052-3 C7F 05/10/96 06/21/96 N HOLD FIXT, AMTS PNL ASSY 8007255 1 136 136
T220052-4 9852E 09/25/96 07/10/96 N HOLD FIXT, AMTS PNL ASSY 8007255 1 136 136
T220063-1 9852E 04/23/96 05/16/96 N WIRING FIXTURE 1 857 857
T220063-2 9852E 04/23/96 05/16/96 N WIRING FIXTURE 1 702 702
T220070 F3B 03/10/97 07/15/96 N HARN BRD, COUP ASSY A12 8007394 1 831 488 1319
T220075-1 C6A 01/20/92 07/08/96 N POTTING FIXT, P1 CLK MOD 8007394 1 184 184
T220075-2 C6A 01/20/92 07/08/96 N POTTING FIXT, P1 CLK MOD 8007394 1 184 184
T220075-3 C6A 01/20/92 07/08/96 N POTTING FIXT, P1 CLK MOD 8007394 1 184 184
T220078-1 9232C 06/14/96 06/14/96 N POTTING FIXT, P1 8007394 1 141 141
T220078-2 9232C 06/14/96 06/14/96 N POTTING FIXT, P1 8007394 1 141 141
T220078-3 9232C 06/14/96 06/14/96 N POTTING FIXT, P1 CLK MOD 8007394 1 141 141
T220306A/B-1 9852E 06/14/96 06/13/96 N SUPPORT BRKT, AMTS ASSY 8007300 1 270 270
T220306A/B-2 9852E 06/13/96 06/14/96 N SUPPORT BRKT, AMTS ASSY 8007300 1 270 270
T402534 SPIRATEX CO. 01/09/81 04/10/96 N REDUCING SLEEVE 3328746 1 1435 1435
T402540 C7D 03/13/92 07/10/96 N TEST FIXT WD BND HYDRO 1 1320 1320
T402542-A D5F POS 02/12/97 09/27/96 N PLUG, BOOTING ASSY 3328780 1 433 433
T402542-D D5F POS 02/12/97 09/27/96 N FITTING, HOSE JUNCTION 3328780 1 172 172
T402549 SN1 9234 04/14/93 06/14/96 N SHOCK TEST SLEEVE, XMTR 3328880 1 242 242
T402549 SN2 C6B 04/14/93 07/08/96 N SHOCK TEST SLEEVE, XMTR 3328880 1 242 242
T402549 SN3 C6B 04/14/93 07/08/96 N SHOCK TEST SLEEVE, XMTR 3328880 1 242 242
T402554-1 9855N 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257
T402554-10 9855N 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257
T402554-2 9855N 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257
T402554-3 CL/ARA 10/15/96 06/09/96 N ASSEMBLY FIXTURE 3333263 1 257 257
T402554-4 C6B 01/29/96 07/08/96 N ASSEMBLY FIXTURE 3333263 1 257 257
T402554-5 9855N 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257
T402554-6 9232C 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257
T402554-7 9232C 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257
T402554-8 9232C 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257
T402554-9 9232C 06/14/96 06/14/96 N ASSEMBLY FIXTURE 3333263 1 257 257
T402567-1 C6D 03/13/92 07/09/96 N TEST HOLD FIXT, HYBRID 1 358 358
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 2
Contract Number: N00024-84-C-6074 Description: TB-23/BQ ST/STE Customer: USN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Tool Location/ Tot.
Number Vender Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Cost
- ---------- --------- -------- -------- --- -------------------------- ----------- --- --------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T402567-2 9234 04/14/93 06/14/96 N TEST HOLD FIXT,HYBRID 1 358 358
T402567-3 C6D 03/13/92 07/09/96 N TEST HOLD FIXT,HYBRID 1 358 358
T402567-4 C6D 03/13/92 07/09/96 N TEST HOLD FIXT/HYBRID 1 358 358
T402567-5 C6D 07/08/92 07/09/96 N TEST HOLD FIXT/HYBRID 1 358 358
T402567-6 C6D 03/13/92 07/09/96 N TEST HOLD F1XT/HYBRID 1 358 358
T402575 C6B 03/06/92 07/08/96 N HOLD FIXT/HI-POT 3328885 1 207 207
T402629 C7D 10/25/95 07/10/96 N HOLD FIXT/XMTR 1 150 16 2400
T402644 C6B 03/09/92 07/08/96 MOLD MSTR/4 STRAND 3332993 1 219 219
T402645 C6B 10/01/96 10/01/96 N MOLD MSTR/8 STRAND 3332992 1 244 244
T402663-1 C6B 03/02/92 07/09/96 Y MOLD MSTR/RESONATOR,REV A 3332990-1 1 26 26
T402664 FREQUENCY 12/10/84 04/03/96 N MOLD/RESONATOR 1 29 29
SELECT NET
T402703-1 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333155 1 58 58
T402703-10 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-11 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T462703-12 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-13 C6D 09/12/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-14 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-2 C6D 09/27/96 09/27/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-3 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-4 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-5 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-6 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-7 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-8 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T402703-9 C6D 09/19/95 07/09/96 N SPLICE MOLD STAND 3333165 1 58 58
T4027041 NPO 11/12/90 09/18/96 Y THERMAL WIRE STRIPPER 1 73 73
T4027042 NPO 11/12/90 10/15/96 Y THERMAL WIRE STRIPPER 1 73 73
T4027043 NPO 11/12/90 09/18/96 Y THERMAL WIRE STRIPPER 1 73 73
T402706-1 9852E 05/16/95 06/21/96 N SPANNER WRENCH 1 174 174
T402714-1 9855E 07/01/93 06/26/96 Y STRAIGHT SCALE/300 LB 1 109 109
T402714-2 9855E 08/29/94 06/26/96 Y STRAIGHT SCALE/300 LB 1 109 109
T402714-3 9855E 07/10/93 06/26/96 Y STRAIGHT SCALE/300 LB 1 109 109
T402714-4 9855W 07/23/90 06/26/96 Y STRAIGHT SCALE/300 LB 1 109 109
T402714-6 9855W 07/01/93 06/26/96 Y STRAIGHT SCALE/300 LB 1 109 109
T402749-1&A DISP ARA 10/15/96 07/01/93 Y PRESSURE POT 1 1568 1568
T402754-1 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746
T402754-10 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746
T402754-11 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746
T402754-12 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746
T402754-2 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004880 1 628 118 746
T402754-3 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746
T402754-4 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746
T402754-5 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746
T402754-6 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746
T402754-7 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746
T402754-8 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004380 1 628 118 746
T402754-9 9855E 01/06/97 07/12/96 N HYDRO BONDING FIXTURE 8004390 1 628 118 746
T402761-1 9855W 07/15/90 06/26/96 N HOSE WRAPPING STATION 1 1008 1008
7402761-2 9855W 07/16/90 06/26/96 N HOSE WRAPPING STATION 1 757 757
7402761-3 9855E 07/21/93 06/26/96 N HOSE WRAPPING STATION 1 757 757
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 3
Contract Number: N00024-84-G-6074 Description: TB-23/BQ ST/STE Customer: USN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Tool Location/ Tot.
Number Vender Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Cost
- ---------- --------- -------- -------- --- -------------------------- ----------- --- --------- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T402761-4 9855E 07/21/93 06/26/96 N HOSE WRAPPING STATION 1 757 757
T402765-1 C6B 04/18/97 07/12/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49
T402765-2 C6B 04/18/97 07/12/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49
T402765-3 C6B 04/18/97 09/30/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49
T402765-4 C6B 04/18/97 07/02/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49
T402765-5 C6B 04/18/97 07/02/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49
T402765-6 C6B 04/18/97 07/02/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49
T402765-7 C6B 04/18/97 07/02/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49
T402765-8 C6B 04/18/97 07/02/96 N END CAP & ELEM ASSY TOOL 8001220 1 49 49
T402769 CAL LAB 06/02/97 07/09/96 Y DIGITAL THERMOMETER 1 0 0
T402773-1 9855E 07/21/93 06/26/96 N SUPPORT BRACKET 1 131 131
T402773-2 9855W 07/18/90 06/26/96 N SUPPORT BRACKET 1 131 131
T402773-3 9855W 07/18/90 06/26/96 N SUPPORT BRACKET 1 131 131
T402773-4 9855E 07/21/93 06/26/96 N SUPPORT BRACKET 1 131 131
T402774-1 8002 03/13/97 07/12/96 N ACOUSTIC CHAMBER HORIZ 1 2500 2500
T402774-2 8900TL 07/18/90 08/30/96 N ACOUSTIC CHAMBER HORIZ 1 2500 2500
T402777-1 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589
T402777-10 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001226 1 589 589
T402777-2 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589
T402777-3 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589
T402777-4 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589
T402777-5 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589
T402777-6 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589
T402777-7 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589
T402777-8 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589
T402777-9 C3B 03/21/97 07/12/96 N BOND FIXT/ELEM ASSY 8001225 1 589 589
T402798-1 TOOLCRIB 03/14/97 07/12/96 N PREP FIXT/C1 & C3 CAP 1 53 53
T402798-2 TOOLCR1B 03/17/97 07/12/96 N PREP FIXT/Cl & C3 CAP 1 53 53
T402799-1 TOOLCRIB 03/17/97 07/12/96 N PREP FIXT/C2 & C4 CAP 1 53 53
T402799-2 TOOLCRIB 03/17/97 07/12/96 N PREP FIXT/C2 a C4 CAP 1 53 53
T402803-1 C4A 03/10/97 06/30/93 N HOT STRIPPER/SPEC GRND 1 154 154
T402803-2 C6B 04/18/97 09/30/96 N HOT STRIPPER/SPEC GRND 1 154 154
T402803-3 CL/ARA 10/15/96 06/30/93 N HOT STRIPPER/SPEC GRND 1 154 154
T402803-4 C6B 04/18/97 09/30/96 N HOT STRIPPER/SPEC GRND 1 154 154
T4O2803-5 C6B 04/18/97 09/30/96 N HOT STRIPPER/SPEC GRND 1 154 154
T402803-6 CL/ARA 10/15/96 06/30/93 N HOT STRIPPER/SPEC GRND 1 154 154
T402805-1 C3C&C4C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48
T402805-10 C3C&C4C 03/21/97 05/28/96 N HANG FIXT,COIL ELEM REV A 8001220 1 48 48
T402805-11 C4C&C3C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48
T402805-12 C4C&C3C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48
T402805-13 C4C&C3C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48
T402805-14 C3C&C4C 03/21/97 05/28/98 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48
T402805-15 C4C&C3C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REVNC 8001220 1 48 48
T402805-16 C4C&C3C 03/21/97 05/28/96 N HAND F1KT,COIL ELEM REVNC 8001220 1 48 48
T402805-2 C3C&C4C 03/21/97 05/28/96 N HAND F1KT,COIL ELEM REV A 8001220 1 48 48
T402805-3 C3C&C4C 03/21/97 05/28/98 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48
T402805-4 C3C&C4C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48
T402805-5 C3C&C4C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8011220 1 48 48
T402805-6 C3C 03/19/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48
T402805-7 C4C&C3C 03/21/97 05/28/96 N HAND ELEM,COIL ELEM REV A 8001220 1 48 48
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 4
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Number: N00024-84-C-6074 Description: TB-23/BQ ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T402805-8 C3C&C4C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48
T402805-9 C3C&C4C 03/21/97 05/28/96 N HAND FIXT,COIL ELEM REV A 8001220 1 48 48
T402823 C6B 03/09/92 07/08/96 N WELD FIXT/PTV 7 CLOCK 1 42 42
T402825 D5F P0S 02/12/97 07/08/96 N SHOCK TEST FIXTURE 2 60 120
T402828ABCD C4B 07/07/92 06/28/96 PRESSURE TEST FITTING 1 977 977
T402829 9855W 10/10/98 06/26/98 N HOSE GRINDER 1 1099 1099
T402839 C6B 08/19/92 07/08/96 N HOLDING FIXTURE 1 952 952
T402876A-1 C6B 09/17/96 06/26/96 Y MOLD, DROGUE TERM REV E 3333220 1 431 431
T4028768-4 C6B 07/23/96 07/23/96 Y MOLD, DROGUE TERM REV E 1 359 359
TE252990 D5C 02/20/92 07/10/96 N TEST FIXT/XMTR LGC 1/2 1 2000 2000
TE252991 D5C 02/20/92 07/10/96 N TEST FIXT/TELE/TLM LGC 1 3000 3000
TE254007 D5B 02/20/92 07/10/96 N PREAMP TEST FIXT 1 250 250
TE254018 D5F P0S 02/12/97 07/1l/96 N HI-POT TEST FIXT 2 1 250 250
TE254019 D6B 02/25/92 07/11/96 N CLOCK TEST FIXT 1 1800 1800
TE254026-1 9855N 08/20/96 06/20/96 Y TEST FIXT, CLOCK TERM 1 200 200
TE254026-2 9855N 10/15/96 06/20/96 Y TEST FIXT, CLOCK TERM 1 200 200
TE254029-1 D5B 02/19/92 07/10/96 N TEST FIXT/FRONT END 3327455 1 1800 1800
TE254029-2 D5B 02/19/92 07/19/96 N TEST FIXT/FRONT END 3327455 1 1800 1800
TE2540311 D6B 02/26/92 07/11/96 N LOGIC TEST PAN/SUBSTRT 3327465 1 3600 3600
TE2540312 D6B 02/26/92 07/11/96 N LOGIC TEST PAN/SUBSTRT 3327465 1 3600 3600
TE254036 D5C 02/20/92 07/10/96 N COAX DELAY LINE 1 1625 1625
TE254039 9234 04/14/93 05/17/96 Y ACTIVE TRIM TEST SET 1 27000 27000
TE264040 D5B 02/19/92 07/10/96 N PWR SPLITTER TEST SET 1 400 400
TE254041 D5B 02/19/92 07/10/96 Y LINEARTY PAD 1 25 25
TE254042 9234 04/14/93 06/17/96 N XMTR ADDRESS BOX 1 200 200
TE254044 D5B 02/19/92 07/10/96 N CROWBAR TEST FIXT 1 500 500
TE254045 D5A 08/09/94 07/10/96 N BURN-IN BD/CURRENT REG 1 300 300
TE254046 9234 04/14/93 06/17/96 Y CURRENT MONITOR/CLOCK 1 200 200
TE254050 CNL/ARA 10/15/96 06/22/93 Y LOW PASS FLTR TEST SET 1 500 500
TE254052 D5B 02/19/92 07/10/96 N HYDROPHONE TEST SET 1 1000 1000
TE254062 D4B 02/18/92 07/10/96 TEST FIXT/ACTV TRIM PS 1 250 250
TE254064-1 NPO 07/30/96 07/11/96 N HYDROPHONE EXCITER 1 200 200
TE254064-2 D6A 04/17/97 07/11/96 N HYDROPHONE EXCITER 1 200 200
TE254072 9234 04/14/93 06/17/96 N TEST PAN/DIODE CLAMP 1 250 250
TE254073 9234 04/14/93 06/17/98 TEST PAN/CURRENT REG 1 400 400
TE254074 9234 05/19/83 06/17/96 N PWR SUPPLY/PTV CUR REG 1 600 600
TE254079 D5A 07/06/93 07/10/96 N ACOUSTIC XMTR/CAL STD 1 5000 5000
TE254086 D7F POS 02/12/97 08/13/96 Y COUNTER/HP5328A/030 1 1550 1550
TE254089-1 FREQUENCY SELECT NET 02/24/94 04/03/96 N TEST COIL RESONATOR 3332990 1 1648 1648
TE254092-1 NPO 08/05/96 07/12/96 N HI-POT TESTER 1 1100 1100
TE254092-2 D5A 04/17/97 09/30/96 HI-POT TESTER 1 1100 1100
TE254092-3 D5A 04/17/97 07/12/96 N HI-POT TESTER 1 1100 1100
TE254100 D6C PM 09/29/95 07/11/96 N REPEATER CLOCK T/S 1 50000 50000
TE254101-1 D4D 10/25/95 07/10/96 N TEST CABLE SWITCH BOX 1 10000 10000
TE254101-2 9234 06/17/96 06/17/96 N TEST CBL SWITCH BOX 1 10000 10000
TE254101-3 9234 06/17/96 06/17/96 N TEST CBL SWITCH BOX 1 10000 10000
TE254160 9852B 06/13/96 06/13/96 Y AMTS PWR SUP TEST FIXT 2 400 800
TE254175 SN 1 9852E 11/14/94 07/11/96 N TEST FIXT, AMTS BRD 8007210 1 1900 1900
8007245
TE254175 SN 2 D6B 09/14/93 07/11/96 N TEST FIXT, AMTS BRD 8007245 1 1900 1900
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 5
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Number: N00024-84-C-6074 Description: TB-23/BQ ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8007210
TE254296-1 9852D HS 06/26/96 06/28/96 N ADAPTOR CABLE 8018100 1 500 500
TE254296-2 9852D HS 09/27/96 09/27/96 N ADAPTOR CABLE 8018100 1 500 500
TE254296-3 9852D HS 06/26/96 06/26/96 N ADAPTOR CABLE 8018100 1 500 500
TE254296-4 9852D HS 06/27/96 06/26/96 N ADAPTOR CABLE 8018100 1 500 500
TE254297 9852E 06/26/96 06/26/96 N FWD ADAPTOR 8018100 1 325 325
TE254298 9852E 06/26/96 06/26/96 N AFT ADAPTOR 8018100 1 325 325
Tooling 305 65269
Test Equip. 47 150898
Total 352 216167
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 1
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Contract Number: N00024-85-C-6236 Description: TB-23/BQ ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T219868 F3B 03/10/97 07/15/96 N HARNESS BRD P1 8009030-401 1 438 436
T219873 F3F 02/18/92 07/15/95 N HARNESS BRD, RCVR PNL 8007625-401 1 1652 1652
T219876 F3D 02/11/92 07/16/96 N HARNESS BRD/PWR SUPPLY 8007620-401 1 2642 177 2819
T219878 F2C POS 02/06/97 07/12/96 N HARNESS BRD,RECEIVER PNL 8007625-402 1 120 120
T219947 F2B 03/10/97 07/16/96 N HARNESS BRD P5 8007625-403 1 518 518
T219953 F3B 03/10/97 07/16/96 N HARNESS BRD P2 8009030-402 1 840 840
T219958 F3B 03/10/97 07/15/96 N HARNESS BRD/TEST POINT 8009035-402 1 1252 1252
T219982 F3F 02/18/92 07/16/96 N HARNESS BRD/LFRA REV A 8007840 1 2092 2092
T220019 C6B 03/06/92 07/08/96 N SPLIT MOLD 8011516 1 21311 21311
T220020 C6B 03/06/92 07/08/96 N SPLIT MOLD 8011516 1 0 0
T220021 C6B 03/06/92 07/08/96 N TENSILE TEST ADAPTOR 8011516 1 0 0
T220022 C6B 03/06/92 07/08/96 N SPLIT MOLD 8011516 1 0 0
T220023 C6B 03/06/92 07/06/96 N PRESSURE TEST LEAD 8011516 1 0 0
T220024 C6B 03/06/92 07/08/96 N TENSILE TEST LEAD 8011516 1 0 0
T220025 C6B 03/06/92 07/08/96 N PLUG 8011516 1 0 0
T220026 C6B 03/06/92 07/08/96 N SPACER PLATE 8011516 1 0 0
T220027 C6B 03/06/92 07/08/96 N DUMMY RETAINER 8011516 1 0 0
T220028 C6B 03/06/92 07/08/96 N SEAL BACK-UP BAR 8011516 1 0 0
T220029 C6B 03/06/92 O7/08/96 N RETAINER POSITION EXP 8011516 1 0 0
T220053 C6D 04/09/92 07/09/96 N COMP PREP FIXTURE 8007805-601 1 516 516
T402944-1 TELFRWHS 08/20/93 08/02/96 N VIB TEST FIXTURE 8007600 1 7767 7767
8007800
8008940
TE254114 D7B 03/24/92 07/11/96 N EMULATOR/T.I. CHIP 1 5000 5000
TE254116 9852B 06/20/96 06/20/96 N TEST CD/ESP RCVR/BFMR 8009040 40 400 16000
TE254116 SN 1 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 10 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 11 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 12 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 13 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 14 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 15 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 16 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 17 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 18 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 19 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 2 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 20 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 21 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 22 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 23 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 24 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 25 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 26 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 27 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 28 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 29 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 3 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 30 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 31 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 2
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Contract Number: N00024-84-C-0074 Description: TB-23/BQ ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE254116 SN 32 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 33 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 34 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 35 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 36 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 37 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 38 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 39 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 4 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 40 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 5 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 6 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 7 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 8 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254116 SN 9 9852B 06/27/90 06/20/96 N TEST CARD,ESP BMFRMR RECV 8009040 1 400 400
TE254117 9852B 06/13/96 06/13/96 N ESP CBL RCVR 79D 8007635 1 300 300
TE254118 SN 1 9852B 05/05/86 06/20/96 N ESP CABLE, RECEIVER 8007635 1 150 150
TE254118 SN 2 9852B 05/05/86 06/20/96 N ESP CABLE, RECEIVER 8007635 1 150 150
TE254118 SN 3 9852B 05/05/86 06/20/96 N ESP CABLE, RECEIVER 8007635 1 150 150
TE254119 9852B 07/22/96 07/22/96 N BRD EST FIXT FRA 8007805 1 500 500
TE254120 9852B 06/13/96 06/13/96 N ESP CBL RCVR 85D 1 300 300
TE254121 SN 1 9852B 06/13/96 06/13/96 N ADAPTER CABLE 90D/94D 1 250 250
TE254121 SN 2 9852B 06/13/96 06/13/96 N ADAPTER CABLE 90D/94D 1 250 250
TE254121 SN 3 9852B 06/13/96 06/13/96 N ADAPTER CABLE 90D/94D 1 250 250
TE254121 SN 4 9852B 06/13/96 06/13/96 N ADAPTER CABLE 90D/94D 1 250 250
TE254121 SN 5 9852B 06/13/96 06/13/96 N ADAPTER CABLE 90D/94D 1 250 250
TE254135 D7E 12/07/95 07/12/96 N CLAMP, RANDOM VIB 13 80 1040
TE254137 D6C 05/06/94 07/11/96 N CKT BRD PWR TEST FIXT 1 1500 1500
TE254139 9852B 06/14/96 06/14/96 N ESP CBL DL3-30R 1OOD 1 150 150
TE254140 9852B 06/14/96 06/14/96 N ESP CBL 14 BNC'S 89D 1 125 125
TE264141 9852B 06/14/96 06/14/96 N ESP CBL DLI-156R 99D 1 250 250
TE254142 D4B 07/18/96 06/14/96 N ESP FIXT RCVR CONT PNL 1 450 450
TE254143 D4B 07/18/96 07/11/96 ESP FIXT CONT PNL BMFR 1 350 350
TE254144-1 9852B 06/14/96 06/14/96 N ESP CABLE 1E HD 78S 1 175 175
TE254144-2 9852B 06/14/96 06/14/96 N ESP CABLE 2E HD 78S 1 175 175
TE254144-3 9852B 06/14/96 06/14/96 N ESP CABLE 3E HD 78S 1 175 175
TE254144-4 9852B 06/14/96 06/14/96 N ESP CABLE 4E HD 78S 1 175 175
TE254145 9852B 06/14/96 06/14/96 N ESP CABLE 5E HD 78P 1 180 180
TE254146 9852B 06/14/96 06/14/96 N ESP CBL 84D 1 250 250
TE254148 9852B 06/14/96 06/14/96 N ESP CBL 8E MOLEX PLUGS 1 150 150
TE254149 D7A 03/17/96 07/11/96 N LFRA BD TESTER 1 2500 2500
TE254150 D5A 03/17/94 07/10/96 N ADAPTER TEST BOX 1 1500 1500
TE254150-1 D5A 03/17/94 07/10/96 N BITE LOGIC CARD 1 2000 2000
TE254150-2 D5A 03/17/94 07/10/96 N CABLE 1 200 200
TE254151 D6A 05/06/94 07/11/96 N LFRA CHANNEL BOX 1 800 800
TE254152 D4B 07/18/96 06/14/98 N ESP CBL LFRA PADL BRD 1 950 950
TE254153 D5C 02/18/92 07/10/96 N PADDLE-BD CARD GAGE 1 1250 1250
TE254153-1 D5C 02/18/92 07/10/96 N D.C. PWR CABLE 1 50 50
TE254161 9852B 06/14/96 06/14/96 N ESP CABLE 83D 1 100 100
TE254162 9852B 06/14/96 06/14/96 N ESP CABLE 86D 1 100 100
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 3
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Contract Number: N00024-85-C-6236 Description: TB-23/BQ ASA TOOL/T/E Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE254163 9852B 06/14/96 06/14/96 N ESP CABLE 6E 1 100 100
TE254164 9852B 06/14/96 06/14/96 N ESP CABLE 10E 50 PIN 1 300 300
TE254165 9852B 06/14/96 06/14/96 N ESP CABLE 11E 50 PIN 1 310 310
TE254168 D5F POS 07/15/96 07/11/96 N ESP CABLE 12E 1 250 250
TE254169 9852B 06/14/96 06/14/96 N ESP CABLE 13E 1 250 250
TE254170-1 SN1 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250
TE254170-1 SN2 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250
TE254170-1 SN3 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250
TE254170-1 SN4 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250
TE254170-1 SN5 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250
TE254170-1 SN6 9852B 10/29/86 06/20/96 N ESP CARD LFRA 1 250 250
TE254170-2 SN1 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250
TE254170-2 SN2 9852B 10/29/86 06/20/96 N ESP CARDS, LFRA 1 250 250
TE254176 D6C 02/25/92 07/11/96 N BRKOUT BOX - ASA 1 750 750
TE254176-1 D6A 02/25/92 07/11/96 N J2 INTERFACE CABLE 1 100 100
TE254176-2 D6A 02/25/92 07/11/96 N J3 INTERFACE CABLE 1 120 120
TE254176-3 D6A 02/25/92 07/11/96 N J4 INTERFACE CABLE 1 100 100
TE254176-4 D6A 02/26/92 07/11/96 N J3 INTERFACE CABLE 1 175 175
TE254176-6 D6A 02/25/92 07/11/96 N INTERFACE CABLE 1 150 150
TE254176 D7E 03/24/92 07/12/96 N TARGET ARRAY SIMULATOR 8007800 18 80000 80000
TE254195 SN 1 D7A 10/27/95 07/11/96 N CABLE BDXW7 8009000 1 50 50
TE254195 SN 2 D7A 02/28/92 07/11/96 N CABLE BDXW7 8009000 1 50 50
TE254195 SN 3 D7A 02/28/92 07/11/96 N CABLE BDXW7 8009000 1 50 50
TE254196 SN 1 D7A 08/29/92 07/11/96 N CABLE BDXW8 8009000 1 50 50
TE254196 SN 2 D7A 08/29/92 07/11/96 N CABLE BDXW8 8009000 1 50 50
TE254196 SN 3 D7A 08/29/92 07/11/96 N CABLE BDXW8 8009000 1 50 50
TE254197 D7A 02/19/92 07/11/96 N PADDLE BOARD 8009000 1 300 300
TE254198 D7A 02/19/92 07/11/96 N ADAPTOR 8009000 1 50 50
TE254199 D7A 11/27/93 07/11/96 N LFRA PWR ADAPTOR 8009000 1 50 50
TE254201-1 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30
TE254201-10 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30
TE254201-2 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30
TE254201-3 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30
TE254201-4 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30
TE254201-5 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30
TE254201-6 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30
TE254201-7 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30
TE254201-8 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30
TE254201-9 D7A 03/26/92 07/11/96 N GROUND CABLES 8009000 1 30 30
TE254300 D4B 07/18/96 06/14/96 N T/F ESP LFRA 8007735 1 200 200
TE254301 TOWSON 04/19/94 09/30/96 N T/F SUMMER MEM, PWB 8008960 1 7796 7796
8008980
TE254302 TOWSON 04/19/94 09/30/96 N T/F BMFMR SUMMER SEQ PWB 8008965 1 8135 8135
TE254303 TOWSON 04/19/94 09/30/96 N T/F ARTHMTC BRD ASSY 8007710 1 5293 5293
TE254304 TOWSON 04/19/94 09/30/96 N T/F BFA CONTROL PWB 8007705 1 5342 5342
TE254305 TOWSON 04/19/94 09/30/96 N T/F INTERPOLATOR PWB 8008995-4 1 7349 7349
8008995-3
8008995
8008995-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 4
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Contract Number: N00024-85-C-6263 Description: TB-23/BQ ASA TOOL/T/E Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8008995-1
TE54306 TOWSON 04/19/94 09/30/96 N T/F LFRA DAC PWB ASSY 8007805 1 6867 6867
Tooling 21 39323
Test Equip. 186 880982
Total 207 920305
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 1
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Contract Number: N00024-89-C-6086 Description: ADC/MK-3 ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T220333 MODERN PATTERN & FOU 08/02/93 10/14/96 N CASTING MOLD,PROPELLER 6667375 1 350 350
T220464 9820 06/05/97 09/17/96 Y TORQUING FIXTURE, VISE 1 1500 1500
T220465-1 9820 06/05/97 09/17/96 Y TORQ WRENCH 75" LB BC50577 1 100 100
T220465-2 C5C 06/05/97 07/18/96 Y TORQ WRENCH 75" LB BC50576 1 100 100
T220466-2 C5C 06/05/97 06/02/97 Y TORQ WRENCH 75" LB BC50578 1 100 100
T220466-3 9820 06/05/97 06/02/97 Y TORQ WRENCH BC51507 1 106 106
T220467ABC-1 9820 06/05/97 09/17/96 N VAC ENCAP CHAMBER UPR STK 1 3000 3000
T220468ABC-1 9820 06/05/97 09/17/96 N VAC ENCAP CHAMBER TOP/LWR 1 3000 3000
T220469A 9820 06/05/97 09/17/96 N VACUUM SYSTEM PUMP 1 2500 2500
6620469B 9820 06/05/97 09/17/96 N VACUUM SYSTEM MANIFOLD 1 350 350
T220470-1 CAL LAB 05/29/97 09/17/96 Y TORQ WRENCH 48' LB BC50581 1 100 100
T220470-2 CAL LAB 05/29/97 09/17/96 Y TORQ WRENCH 48' LB BC50580 1 100 100
T220461 9820 06/05/97 09/17/96 N FEED THRU ASSY BOND FIXT 1 100 100
T220472 C5C 06/04/97 09/17/96 N ULTRASONIC CLEANER 1 1200 1200
T220473 9820 06/05/97 09/17/96 N RING PAD CNTRING/BOND FIX 1 350 350
T220474-1 9820 06/05/97 09/17/96 N BONDING FIXTURE 1 1250 1250
T220474-2 9820 06/05/97 09/17/96 N BONDING FIXTURE 1 1250 1250
T220475-1 9820 06/05/97 09/17/96 N LOWER STACK ASSY FIXTURE 1 250 250
T220475-1 9820 06/05/97 09/17/96 N LOWER STACK ASSY FIXTURE 1 250 250
T220476-1 CAL LAB 06/29/97 09/17/96 N CRIMP TOOL 1 138 138
T220476-2 CAL LAB 06/29/97 09/17/96 Y CRIMP TOOL BC50620 1 138 138
T220477-1 NPO WA 03/10/94 09/17/96 N MOLD, LWR CLAM SHELL 1 3100 3100
T220477-2 9820 06/05/97 09/17/96 N MOLD, LWR CLAM SHELL REV C 8028900 1 1062 1062
8028925-2
T220478-1 C5C 05/30/97 09/17/96 N MOLD, UPPER CLAM SHELL 1 2750 2750
T220478-2 C5C 05/30/97 09/17/96 N MOLD, UPR CLAM SHELL REV C 8028900 1 965 965
T220479 9820 06/05/97 09/17/96 N LATHE 1 5500 5500
T220480-1 9820 06/05/97 09/17/96 N STACK WIRING ASSY 1 750 750
T220480-2 9820 06/05/97 09/17/96 N STACK WIRING ASSY 1 750 750
T220481 NPO W/A 03/10/94 09/17/96 N UPPER STACK WIRING FIXT 1 150 150
T220482-1 NPO W/A 03/10/94 09/17/96 Y TORQ WRENCH, 25 LBS 1 125 125
T220482-2 9820 06/05/97 06/02/97 Y TORQ WRENCH 25" LB BC50631 1 125 125
T220483-1 9820 06/05/97 09/17/96 N BUS WIRE FORMING FIXTURE 1 400 400
T220483-2 9820 06/05/97 09/17/96 N BUS WIRE FORMING FIXTURE 1 400 400
T220506 9820 06/05/97 09/17/96 N 30 GAL POLYETHYLENE TANK 1 300 300
T220533 9820 06/05/97 N MOLD, MID COUPLING 1 250 250
T220534-1 9820 06/05/97 N MOLD, COIL BOARD 1 500 500
T220523 9820 06/05/97 09/17/96 Y MOLD 8132888-2 1 3000 3600
T220524 9820 06/05/97 09/17/96 Y MOLD 8132887-2 1 3000 3000
T404001-1 C5D 01/14/92 07/02/96 N HOLD FIXT, HOVER CONT 4709300 1 125 125
T404001-2 C5D 06/23/93 07/02/96 N HOLD FIXT, HOVER CONT 4709300 1 125 125
T404002 C5D 01/23/93 07/02/96 N PANEL, HOVER CONTROLT 4709300 1 275 275
T404003 C5D 00S 01/14/92 07/02/96 Y PANEL ASSY, HOVER ASSY 4709300 1 275 275
T404004-1 C5D 01/14/92 07/02/96 N END CAP, RDT POOL TEST 4709300 1 175 175
T404004-2 C5D 01/14/92 07/02/96 N END CAP, RDT POOL TEST 4709300 1 175 175
T404006-1 C5D 10/21/92 10/16/96 N ADAPT HOLD FIXT, RDT 4709300 1 421 421
T404006-2 C5D 01/14/92 07/02/96 N ADAPT HOLD FIXT, RDT 4709300 1 421 421
TE254416 9820 06/05/97 09/17/96 N COIL ASSY TEST FIXTURE 1 1170 1170
TE256000-3 C5D OOS 01/23/92 07/02/96 Y CAGE, HELICOID PRESSUR 4709300 1 950 950
Tooling 46 41431
Test Equip. 2 2126
Total 48 43551
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 1
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Contract Number: N00383-88-G-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T207231 C5E 06/17/93 07/02/96 N DRILL JIG 10672184567 1 321 321
T207232 C5E 06/17/93 01/02/96 N DRILL JIG 1067218 1 478 478
1207233 C5E 06/17/93 07/02/96 N DRILL JIG 1067218-2 1 196 198
1067218-1
T207234 C5E 06/17/93 07/02/96 N ALIGNMENT FIXTURE 1067218-3 1 78 78
T207385-ABCD C5D 09/30/93 07/02/96 N PRESSURE TEST FIXTURE 1060394 1 322 322
T207396&A C4D 08/05/96 08/05/96 N PRESSURE TEST FIXTURE 1049920 1 494 494
1207397 C5D 09/30/93 07/02/96 N TEST PLATE 1067248 1 170 170
1207611 C3F 02/28/92 06/27/96 N DRILL JIG 1043165 1 212 212
T207631 C3F 03/03/92 06/27/96 N MOLD 1067269 1 590 590
T207650 SONFARRELL, INC. 12/04/72 07/12/96 N MOLD 1067222 1 2219 2219
1207664-1 C2B 06/02/93 06/27/96 N BOND & LOCATE FIXTURE 1049927 1 57 57
T207664-2 C2B 06/02/93 06/27/96 N BOND A LOCATE FIXTURE 1049927 1 57 57
T207664-3 C2B 06/02/93 06/27/96 N BOND & LOCATE FIXTURE 1049927 1 57 57
T207664-4 C2B 08/23/94 06/27/96 N LOCATING FIXTURE 1049927 1 57 57
T207727-1 C7A 05/14/96 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63
1049928
T207727-2 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 1049928 1 63 63
3187780
T207727-3 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63
1049928
T207727-4 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63
1049928
T207727-5 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63
1049928
T207727-6 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63
1049928
T207727-7 TELFWHSE 08/01/93 08/02/96 N BAFFLE HOLDING FIXTURE 3187780 1 63 63
1049928
T207776 9852B 01/10/78 08/09/96 N TANK TEST FIXTURE 1049930 1 159 159
T207965 LINMOLD CO. 03/08/73 07/12/96 N MOLD 1067248-998 1 724 724
T208013 TELFWHSE 08/01/93 08/02/96 N ALUMINUM DIE, FWD EMD 1060364 1 2970 2970
T208014 TELFWHSE 08/01/93 08/02/96 N ALUMINUMM DIE 1060384 1 2309 2309
1208015 TELFWHSE 08/01/93 08/02/96 N PUSHOFF RING 1060354 1 31 31
T208016 TELFWHSE 08/01/93 08/02/96 N STEEL MANDREL 1060364 1 1082 1082
T208118 RUBBERCRAFT 11/11/85 07/17/96 H MOLD, COVER FLANGE 1070522 1 417 417
T208355 C7B 01/30/97 07/10/96 N SHAKE TEST FIXTURE(1 SET) 1049201 1 25 25
T208556 BLOOMERS METAL STAMP 09/21/77 07/10/96 H FORM DIE 1048364 1 662 682
T208557 BLOOMERS METAL STAMP 09/21/77 07/10/96 N FORM DIE 1048364 1 285 285
T208682A/B 0 & D INDUSTRIES 02/26/87 07/23/96 N DRILL JIG & GAGE 1047180 1 834 834
T209075 J4D 02/20/96 02/20/96 N TANK TEST FIXT 1049928 1 0 0
T209151 C4B 03/11/92 06/28/96 N HYDRO STD ADAPTER 1049928 1 167 167
T211537 C4F 02/27/92 07/01/96 N DRILL JIG 3134269 1 93 93
T211538 C5F 11/02/94 07/02/96 N PERM MOLD 3153771 1 246 246
T211600 C5A 03/05/92 07/01/96 N TEMPLATE 3134276 1 28 28
T211601 C5A 03/05/92 07/01/96 N TEMPLATE 3134272-1 1 16 16
T211602 C5A 03/05/92 07/01/96 N TEMPLATE 3134272-2 1 16 16
T211603 C5A 03/05/92 07/01/96 N TEMPLATE 1 33 33
T211619 C5A 03/05/92 07/01/96 N TEMPLATE 3134263-1 1 97 97
T211626 C6E1 02/28/92 07/09/96 N ROUTER FIXTURE 3134263-1 1 81 81
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 2
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Contract Number: N00383-84-G-K301 Description: Q18B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- -------------- -------------------- -------- ------- --- ------------------------- ------------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T211623 TURNER CASTING CORP. 07/25/91 07/12/96 N WOOD PATTERN 3153759 1 331 331
T211624 C6F 02/27/92 07/09/96 N WOOD PATTERN 3153766 1 329 329
T211648 C5A 03/05/92 07/01/96 N TEMPLATE 3152116-1 1 45 45
T211664 C5A 03/05/92 07/01/96 N TEMPLATE 3134317 1 41 41
T211665 C5A 03/05/92 07/0l/96 N TEMPLATE 3164333-1 1 45 45
T211666 C5A 03/05/92 07/01/96 N TEMPLATE 3154333-2 1 37 37
T211667 C5A 03/05/92 07/01/96 N TEMPLATE 3154271 1 33 33
T211670 ACE RUBBER CO. 04/19/72 07/10/96 N CAVITY MOLD 1080397 1 971 971
T211672 C3F 02/28/92 06/27/96 N CAVITY MOLD 3153878 1 229 229
T211779 C5A 03/05/92 07/01/96 N TEMPLATE 3154340-1 1 113 113
T211780 C5A 03/05/92 07/01/96 N WELD FIXTURE 3154340-1 1 64 64
T211781 C5A 03/05/92 07/01/96 N TEMPLATE 3154340-2 1 33 33
T211782 C5A 11/O3/94 07/01/96 N TEMPLATE 3154342 1 28 28
T211812 C5E 06/24/93 07/02/96 N PERMANENT MOLD 3153765 1 487 487
T211813ABCD TEMPCO 09/11/90 07/10/96 N CASTING MOLD 3144273 1 608 608
T211847A/B G & D INDUSTRIES 02/26/87 07/23/96 N FABRIC MODELS 2 639 1278
T211849 G & D INDUSTRIES 02/26/87 07/23/96 N HI-TEMP DIE 3165890 1 749 749
T211850A/B G & D INDUSTRIES 02/26/87 07/23/96 N DRILL/TRIM FIXTURE 3165890 1 555 555
T211851 G & D INDUSTRIES 02/26/87 07/23/96 N FABRIC MODELS 3165890 1 933 933
T211852 G & D INDUSTRIES 02/27/87 07/23/96 N HI TEMP DIE 3165890 1 360 360
T211911 TELFWHSE 08/01/93 08/02/96 N COMPRESSION MOLD 3149684 1 3892 3892
T212172 F2A 07/31/95 07/12/96 N CABLE HARNESS BRD REV A 3134270 1 43 43
T213144 C3F 03/03/92 06/27/96 N SINGLE CAVITY MOLD 3152810-1 1 322 322
T213322 TELFWHSE 08/01/93 08/02/96 N CHECK FIXTURE 1060365 1 643 643
T213537-1 C5C 09/30/93 07/01/96 N LOCATING TOOL 3167589 1 50 50
T213537-2 C5C 08/09/96 08/09/96 N LOCATING TOOL 3167589 1 50 50
T213537-3 C5C 09/30/93 07/01/96 N LOCATING TOOL 3167589 1 50 50
T213537-4 C5C 08/09/96 08/09/96 N LOCATING TOOL 3167589 1 50 50
T213537-5 C5C 09/30/93 07/01/96 N LOCATING TOOL 3167589 1 50 50
T213677&A C5E 06/17/93 07/02/96 N DRILL FIXTURE 3153208 1 498 498
T215486 C5E 03/05/92 07/01/96 N TEMPLATE 3188495 1 385 385
T216029-1 C5A 03/05/92 07/01/96 N SPANNER WRENCH 3183186 1 54 54
T216029-2 C5A 03/05/92 07/01/96 N SPANNER WRENCH 3183186 1 54 54
T216238 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 147 147
T216239 C5A 08/21/98 07/01/96 N WALES TEMPLATE 1 49 49
T216240 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 134 134
T216241 C6E4 02/20/92 07/09/96 N ROUTER PLATE 1 206 206
T216242 C5A 03/05/92 07/01/96 N ROUTER PLATE 1 79 79
T216243 C5A 03/05/92 07/01/96 N ROUTER PLATE 1 60 60
T216351 C5A 03/05/92 07/01/96 N P. C. TEMPLATE 1 30 30
T216352 C6E4 02/20/92 07/09/96 N ROUTER PLATE 1 243 243
T216354 C5A 03/05/92 07/01/96 N ROUTER PLATE 1 57 57
T216355 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 79 79
T216357 C6E3 02/20/92 07/09/96 N P. C. TEMPLATE 1 42 42
T216358 C5A 10/19/93 07/01/96 N WALES TEMPLATE 1 49 49
T216359 C5A 03/01/93 07/01/96 N WALES TEMPLATE 1 42 42
T216360 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 42 42
T216361 C5A 09/09/96 07/01/96 N WALES TEMPLATE 1 91 91
T216362 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 42 42
T216378 C5A 03/05/92 07/01/96 N DRILL FIXTURE 1 246 246
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 3
<TABLE>
<CAPTION>
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T216403 C5A 10/29/93 07/01/96 N WALES TEMPLATE 1 60 60
T216406 C5A 03/05/92 07/01/96 N PANTO MASTER 1 198 198
T216415 C5A 05/03/93 07/01/96 N WALES TEMPLATE 1 122 122
T216416 C5A 03/05/92 07/01/96 N DRILL FIXTURE 1 290 290
T216417 C6E3 04/13/94 07/09/96 N WALES TEMPLATE 1 129 129
T216418 C5A 03/09/93 07/01/96 N WALES TEMPLATE 1 122 122
T216419 C6E3 03/09/93 07/09/96 N WALES TEMPLATE 1 202 202
T216420 C6E1 03/09/93 07/09/96 N WALES TEMPLATE 1 246 246
T216421 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 77 77
T216422 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 8 80
T216423 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 180 160
T216439 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 48 48
T216440 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 91 91
T216441 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 142 142
T216443 C5A 03/06/92 07/01/96 N WALES TEMPLATE 1 99 99
T216445 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 114 114
T216447 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 83 83
T216448 C6E2 02/20/92 07/09/96 N ROUTER PLATE 1 122 122
T216449 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 152 152
T216451 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 236 236
T216452 C6E2 02/20/92 07/09/96 N ROUTER PLATE 1 137 137
T216453 C5A 03/06/92 07/01/96 N WALES TEMPLATE 1 293 293
T216454 C6E1 02/20/92 07/09/96 N WALES TEMPLATE 1 129 129
T216455 C6E2 02/28/92 07/09/96 N ROUTER PLATE 1 214 214
T216456 C6E1 02/20/92 07/09/96 N P. C. TEMPLATE 1 297 297
T216457 C6E1 02/20/92 07/09/96 N P. C. TEMPLATE 1 103 103
T216458 C6E1 02/20/92 07/09/96 N P. C. TEMPLATE 1 103 103
T216459 C6E3 09/30/92 07/09/96 N P. C. TEMPLATE 1 73 73
T216460 C6E3 12/08/93 07/09/96 N P. C. TEMPLATE P/H REV C 1 80 80
T216461 C6E3 12/08/93 07/09/96 N P. C. TEMPLATE 1 72 72
T216462&A C6E1 06/07/95 07/09/96 N P. C. TEMPLATE 1 90 90
T216465 C5A 06/10/92 07/01/96 N SPDO WELD FIXTURE 1 77 77
T216466&-A C6E4 04/13/94 07/09/96 N SHEAR & ROUTER TEMP REV A 3184045-2 1 171 171
T216478 C5A 03/05/92 07/01/96 N PREP FIXTURE 1 19 19
T216485 C5A 03/01/93 07/01/96 N WALES TEMPLATE 1 42 42
T216488 TOWSON 04/26/94 09/30/96 N PREP FIXTURE 1 31 31
T216491 C5A 03/05/92 07/01/96 N WALES TEMPLATE 1 49 49
T216500-1 C5A 09/27/96 07/01/96 N PREP BLOCK 1 10 10
T216500-2 C5A 07/01/96 09/27/96 N PREP BLOCK 1 10 10
T216505 C5A 03/21/94 07/01/96 N WALES TEMPLATE 1 54 54
T216522&-A C5A 03/05/92 07/01/96 N PREP FIXTURE 1 245 245
T216567-1 9852B 06/17/96 06/17/96 N ALIGNMENT FIXTURE 3183305-801 1 74 74
T216567-2 9852B 06/17/96 06/17/96 N ALIGNMENT FIXTURE 3183305-801 1 74 74
T217147 C5A 03/06/92 07/01/96 N TEMPLATE 3188469-4 1 127 127
T217828 C5A 03/06/92 07/01/96 N MOLD FIXTURE 1049920 1 201 201
T217829 C4C 03/12/92 06/28/96 N STRAIGHTENING TOOL 1049920 1 440 440
T217835 C5A 03/06/92 07/01/96 N DRILL FIXTURE 405 405
T217838-1 C4B 03/11/92 06/28/96 N HOLD FIXT, PRE AMP 3135110 1 137 137
T217838-2 C4B 03/11/92 06/28/96 N HOLD FIXT, PRE AMP 3135110 1 137 137
T217846 C5A 08/24/94 07/01/96 Y STATION HEADER FIXTURE 1 500 500
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 4
<TABLE>
<CAPTION>
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T217913 C5A 03/06/92 07/01/96 N WALES TEMPLATE 3183111 1 30 30
3183111-1&2
T217966 C5A 03/06/92 07/01/96 N DRILL TEMPLATE 3183204-801 1 65 65
T217967 C5A 03/06/92 07/01/96 N DRILL TEMPLATE 3183504-801 1 65 65
T217968 C5A 03/06/92 07/01/96 N DRILL TEMPLATE 3183680-801 1 65 65
T217969 C5A 03/06/92 07/01/96 N DRILL TEMPLATE 3183304-801 1 65 65
T218121 C5B 03/09/92 07/01/96 N TEMPLATE 3198341-2 1 45 45
3198341-1
T218247 C5B 03/09/92 07/01/96 N SHEAR TEMPLATE 3310718-5 1 41 41
3310718-6
T218248-1 CAL LAB 06/04/97 06/14/96 Y CRIMPER 3310700 1 0 0
T218248-2 C4A 03/18/97 07/10/96 Y CRIMP TOOL 3310700 1 70 70
T218248-3 9852E 03/05/96 06/21/96 Y HAND CRIMP TOOL 3310700 1 70 70
T218249-1 9852E 03/18/97 07/01/96 Y HAND CRIMP TOOL 3310700 1 140 140
T218249-2 CAL LAB 06/04/97 05/10/96 Y CRIMP TOOL 3310700 1 70 70
T218249-3 9852E 03/05/96 07/10/96 Y HAND CRIMP TOOL 3310700 1 70 70
T218257 F3A 03/07/97 07/15/96 N CABLE BOARD 3310674-101 1 216 216
T218258 F2A 02/10/92 07/12/96 N CABLE BOARD 3310749 1 104 104
T218259 F3A 03/07/97 07/15/96 N CABLE BOARD 3310748 1 620 620
T218271 F3A 03/07/92 08/09/96 N CABLE BOARD 3310660-402 1 6350 6350
T218287 C7E6 02/28/92 07/10/96 N TEMPLATE 3310669-1 74 74
T218288 C6E17 02/20/92 07/09/96 N TEMPLATE 3310669-2 1 61 61
T218296 C6E21 02/21/92 07/09/96 N PANTO MASTER 3310662-1 1 158 158
T218297 C5B 01/03/94 07/01/96 N TEMPLATE 3183406 1 99 99
T218298 C6E18 02/20/92 07/09/96 N TEMPLATE 3310662-2 1 87 87
T218299 C6E18 02/21/92 07/09/96 N TEMPLATE 3310662-3 1 87 87
T218300 C5B 03/09/92 07/01/96 N DRILL FIXTURE 3195284 1 125 125
T218302 C5B 02/20/92 07/01/96 N SPOT WELDING FIXTURE 3192493 1 136 136
T218303 C5B 03/09/92 07/01/96 N TEMPLATE 3192493-3 1 52 52
T218304 C5B 03/09/92 07/01/96 N TEMPLATE 3192493-2 1 52 52
T218305 C5B 03/09/92 07/01/96 N TEMPLATE 3192493-1 1 52 52
T218306 C5B 03/09/92 07/01/96 N TEMPLATE 3195407-9 1 26 26
T218307 C6E14 02/20/92 07/09/96 N TEMPLATE 3194984 1 86 86
T218308 C5B 03/09/92 07/01/96 N TEMPLATE 3194984-2 1 139 139
T218309 C8E6 02/20/92 07/09/96 N WALES TEMPLATE 3310694-1 1 136 136
T218310 C5B 03/09/92 07/01/96 N FORM TEMPLATE 3183778-4 1 61 61
T218311 C5B 03/09/92 07/01/96 N TEMPLATE 3183778-7 1 87 87
T218312 C5B 03/09/92 07/01/96 N TEMPLATE,BRCKT CLMP REV B 3195926 1 71 71
T218313 C6E6 02/20/92 07/09/96 N TEMPLATE 3310693-1 1 184 184
T218314 C5B 03/09/92 07/01/96 N TEMPLATE 3310693-2 1 187 187
T218315 C6E7 02/20/92 07/09/96 N TEMPLATE, REV C 3310772-1 1 124 124
T218316 C5B 03/09/92 07/01/96 N TEMPLATE 3310772-2 1 112 112
T218317 C5B 03/09/92 07/01/96 N TEMPLATE 3310772-3 1 112 112
T218318 C6E19 02/21/92 07/09/96 N TEMPLATE 3310655-1 1 74 74
T218320 C6E6 02/20/92 07/09/96 N TEMPLATE 3310679 1 61 61
T218321 C6E6 02/21/92 07/09/96 N PANTO MASTER 3310679 1 100 100
T218326 C6E9 02/20/92 07/09/96 N TEMPLATE 3310661 1 126 126
T218327 C5B 03/09/92 07/01/96 N TEMPLATE 3310826 1 48 48
T218328 C5B 03/09/92 07/01/96 N TEMPLATE 3310827 1 48 48
T218329 C6E15 02/20/92 07/09/96 N TEMPLATE 3310648-1 1 113 113
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 5
<TABLE>
<CAPTION>
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T218330 C6E12 02/20/92 07/09/96 N TEMPLATE 3310648-2 1 113 113
T218331 C5B 03/09/92 07/01/96 N TEMPLATE 3310648-3 1 26 26
T218332 C6E6 02/21/92 07/09/96 N TEMPLATE, REV D 3310659 1 74 74
T218333 C6E5 02/20/92 07/09/96 N TEMPLATE 3310699 1 74 74
T218334 C5B 03/09/92 07/01/96 N TEMPLATE 3310698 1 61 61
T218335 C5B 03/09/92 07/01/96 N TEMPLATE 3310733 1 61 61
T218336 C6E18 02/21/92 07/09/96 N TEMPLATE 3310708 1 87 87
T218338 C5B 03/09/92 07/01/96 N TEMPLATE, P/N REV 0 3310656 1 149 149
T218339 C6E9 02/20/92 07/09/96 N ROUTER PLATE 3310656 1 174 174
T218340 C6E12 02/20/92 07/09/96 N TEMPLATE 3310649-1 1 113 113
T218341 C6E19 02/21/92 07/09/96 N TEMPLATE 3318649-2 1 48 48
T218343 C5B 05/05/93 07/01/96 N TEMPLATE 3310683-2 1 13 13
T218344 C6E5 02/20/92 07/09/96 N TEMPLATE 3310648-7 1 139 139
T218345 C6E12 02/20/92 07/09/96 N TEMPLATE 3310648-10 1 168 168
T218346 C6E5 02/20/92 07/09/96 N TEMPLATE 3310646-11 1 126 126
T218347 C5B 03/09/92 07/01/96 N TEMPLATE 3310652 1 74 74
T218348 C6E7 02/20/92 07/09/96 N TEMPLATE 3310646-1 1 100 100
T218349 C6E5 02/20/92 07/09/96 N TEMPLATE 3310646-9 1 139 139
T218350 C6E7 02/21/92 07/09/96 N TEMPLATE 3310646-20 1 74 74
T2183510A C7E10 03/02/92 07/10/96 N DRILL TEMPLATE 3310650 1 180 180
3319246
3310646
3319245
T218352A C7E8 03/02/92 07/10/96 N DRILL FIXTURE 3310646 1 180 180
3310246
T218356 C6E9 02/24/92 07/09/96 N TEMPLATE 3310683-1 1 400 400
T218357 C5B 03/09/92 07/01/96 N TEMPLATE,P/N REV F 3310688-1 1 126 126
T218358 C5B 03/09/92 07/01/96 N TEMPLATE 3310688-2 1 21 21
T218359 C5B 03/09/92 07/01/96 N TEMPLATE 3310688-3 1 48 48
T218360 C5B 03/09/92 07/01/96 N TEMPLATE 3310688-4 1 26 26
T218361 C5B 03/09/92 07/01/96 N TEMPLATE 3310714-1 1 100 100
T218362 C6E21 02/24/92 07/09/96 N TEMPLATE 3310714-2 1 129 129
T218363 C5B 03/09/92 07/01/96 N TEMPLATE 3310731 1 48 48
T218364 C5B 12/21/93 07/01/96 N TEMPLATE 3310815 1 74 74
T218365 C5B 03/09/92 07/01/96 N TEMPLATE 3310814 1 65 65
T218366 C5B 03/09/92 07/01/96 N TEMPLATE 3310713 1 48 48
T218367 C6E5 02/21/92 07/09/96 N TEMPLATE 3310817 1 113 113
T218368 C5B 03/09/92 07/01/96 N TEMPLATE, P/N REV C 3310833 1 48 48
T218369 C5B 05/05/93 07/01/96 N TEMPLATE,P/N REV B 3310739 1 48 48
T218370 C6E8 02/21/92 07/09/96 N ROUTER PLATE,P/N REV B 3310739 1 100 100
T218371 C7E4 02/24/92 07/10/96 N TEMPLATE 3310654-1 1 300 300
T218372 C6E18 02/24/92 07/09/96 N TEMPLATE 3310654-2 1 74 74
T218373 C5B 03/09/92 07/01/96 N TEMPLATE, P/N REV F 3310654-3 1 65 65
T218374 C6E9 02/24/92 07/09/96 N TEMPLATE 3310654-4 1 200 200
T218375 C6E19 02/24/92 07/09/96 N TEMPLATE 3310654-5 1 78 78
T218376 C6E18 02/24/92 07/09/96 N TEMPLATE 3310654-6 1 26 26
T218377 C5B 03/09/92 07/01/96 N TEMPLATE 3310654-8 1 252 252
T218378 C5B 03/09/92 07/01/96 N TEMPLATE 3310654-9 1 103 103
T218379 C6E6 02/21/92 07/09/96 N TEMPLATE 3310654-10 1 74 74
T218380 C6E19 02/24/92 07/09/96 N TEMPLATE 3310737 1 39 39
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 6
<TABLE>
<CAPTION>
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T218381 C6E19 02/24/92 07/09/96 N TEMPLATE 3314162-1 1 87 87
T218382 C5B 03/09/92 07/01/96 N TEMPLATE 3310819 1 96 96
T218383 C7E6 02/24/92 07/10/96 N TEMPLATE 3310736 1 274 274
T218384 C7F 07/10/96 07/10/96 N ROUTER FIXTURE 3310736 1 329 329
T218385 C7E9 03/02/92 07/10/96 N TEMPLATE 3310686 1 213 213
T218386 C5B 05/11/93 07/01/96 N TEMPLATE 3310712-1 1 74 74
T218387 C7E8 03/02/92 07/10/96 N ROUTER PLATE 3310689-1 1 352 352
T218388 C7E8 03/02/92 07/10/96 N TEMPLATE, P/N REV C 3310689-1 1 352 352
T218389 C6E12 02/24/92 07/09/96 N PANTO MASTER 3310689-1 1 74 74
T218390 C5B 03/09/92 07/01/96 N TEMPLATE 3310732 1 61 61
T218399 F2A 02/10/92 07/12/96 N CABLE BOARD 3310760 1 110 110
T218401 F3B 02/10/92 07/15/96 N CABLE BOARD 3310744 1 223 223
T218404 C5B 03/09/92 07/01/96 N LAYOUT TEMPLATE 3310689 1 87 87
T218417 C6E21 02/24/92 07/09/96 N PANTO MASTER 3310686 1 320 320
T218422ABC C7E11 02/26/92 07/10/96 N PANTO MASTER 1 213 213
T218423 C7E6 02/24/92 07/10/96 N TEMPLATE 3310647-1 1 275 275
T218428 C6E9 02/24/92 07/09/96 N TEMPLATE 3310662-1 1 232 232
T218429 C6E21 02/24/92 07/09/96 N PANTO MASTER 3310662-1 1 91 91
T2l8432 C5B 03/09/92 07/01/96 N TEMPLATE 3314157-1 1 126 126
T2l8443 C5B 03/09/93 07/01/96 N SHEAR & BRAKE FIXTURE 3310646-6 1 39 39
T218444 C5B 03/09/92 07/01/96 N SHEAR & BRAKE FIXTURE 3310646-4 1 48 48
T218445 C5B 03/09/92 07/01/96 N TEMP/SH/BR/FIXTURE 3310246-4 1 39 39
T218447 C6E14 02/24/92 07/09/96 N SHEAR & FORM TEMPLATE 3310646-5 1 61 61
T218458 F2A 08/08/94 07/11/96 N HARNESS BOARD 3310770-401 1 315 315
T218459 C5B 03/09/92 07/01/96 N TEMPLATE 3190033-3 1 48 48
3190033-4
T218478 F3A 03/10/97 07/15/96 N HARNESS BOARD, AZA1 P1 3310685-401 1 65 65
T218480 F2A 02/10/92 07/12/96 N HARNESS BOARD 3310685-403 1 65 65
T218498 F3A 03/10/97 07/15/96 N HARNESS BOARD J2 3310680-402 1 101 101
T228621 C5B 03/09/92 07/01/96 N DRILL FIXTURE 3310834-1 1 50 50
T218622 F5C 02/12/92 07/15/96 N HOLD FIXTURE 3196099 1 75 75
T218625 C5B 03/09/92 07/01/96 N DRILL FIXTURE 3310688-5 1 60 60
T218632 9234 07/06/87 08/08/96 N MASK ALIGN FIXT 1 708 708
T218748 C5B 03/10/92 07/01/96 N FORM TEMP 3190082-2 1 75 75
T218754 C5B 03/10/92 07/01/96 N TEMPLATE 3310783 1 135 135
T400300 TELFWHSE 08/01/93 08/02/96 N LAY-UP MOLD 1060364 1 28 28
T400301 TELFWHSE 08/01/93 08/02/96 N FOAM MOLD 1060364-1 1 419 419
T400302 TELFWHSE 08/01/93 08/02/96 N FOAM MOLD 1060364-2 1 335 335
T400303 TELFWHSE 08/01/93 08/02/96 N LAYUP MOLD 1060364-4 1 54 54
T400304 TELFWHSE 08/01/93 08/02/96 N MANDREL 1060364-3 1 431 431
T400306ABC TELFWHSE 08/01/93 08/02/96 N DRILL JIG 1060364 1 620 620
T400312 KLUNE 11/22/72 07/12/96 N BLANK DIE 1049920-6 1 110 110
T400411 TELFWHSE 08/01/93 08/02/96 N DRILL JIG 2069401 1 324 324
T400447 ACE RUBBER CO. 07/28/71 07/10/96 N CAVITY MOLD 1060381 1 260 260
T401132 C3F 02/28/92 06/27/96 N SINGLE CAVITY MOLD 3051072 1 185 185
T401133 C3F 02/28/92 06/27/96 N SINGLE CAVITY MOLD 3051073 1 180 180
T401143AB C6F 02/28/92 07/09/96 N PATTERN & CORE BOX 3151156 1 1386 1385
T401144ABC C2F 02/28/92 06/26/96 N PATTERN & 2 CORE BOXES 3151157 1 985 985
T401145ABCD C5F 02/28/92 07/08/96 N PLASTIC PATTERN 3151158 1 795 795
T401421 INDUSTRIAL TUBE 07/02/71 07/17/96 N FORMING TOOL 3165871 1 740 740
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 7
<TABLE>
<CAPTION>
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T401599 G & D INDUSTRIES 02/26/87 07/23/96 N PLASTER MOCKUP 3185355 1 2670 2670
T401600 G & D INDUSTRIES 02/26/87 07/23/96 N MOLD 3185355 1 2636 2636
T401601 G & D INDUSTRIES 02/26/87 07/23/96 N FORMING TOOL A 3185355 1 1115 1115
T401602 G & D INDUSTRIES 02/26/87 07/23/96 N FORMING TOOL B 3185355 0 0 0
T401603 G & D INDUSTRIES 02/26/87 07/23/96 N TRIM DRILL FIXTURE 3185355 1 676 676
T401605 G & D INDUSTRIES 02/26/87 07/23/96 N EPOXY MOLD 3185350 1 1960 1960
T401606 G & D INDUSTRIES 02/26/87 07/23/96 N EPOXY MOLD A 3185350 1 860 860
T401607 G & D INDUSTRIES 02/26/87 07/23/96 N FORMING TOOL B 3185350 0 0 0
T401608 G & D INDUSTRIES 02/26/87 07/23/96 N TRIM DRILL FIXTURE 3186350 1 510 510
T401609 G & D INDUSTRIES 02/26/87 07/23/96 N APPLY ROUTING FIXTURE 3185350 1 150 150
T401611 G & D INDUSTRIES 02/26/87 07/23/96 N EPOXY MOLD 3185350 1 795 795
T402404 D5F POS 02/11/97 06/26/96 N PROTRACTOR, REEL MACHINE 3323471 1 250 250
T402421 G & D INDUSTRIES 02/26/87 07/23/96 N MOLD LOW FUNNEL 3318695 1 3500 3500
T402463 G & D INDUSTRIES 02/26/87 07/23/96 N LAYUP MOLD 3165890 1 2500 2500
T603660-1 CIC0N 01/28/97 07/10/96 N HARNESS HOLDING FIXTURE 1 258 258
T603660-2 CICON 01/28/97 09/27/96 N HARNESS HOLDING FIXTURE 1 258 258
T603766 C6B 03/11/92 07/08/96 N ROUTER PLATE 3310646 1 120 120
3319246
T603767 C6B 03/11/92 07/08/96 N SAW TEMPLATE 3319246 1 45 45
3310646
T603768 C6B 03/11/92 07/07/96 N SAW TEMPLATE 3310646 1 45 45
3319246
T603769 C6B 03/11/92 07/09/96 N SAW TEMPLATE 3319246 1 45 45
3310646
T603770 C6B 03/11/92 07/09/96 N SAW TEMPLATE 3319246 1 45 45
3310646
T603771 C6B 03/11/92 07/09/96 N SAW TEMPLATE 3310646 1 45 45
3319246
T603777 C68 03/11/92 07/09/96 N DRILL JIG 3310834-2 1 180 180
T603780 C6B 03/11/92 07/09/96 N ROUTER PLATE 3310646 1 120 120
3319246
TE251006 D5A 09/27/96 09/27/96 N POLAR & RES. HYDRO T/F 1 110 110
TE251008 9852D 06/25/96 06/25/96 REEL MACK PANEL 1 344 344
TE251008-4 D4B 06/25/96 06/25/96 N TEST C0NNECTOR P5657 1 100 100
TE251008-5 D4B 06/25/96 06/25/96 N TEST CONNECTOR P6019 1 100 100
TE251008-6 D4B 05/25/96 06/25/96 CONTINUITY TEST FIXTURE 1 100 100
TE251010 9852AR/0 05/10/89 08/09/96 N JIFF--LIFF T/F 1 175 175
TE251696 9234 04/14/93 06/17/96 T/F NAFI-4 & HYBRID 4F 3185210 1 875 875
TE251698 9234 04/14/93 06/17/96 T/F NAFI-3& HYBRID 3F 3185205 1 767 767
TE251705 D6C 02/26/92 07/11/96 N TEST FIXT, HYBRID 1021 3185240 1 324 324
TE251710 9762 06/20/90 09/27/96 T/F CURSOR POSITION CONT 3184674 1 511 511
TE251712 D6A 05/25/92 07/11/96 N TEST FIXTURE 3183370 1 347 347
TE251714 D5F POS 02/10/97 07/12/96 N TEST FIXTURE 1 316 316
TE251748 9234 04/13/93 06/17/96 TEST FIXTURE 3185220 1 300 300
TE251754 D7E 07/02/92 07/11/96 N SONAR CABLE, SUPER TESTER 1 439 439
TE251757 9234 04/14/93 06/17/96 TEST FIXTURE 3185075 1 363 363
TE251760 9852B00S 08/18/96 06/18/96 SYST ATP TEST STATION 1 8450 8450
TE251760-1 9852B00S 06/18/96 06/18/96 PANEL, METER 1 1000 1000
TE251760-10 D7F POS 02/10/97 07/10/96 Y OSCILLOSCOPE 1 3600 3600
TE251760-12 9852B00S 06/18/96 06/18/96 PANEL, POWER CONTROL 1 800 800
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 8
<TABLE>
<CAPTION>
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE251760-13 9852B 06/18/96 06/18/96 PANEL, 60 HS POWER 1 700 700
TE251760-14 9852B 06/18/96 06/18/96 PANEL, 400 HS POWER 1 1500 1500
TE251760-2 9852B 08/18/96 08/18/96 TIMER, COUNTER 1 3500 3500
TE251760-3 9852B00S 06/18/96 06/18/96 BURST GEN DRANETZ 206A 1 5000 5000
TE251760-4 D7F P0S 02/10/97 06/18/96 WAVEFORM SYNTHESIZER 1 3000 3000
TE251760-5 9852B 05/18/96 06/18/96 CONTROL PANEL, MARTIX 1 30000 80000
TE251760-6 9852B 06/18/96 06/18/96 CONTROL PANEL 1 28761 28761
TE251760-7 9852B 06/18/96 06/18/96 BLOWER 1 150 150
TE251760-8 9852B00S 06/18/96 06/18/96 PANEL, METER 1 1500 1500
TE252142 9762 05/24/82 07/22/96 N T/F I.C. TESTER D/A CONV 3184649 1 355 355
TE252143 D5F P0S 02/10/97 07/11/96 N SUPER TEST CABLE SA 1 200 200
TE252144 98528 12/12/80 06/13/96 N TEST CABLE SB 1 200 200
TE252146 D5F P0S 02/10/97 09/27/96 N TEST CABLE 1 200 200
TE252147 D5F POS 02/10/97 06/13/96 N SUPER TEST CABLE TG 1 200 200
TE252162 9852B 07/22/96 07/22/96 N TEST CABLE 1 200 200
TE252167 D5F P0S 02/10/97 07/12/96 N SUPER TEST CABLE TF 1 200 200
TE252168 D5F P0S 02/10/97 07/11/96 N SUPER TEST CABLE TG 1 200 200
TE252170 9852B 06/13/96 06/13/96 N TEST CABLE 1 200 200
TE252171 9852B 06/13/96 06/13/96 N TEST CABLE 1 200 200
TE252181 9234 04/19/93 06/17/96 TEST FIXTURE 3185110 1 511 511
TE252182 9234 04/14/93 06/17/96 TEST FIXTURE 3185180 1 402 402
TE252184 9234 04/14/93 06/17/96 TEST FIXTURE 3185100 1 411 411
TE252185 9234 04/14/93 06/17/96 TEST FIXTURE 3185065 1 411 411
TE252186 9234 04/14/93 06/17/96 POWER DISTRIBUTOR BOX 3185230 1 411 411
TE252187 9234 04/14/93 06/17/96 POWER DISTRIBUTOR BOX 3185190 1 411 411
TE252188 9234 04/14/93 06/17/96 POWER DISTRIBUTOR BOX 3185235 1 411 411
TE252189 9234 04/14/93 06/17/96 POWER DISTRIBUTOR BOX 3185060 1 377 377
TE252230 9234 04/14/93 06/17/96 I.F. HYBRID TEST FIXT 3185100 1 753 753
TE252236-1 D7C P0S 02/10/97 09/27/96 Y POWER SUPPLY 1 550 550
TE252237 D5C 02/20/92 07/10/96 N TEST FIXTURE, 1026 1 700 700
TE252242 D3F P0S 02/10/97 07/10/96 N TEST HEAD 3183370 1 225 225
TE252250 D3F P0S 02/10/97 07/10/96 N TEST HEAD 3183450 1 225 225
TE252251 D3F P0S 02/10/97 07/10/96 N TEST HEAD 3183355 1 250 250
TE252263 D3F P0S 02/10/97 07/10/96 N TEST HEAD 3183226 1 183 183
TE252300 D4B 02/18/92 07/10/96 TEST FIXTURE 1 653 653
TE252301 D5B 02/19/92 07/10/96 N TEST FIXTURE 3185110 1 214 214
TE252304 9234 07/21/88 06/17/96 HYBRID TRIM FIXTURE 1 214 214
TE252406 D3F POS 02/10/97 07/10/96 N ADAPT MULTILAYER BOARD 3194811 1 1500 1500
TE252475 8900XDCR 10/30/79 08/09/96 NULLMETER 1 3566 3566
TE252483 9852B 05/14/82 08/09/96 TEST FIXTURE 3183225 1 540 540
TE252484-1 D6B 02/26/92 07/11/96 N T/F MAD GATING 2A11 3188483 1 1147 1147
TE252493 9852B 06/18/96 06/18/96 SONAR BITE CNTL A11 3196615 1 1500 1500
TE252494 9852B 08/18/96 06/18/96 DOME CONTROL T/F A2 1 750 750
TE252652 9852B 06/18/96 06/18/96 TEST FIXTURE 3198360 1 500 500
TE252656-1 D4A 02/18/92 07/10/95 N TEST FIXTURE A2A12 3188486 1 2703 2703
TE252657 9852B 06/18/96 06/18/96 TEST FIXTURE 3183420 1 3000 3000
TE252659 9852B 06/18/96 06/18/96 TEST FIKTURE 3198205 1 3200 3200
TE252672 9852B 06/18/96 06/18/96 TEST FIXTURE 3183630 1 1721 1721
TE252674 9852B 06/18/96 06/18/96 TEST FIXTURE 3310480 1 2256 2256
TE252676 9852B 06/18/96 06/18/96 TEST FIXTURE 3198740 1 2805 2805
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 9
<TABLE>
<CAPTION>
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE252677 9852B 06/18/96 06/18/96 TEST FIXTURE 3183404 1 1721 1721
TE2S2678 9852B 06/18/96 06/18/96 TEST FIXTURE 3185460 1 1721 1721
TE252679 9852B 06/18/96 06/18/96 TEST FIXTURE 3185445 1 2233 2233
TE252738 D4B 07/18/96 06/13/96 TEST FIXTURE 3163630 1 1900 1900
TE252739 D4A 02/18/92 07/10/96 N TEST FIXTURE 3187820 1 1921 1921
TE252740 D5B 02/19/92 07/10/96 N TEST FIXTURE 3315780 1 2256 2256
TE252747 9852B 06/18/96 06/18/96 TEST FIXTURE 3185435 1 2776 2776
TE252748 9852B 06/18/96 06/18/96 N TEST FIXTURE, AMP DRIVER 3198209 1 1577 1577
TE252749 D5C 00S 02/20/92 07/10/96 Y TEST FIXTURE 3315775 1 2050 2050
TE252765 9852B 06/18/96 06/18/96 TEST FIXTURE 3196610 1 2000 2000
TE252778 9852B 06/18/96 06/18/96 TEST FIXTURE 3198270 1 596 595
TE252803 9852B 06/18/96 06/18/96 TEST FIXTURE 3183465 1 1705 1705
TE252815 9852B 06/18/96 06/18/96 TEST FIXTURE 3198010 1 1700 1700
TE252816 9852B 06/18/96 06/18/96 TEST FIXTURE 3196565 1 2138 2138
TE252836 9852B 06/18/96 06/18/96 TEST FIXTURE 3199831 1 743 743
TE252836 9852B 06/18/96 06/18/96 TEST FIXTURE 3196575 1 2132 2132
TE252837 9852B 06/18/96 06/18/96 TEST FIXTURE 3310500 1 1642 1642
TE252846 9852B 06/18/96 06/18/96 TEST FIXTURE 3185430 1 2200 2200
TE252847 9852B 06/18/96 06/18/96 TEST FIXTURE 3183485 1 2200 2200
TE252848 9852B 06/18/96 06/18/96 TEST FIXTURE 3315750 1 2200 2200
TE252849 9852B 06/18/96 06/18/96 TEST FIXTURE 3315730 1 1700 1700
TE252850 9852B 06/18/96 06/18/96 TEST FIXTURE 3185290 1 2200 2200
TE252851 9852B 06/18/96 06/18/96 TEST FIXTURE 3183885 1 1700 1700
TE252853 9852B 06/18/96 06/18/96 TEST FIXTURE 3196605 1 2336 2336
TE252855 9852B 06/18/96 08/18/96 TEST FIXTURE 3183270 1 1710 1710
TE252857 9852B 06/18/96 06/18/96 TEST FIXTURE 3183390 1 1100 1100
TE252864 98528 06/18/96 06/18/96 TEST FIXTURE 3315760 1 2330 2330
TE252866 D3A 11/18/94 07/10/96 N TEST FIXT,SERVOMECHANISM 1 2118 2118
TE252873 9852B 06/18/96 06/18/96 TEST FIXTURE 3183230 1 1502 1502
TE252876 9852B 06/28/96 06/18/96 TEST FIXTURE 3198365 1 2688 2688
TE252881 9852B 06/18/96 06/18/96 TEST FIXTURE 3198255 1 2115 2115
TE252882 9852B 06/18/96 06/18/96 TEST FIXTURE 3183610 1 1542 1542
TE252888-1 TELFWHSE 08/01/93 08/02/96 END BELL TEST FIXTURE 3149684 1 2400 2400
TE252888-2 TELFWHSE 08/01/93 08/02/96 END BELL TEST FIXTURE 3149684 1 2400 2400
TE252896 9852B 06/18/96 06/18/96 TEST FIXTURE A2AB 3310695 1 2000 2000
TE252897 9852B 06/18/96 06/18/96 TEST FIXT SPEECH AMP A4 3190065 1 1800 1800
TE252898 9852B 06/18/96 08/18/96 TEST FIXT FUNCT GEN A4A1 3310715 1 2200 2200
TE252899 9852B 06/18/96 06/18/96 TEST FIXT LOG FILTR A4A2 3310720 1 2200 2200
TE252900 9852B 06/18/96 06/18/96 TEST FIXT MONITOR A5 3190280 1 2000 2000
TE252901 9852B 06/18/96 06/18/96 TEST FIXT MOD CAR GEN A6 3190015 1 2000 2000
TE252903 9852B 06/18/96 08/18/96 TEST FIXT METER SEAL A8 3190085 1 2200 2200
TE252904 9862B 06/18/95 06/18/96 TEST FIXT PHASE DET A9 3190270 1 2000 2000
TE252905 9852B 06/18/96 06/18/96 TEST FIXT/SIG COND A 10 3190095 1 1800 1800
TE252916 9852B 06/18/96 08/18/96 TEST FIXT PHASE SHFTR A11 3190095 1 1800 1800
3190275
TE252917 9852B 06/18/96 06/18/96 T/F PREAMP ATTEN A12 A13 3190023 1 2000 2000
TE252918 9862B 06/18/96 06/18/96 TEST FIXT ECHO PROC A 14 3190045 1 2000 2000
TE252919 9862B 06/18/96 06/18/96 TEST FIXT RANGE DELAY A15 3190026 1 2000 2000
TE252920 9852B 06/18/96 06/18/96 T/F PULSE WIDTH/MSTR TIMR 3190075 1 2200 2200
TE252921 9852B 06/18/96 06/18/96 T/F HI VOL REG A2A7 3310705 1 2000 2000
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 10
<TABLE>
<CAPTION>
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE252923 9852B 06/18/96 06/18/96 T/F MAD & SAD OSC A1A1A2 3310675 1 1800 1800
TE252924 9852E 09/19/95 06/21/96 T/F INTERFC BUFFER A1A1A1 3310725 1 2500 2500
TE252930 D6B 04/30/92 07/11/96 N TEST FIXTURE OP 3190055 1 240 240
TE252931 D5B 02/19/92 07/10/96 N TEST FIXT 3162393 1 2350 2350
TE252932 9852B 06/18/96 06/18/96 CAL FIXT A2A8 LOW VOL REQ 3310695 1 1800 1800
TE252938 9852B 06/19/96 06/18/96 N T/F COS SHAPER 4A14 3316150 1 2000 2000
TE252939 9852B 06/18/96 06/18/96 T/F MULTIPLEXER 4A16 3316155 1 2000 2000
TE254182 9234 04/14/93 06/17/96 N TEST FIXT,ALC & LEVEL 3325690 1 1500 1500
TE254183 9234 64/14/93 06/17/96 N TEST FIXT, D/A CONVERTER 3318663 1 1200 1200
TE254185 9234 04/14/93 06/17/96 N TEST FIXT,AUDIO FILTER 3190431 1 800 800
3188110
TE254186 9234 04/14/93 06/17/96 N TEST FIXT,BANDPASS FILTER 1 1200 1200
TE254187 9234 04/14/93 06/17/96 N TEST FIXT,#1 CONTINUITY 1 1500 1500
TE254189 9234 04/14/93 06/17/96 N TEST FIXT,#2 CONTINUITY 3322393 1 1500 1560
8013841
3326598
8013840
8013845
3326590
TE254246 9234 04/14/93 06/17/96 N TEST FIXTURE 3322394 1 2000 2000
TE254247 9234 04/06/93 08/17/96 N TEST FIXT DCP PRO #2 3310440 1 4300 4300
TE265146 TELFWHSE 08/01/93 08/02/96 N HYDROPHONE 1 10151 10151
TE265151 D7C 06/25/95 07/11/96 N SONAR CABLE 1 1174 1174
TE265155 D7D 03/24/92 07/11/96 Y RECORD TEST SET 1 5000 5000
TE270001 9852DP0S 10/28/96 06/25/96 Y TENSIONING MACHINE 3162388 1 5416 5416
TE425192-1 9234 07/09/87 07/15/96 BURN IN RACK S/N 1 1 851 851
TE45105 C/L IFR 08/12/96 08/12/96 VAR 0 SHIFT GENERATOR 1046912 1 2722 2722
Tooling 307 84488
Test Equip. 139 275242
Total 446 359730
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 11
<TABLE>
<CAPTION>
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
403012-1 NAS FLA 02/02/95 10/16/96 N DRILL JIG DOME CONT 1 RVA 8030640 1 1342 1342
403012-2 9855A 05/03/95 06/25/96 N DRILL JIG DOME CONT 1 RVA 8030640 1 1342 1342
403012-3 NAS CA 02/02/95 09/16/96 N DRILL JIG DOME CONT 1 RVA 8030640 1 1342 1342
403013-1 NAS FLA 02/02/95 10/15/96 N DRILL JIG DOME CONT 2 RVA 8030640 1 1342 1342
403013-2 9855A 05/03/95 06/25/96 N DRILL JIG DOME CONT 2 RVA 8030640 1 1342 1342
403013-3 NAS CA 02/02/95 09/16/96 N DRILL JIG DOME CONT 2 RVA 8830640 1 1342 1342
403016-1 NAS FLA 02/02/95 10/15/96 N HOLE TEMP CBL RETNR REV A 8030640 1 898 898
403016-2 C5B 12/17/96 06/25/96 N HOLE TEMP CBL RETNR REV A 8030640 1 898 898
403016-3 NAS CA 02/02/95 09/16/96 N HOLE TEMP CBL RETNR REV A 8030640 1 898 898
403017-1 NAS CA 02/02/96 09/16/96 N TOOL,DRIP PAN BRCKT REV A 8030640 1 500 500
403017-2 C5B 06/26/96 08/25/96 N TOOL,DRIP PAN BRCKT REV A 8030640 1 500 500
403017-3 NAS FLA 02/02/95 10/15/96 N TOOL,DRIP PAN BRCKT REV A 8030640 1 500 500
403018-1 NAS CA 02/02/95 09/16/96 N CUTOUT GUIDE UPR PAN RV A 8030640 1 500 500
403018-2 C5B 06/25/90 06/26/96 N CUTOUT WIDE UPR PAN RV A 8030640 1 500 500
403018-3 NAS FLA 02/02/95 10/15/96 N CUTOUT WIDE UPR PAN RV A 8030640 1 500 500
403019-1 NAS CA 02/02/95 09/16/96 N TOOL,UPPER DRIP PAN REV A 8030640 1 371 371
403019-2 C5B 08/25/96 06/25/96 N TOOL,UPPER DRIP PAN REV A 8030640 1 371 371
403019-3 NAS FLA 02/02/95 10/15/96 N TOOL UPPER DRIP PAN REV A 8030640 1 371 371
403020-1 NAS CA 02/02/95 09/16/96 N TOOL,MID DRIP PAN REV A 8036640 1 335 335
403020-2 C5B 08/25/96 06/25/96 N TOOL,MID DRIP PAN REV A 8030640 1 335 335
403020-3 NAS FLA 02/02/95 10/15/96 N TOOL,MID DRIP PAN REV A 8030640 1 335 335
403021-1 NAS CA 02/02/95 09/16/95 N TEMPLATE CBL GUIDE REV A 8030640 1 273 273
403022-2 C5B 12/17/96 06/25/96 N TEMPLATE CBL GUIDE REV A 8030640 1 273 273
403021-3 NAS FLA 02/02/95 10/15/96 N TEMPLATE CBL GUIDE REV A 8030640 1 273 273
403022-1 C6B 05/03/95 07/08/96 N TEMPLATE CDL GUIDE REV A 8030840 1 644 644
403022-2 NAS CA 02/02/95 09/16/96 N TEMPLATE CBL GUIDE REV A 8030640 1 644 644
403022-3 NAS FLA 02/02/95 10/15/96 N TEMPLATE CBL GUIDE REV A 8030640 1 644 644
403023-1 NAS CA 02/02/95 09/16/96 N ALIGN TOOL CBL RETNR REVA 8030848 1 2019 2019
403023-2 9852D 05/03/95 08/25/96 N ALIGN TOOL CBL RETNR REVA 8030640 1 2019 2019
403023-3 NAS FLA 02/02/95 10/15/96 N ALIGN TOOL CBL RETNR REVA 8030640 1 2019 2019
Tooling 30 24672
Test Equip. 0 0
Total 30 24672
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page: 12
<TABLE>
<CAPTION>
Contract Number: N00383-88-Q-K301 Description: Q13B SPEC TOOL/TEST EQUIP Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T403048 C7B 10/17/96 10/17/96 N TERMINATION TOOL REV B 1 1364 1364
T403050-1 C7B 08/05/96 08/05/96 N MARKING BRACKET 1 174 131 305
T403050-2 C7B 06/26/96 06/26/96 N MARKING BRACKET 1 174 131 305
T403050-3 C7B 06/26/96 06/26/96 N MARKING BRACKET 1 174 131 305
T403050-4 C7B 06/26/96 06/26/96 N MARKING BRACKET 1 174 131 305
T403054-1 C7B ABC 06/18/96 06/18/96 N MOLD, MASTER 1 192 192
T403054-2 C7B ABC 10/17/96 10/17/96 N MOLD, MASTER 1 192 192
T403055-1 C7B 10/17/96 07/09/96 N CENTERING PIN 1 44 44
T403055-2 C7B 10/11/96 07/09/96 N CENTERING PIN 1 44 44
T403055-3 C7B 10/17/96 07/09/96 N CENTERING PIN 1 44 44
T403055-4 C7B 10/17/96 07/09/96 N CENTERING PIN 1 44 44
T403055-5 C7B 10/17/96 07/09/96 N CENTERING PIN 1 44 44
T403055-6 C7B 10/17/96 07/09/96 N CENTERING PIN 1 44 44
T403056-1 C7B 10/17/96 07/15/96 N TENSION ADAPTER 1 220 220
T403056-2 C7B 10/17/96 07/15/96 N TENSION ADAPTER 1 220 220
T403058A/B C7B 10/17/96 07/09/96 N MARKING BRACKET 1 435 435
T403060 C7B 06/13/96 06/14/96 N MANDREL, HOSE GRINDER 1 237 237
T403061 C7B 10/17/96 10/17/96 N SLEEVE,COLLET,HOSE TERM 1 208 208
T403062 C7B 10/17/96 10/17/96 N COLLET, HOSE TERM 1 385 385
T403063 C7B 07/10/96 07/10/96 N MOLD,LRH HOSE TERM 1 534 534
T403064 C7B 07/10/96 07/10/96 Y MOLD, HOSE TERM BOND STA 1 534 534
T403068 C7B 12/17/96 06/04/96 N GAGE, ASSEMBY 1 801 801
T403070 8600 ENG 09/25/95 09/14/95 N COUPLER, HOSE 1 237 237
T403071 8600 ENG 09/25/95 09/15/95 N ADAPTER 1 359 359
T403072 8600 ENG 09/25/95 09/14/95 N ADAPTER 1 292 292
T403073 C7B 06/13/96 06/14/96 N ADAPTER 1 267 267
T403074A-1 8600 09/27/95 09/27/95 N FITTING 1 148 148
T403074A-2 8600 09/27/95 09/27/95 N FITTING 1 148 148
T403075 C7B 10/17/96 10/17/96 N PULL PIG 1 208 208
T403078-1 C7B 07/10/96 07/10/96 N TENSION TEST TOOL REV A 1 878 878
T403078-2 C7B 07/10/96 07/10/96 N TENSION TEST TOOL REV A 1 878 878
T403078-3 C7B 07/10/96 07/10/96 N TENSION TEST TOOL REV A 1 878 878
T403078-4 C7B 07/10/96 07/10/96 N TENSION TEST TOOL REV A 1 878 878
T403082 C7B 02/26/97 06/04/96 Y GAGE ASSY REV A 1 1250 1250
Tooling 34 13227
Test Equip. 0 0
Total 34 13227
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PROPERTY ADMINISTRATOR WORKSHEET
DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
- ------------------------------------------------------------------------------------------------------------------------------------
Contractor CAGE: Allied Signal Ocean Systems As of Date: 03/03/97 Page: 1
- ------------------------------------------------------------------------------------------------------------------------------------
Estimated Total Value Special Other Agency Indust Material
Control Number Completion Government Special Test Plant Peculiar Plant
Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N00019-85-C-0148 54 LI 3 51 Sikorsky
----------------------------------------------------------------------------------------------------------
$127,527 $ 7239 120288 AQS-13F
- ------------------------------------------------------------------------------------------------------------------------------------
N00024-90-C-6013 364 LI 62 302 Northrop-Grumman
----------------------------------------------------------------------------------------------------------
$2,932,360 $ 394768 2537592 SQR-19
- ------------------------------------------------------------------------------------------------------------------------------------
N00024-90-C-6031 2 LI 1 1
----------------------------------------------------------------------------------------------------------
$837 $ 437 400 TARC
----------------------------------------------------------------------------------------------------------
N00024-[ILLEGIBLE] 5 LI 1 4
- ------------------------------------------------------------------------------------------------------------------------------------
$12,040 $ 425 11615 TARC
----------------------------------------------------------------------------------------------------------
N00024-92-C-6225 5 LI 1 4 Northrop-Grumman
----------------------------------------------------------------------------------------------------------
FP $12,040 $ 425 11615 NSIS
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$0 $
- ------------------------------------------------------------------------------------------------------------------------------------
Total LI 68 382 0 0 0 0 0
----------------------------------------------------------------------------------------------------------
Total $ 403,294 2,681,510 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL LINE ITEMS 430 GRAND TOTAL $$ 3,084,804
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PROPERTY ADMINISTRATOR WORKSHEET
DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
- ------------------------------------------------------------------------------------------------------------------------------------
Contractor CAGE: Allied Signal Ocean Systems As of Date: 03/03/97 Page: 2
- ------------------------------------------------------------------------------------------------------------------------------------
Estimated Total Value Special Other Agency Indust Material
Control Number Completion Government Special Test Plant Peculiar Plant
Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
Total LI 0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------
Total $ 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL LINE ITEMS 0 GRAND TOTAL $$ 0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PROPERTY ADMINISTRATOR WORKSHEET
DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
- ------------------------------------------------------------------------------------------------------------------------------------
Contractor CAGE: Allied Signal Ocean Systems As of Date: 03/03/97 Page: 3
- ------------------------------------------------------------------------------------------------------------------------------------
Estimated Total Value Special Other Agency Indust Material
Control Number Completion Government Special Test Plant Peculiar Plant
Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
0 LI
----------------------------------------------------------------------------------------------------------
$ 0 $
- ------------------------------------------------------------------------------------------------------------------------------------
Total LI 0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------
Total $ 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL LINE ITEMS 0 GRAND TOTAL $$ 0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PROPERTY ADMINISTRATOR WORKSHEET
DCRL SUP 1 TO DLAM 8135.1 DCRL Form 098
- ------------------------------------------------------------------------------------------------------------------------------------
Contractor CAGE: Allied Signal Ocean Systems As of Date: 03/03/97 Page: 4
- ------------------------------------------------------------------------------------------------------------------------------------
Estimated Total Value Special Other Agency Indust Material
Control Number Completion Government Special Test Plant Peculiar Plant
Type Contract Date Property Tooling Equipment Equipment Property Equipment CAP GFM Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LI
----------------------------------------------------------------------------------------------------------
$
- ------------------------------------------------------------------------------------------------------------------------------------
LI
----------------------------------------------------------------------------------------------------------
$
- ------------------------------------------------------------------------------------------------------------------------------------
LI
----------------------------------------------------------------------------------------------------------
$
- ------------------------------------------------------------------------------------------------------------------------------------
LI
$
- ------------------------------------------------------------------------------------------------------------------------------------
LI
----------------------------------------------------------------------------------------------------------
$
- ------------------------------------------------------------------------------------------------------------------------------------
LI
----------------------------------------------------------------------------------------------------------
$
- ------------------------------------------------------------------------------------------------------------------------------------
LI
----------------------------------------------------------------------------------------------------------
$
- ------------------------------------------------------------------------------------------------------------------------------------
Total LI 68 362 0 0 0 0 0
----------------------------------------------------------------------------------------------------------
Total $ 403294 2681510 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL LINE ITEMS 430 GRAND TOTAL $$ 3,084,804
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
4-JUN-97 TOOL MASTER LIST Page:
<TABLE>
<CAPTION>
Contract Number: N00019-85-C-148 Descriptions AQS-13F ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
402843 STILLMAN SEAL 08/07/92 07/17/96 N MOLD, SOL CAV, ELEMENT 3328838 1 3639 3639
3328838
402898A/B C4B 03/09/92 06/28/96 N U-JOINT TENSILE FIXT 1 300 300
402963 STILLMAN SEAL 02/16/93 07/17/96 N MOLD, BOOT BLADDER 8002763 1 3300 3300
8002763
E254178 9234 04/14/93 06/17/96 N BURN-IN BOARD 8013841 1 1500 1500
E254179 9234 04/14/93 06/17/96 N BURN-IN BOARD 8013845 1 1500 1500
E254203 D4F P0S 02/06/97 07/10/96 N ESP TEST FIXT A3 BRD 8011756 1 1613 1613
E254204 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A4 BRD 8011766 1 2419 2419
E254205 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A8 BRD 8009331 1 1723 1723
E254206 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A9 BRD 8011796 1 2266 2266
E254207 D4F P0S 02/06/97 07/10/96 N ESP TEST FIXT A12 BRD 8011806 1 2472 2472
E254208 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A13 BRD 8011816 1 1648 1648
E254209 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A7 BRD 8013555 1 2418 2418
E254210 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A14 BRD 8014086 1 1723 1723
E254211 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A27 BRD 8011826 1 5152 5152
E254212 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A28 BRD 8011831 1 4048 4048
E254213 9852B 06/20/96 06/20/96 N AUTO BRD T/S FIXT 4A29 8009235 1 1600 1600
E254214 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A40 BRD 8011841 1 1880 1880
E254215 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A38 BRD 8011836 1 2773 2776
E254216 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A6 BRD 8013956 1 1526 1526
E254217 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A40 BRD 8183972 1 1890 1890
E254218 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A1 BRD 8013966 1 1890 1890
E2S4219 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A4 BRD 8013946 1 1890 1890
E254220 D4F P0S 02/06/97 07/11/96 N ESP FIXT DOPPLER PROC 8013876 1 1000 1000
E254222 9852B 06/20/96 08/20/96 N AUTO BRD T/S FIXT 10A3 8011755 1 2500 2500
E254223 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A5 BRD 8013961 1 1820 1820
E254224 D4F P0S 02/06/97 07/11/96 N ESP TEST F1XT A7 BRD 8011786 1 2220 2220
E254225 D4F P0S 02/06/97 07/11/96 N ESP T/F A1 CKT CD 8011381 1 1190 1190
E254226 D4F P0S 02/06/97 07/11/96 N ESP T/F I/0-A2 CKT CD 8011386 1 1240 1240
E254227 D4F P0S 02/06/97 07/11/96 N ESP T/F LED-A3 CKT CD 8011391 1 1080 1080
E254230 9852B 07/01/88 06/20/96 N IEEE-488 BUS S/N 753 1 5899 5899
E254231 9852EL 07/28/88 07/15/96 N IEEE-488 BUS S/N 759 8013965 1 5899 5899
E254232 9852EL 12/03/92 07/15/96 N IEEE-488 BUS S/N 767 1 5899 5899
E254233 9852EL 10/02/88 08/02/96 N IEEE-488 BUS S/N 769 1 5899 5899
E254234 D4E 07/18/96 06/14/96 N TEST FIXT/ESP DOME CON 8014005 1 2610 2610
E254235 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A3 BRD 8013951 1 1990 1990
E254239 9852 06/30/88 06/20/96 N INTERFACE MOD PM (A28) 8011830 1 8000 8000
E254242 9852 06/16/88 06/20/96 N AUTO BRD T/F 10A9 BRD 8011795 1 1500 1500
E254243 9852 06/24/88 06/20/96 N AUTO BRD T/F PM 10A12 8011805 1 2000 2000
E254244 9852 06/28/88 06/20/96 N AUTO BRD T/F A40 FRT 8011840 1 1800 1800
E254245 9852 07/05/88 06/20/96 N AUTO BRD T/F DOME A10 8013970 1 2000 2000
E264248 D4F P0S 02/06/97 07/11/96 N ESP TEST FIXT A24 BRD 8014026 1 2074 2074
E254250 9852 07/19/88 08/20/96 N AUTO BRD T/F DOME A1 8013965 1 1800 1800
E254251 9852 07/20/88 06/20/96 N AUTO BRD T/F MUX A10 8000390 1 1500 1500
8011890
E254252 9852B 06/14/96 06/14/06 N ESP CABLE 23E 1 250 250
E254253 9852B 06/14/96 06/14/96 N ESP CABLE 24E 1 250 250
E254254 9852B 06/14/96 06/14/96 N ESP CABLE 26E 1 250 250
E254255 9852B 06/14/96 06/14/96 N ESP CABLE 27E 1 100 100
</TABLE>
<PAGE>
4-JUN--97 TOOL MASTER LIST Page:
<TABLE>
<CAPTION>
Contract Number: N00019-85-C-148 Descriptions AQS-13F ST/STE Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- --- ---------------- ----------- --- --------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
E254257 9852 09/12/88 06/20/96 N TEST FIXT/PC BRD 3A24 8014530-401 1 600 600
8014025
E254258 9852 08/26/88 06/20/96 N TEST FIXT A27 BRD 8011825 1 1500 1500
8013990
E254258-1 9852 08/26/88 06/20/96 N TEST CABLE A27 BRD 8011825 1 300 300
8013990
E254259 D4F P0S 02/06/97 07/11/96 N ESP CARD HOLD IND BRD 1 365 365
E254279 9852 01/17/89 06/20/96 N INTERFACE MOD PM (A37) 1 1800 1800
E254280 9852 04/05/89 08/20/96 N AUTO T/F A38 BRD ASSY 8011835 1 2500 2500
E54365 TOWSON 04/19/94 09/13/96 N T/F HP 3065 MUX A10,A17 8014075 1 10522 10522
Tooling 3 7239
Test Equip. 51 120288
Total 54 127527
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO
CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT
- -----------------------------------------------------------------------------------------------------------------------
Phy. Inv. REQUEST TO KEEP FOR:
Found Trans. Bar Code CATEGORY
03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0030983.00 1 FITS SUBASSY STE
X 0030983.01 TE254358-1 AFT DATA #1 TEST FIXTURE
X 0030983.02 TE254358-2 VOLTAGE MONITOR 1213D3903
X 0030983.03 TE254358-3 P/S ITA 1213D3891
X 0030983.04 TE254358-4 AFT DATA #2 1213D3899
X 0030983.05 TE254358-5 CONTROL BOARD ITA PART 1
X 0030983.06 TE254358-6 CONTROL BOARD ITA PART 2
X 0030983.07 TE254358-7 LINE DRIVER #1 1215A3914
X 0030983.08 TE254358-8 LINE DRIVER #2
X 0030983.09 TE254358-9 CABLES
0030984.00 2 T/A PWA FIXTURES
X X 0030984.01 TE254659-1 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.02 TE254659-2 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.03 TE254659-3 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.04 TE254659-4 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.05 TE254659-5 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.06 TE254659-6 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.07 TE254659-7 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.08 TE254659-8 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.09 TE254659-9 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.10 TE254659-10 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.11 TE254659-11 ZEHNTEL IN CIRCUIT TEST FIX.
X X 0030984.12 TE254659-12 ZEHNTEL IN CIRCUIT TEST FIX.
0031037.00 3 T/A CAN FIXTURES
X X 0031037.01 TE254360-1 SN1 VIBRATION TEST FIXTURE
X X 0031037.02 TE254360-1 SN2 SOLID DELRIN VIBRATION FIXTURE QTY 1
X X 0031037.03 TE254360-1 SN3 SOLID DELRIN VIBRATION FIXTURE QTY 1
X X 0031037.04 TE254360-2 SN1 (2PCS) SOLID DELRIN VIBRATION FIXTURE QTY 1
X X 0031037.05 TE254360-2 SN2 (2PCS) SOLID DELRIN VIBRATION FIXTURE QTY 1
X X 0031037.06 TE254361-1 TDM A11 CAL/CGA COMM RECV
X X 0031037.07 TE254361-2 TDM A4 OVERVOLTAGE PROTECTOR
X X 0031037.08 TE254361-3 TDM A3 SHUNT REGULATOR
X X 0031037.09 TE254361-4 TDM A27 CALIBRATOR
X X 0031037.10 TE254361-5 HDTM A7 AFT VOLTAGE MONITOR
X X 0031037.11 TE254361-6 TDM A13 XMT D/D
X X 0031037.12 TE254361-7 TDM A7 NAD/VLF VOLTAGE REG
X X 0031037.13 TE254361-8 TDM A9 FORWARD POWER SUPPLY
X X 0031037.14 TE254361-9 TDM A21, A22, A23 GCA/SAMPLE HOLD
X X 0031037.15 TE254361-10 TDM A18 A/D CONVERTER
X X 0031037.16 TE254361-11 HDTM A13 HEADING SENSOR
X X 0031037.17 TE254361-12 TDM A24 INVERSE GCA/OOB FILTER
X X 0031037.18 TE254361-13 VLFM A5 3.1 ACOUSTIC MUX
X X 0031037.19 TE254361-14 CABLE LINE DRIVER
X X 0031037.20 TE254361-15 TDM A5 A6 + 39V ACOUSTIC REG
<CAPTION>
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0030983.00 $ 38,507.00
X 0030983.01 BENDIX NSP
X 0030983.02 BENDIX NSP
X 0030983.03 BENDIX NSP
X 0030983.04 BENDIX NSP
X 0030983.05 BENDIX NSP
X 0030983.06 BENDIX NSP
X 0030983.07 BENDIX NSP
X 0030983.08 BENDIX NSP
X 0030983.09 BENDIX SN-17 NSP
0030984.00
X X 0030984.01 MGB 1418Z 962 $ 6,095.00
X X 0030984.02 MGB 1418Z 969 $ 6,095.00
X X 0030984.03 MGB 1418Z 965 $ 6,095.00
X X 0030984.04 MGB 1418Z 964 $ 6,095.00
X X 0030984.05 MGB 1418Z 967 $ 6,095.00
X X 0030984.06 MGB 1418Z 961 $ 6,095.00
X X 0030984.07 MGB 1418Z 966 $ 6,095.00
X X 0030984.08 MGB 1418Z 959 $ 6,095.00
X X 0030984.09 MGB 1418Z 970 $ 6,095.00
X X 0030984.10 MGB 1418Z 963 $ 6,095.00
X X 0030984.11 MGB 1418Z 960 $ 6,095.00
X X 0030984.12 MGB 1418Z 968 $ 6,095.00
0031037.00 $214,592.00
X X 0031037.01 NSP
X X 0031037.02 S/N 1 NSP
X X 0031037.03 S/N 2 NSP
X X 0031037.04 S/N 3 NSP
X X 0031037.05 NSP
X X 0031037.06 BENDIX 1213D0368 NSP
X X 0031037.07 BENDIX 1213D3546 NSP
X X 0031037.08 BENDIX 1213D0338 NSP
X X 0031037.09 BENDIX 1213D3683 NSP
X X 0031037.10 BENDIX 1213D3380 NSP
X X 0031037.11 BENDIX 1213D3779 NSP
X X 0031037.12 BENDIX 1213D3651 NSP
X X 0031037.13 BENDIX 1213D3657 NSP
X X 0031037.14 BENDIX 1213D0357 NSP
X X 0031037.15 BENDIX 1213D0359 NSP
X X 0031037.16 BENDIX 1213D0369 NSP
X X 0031037.17 BENDIX 1213D0920 NSP
X X 0031037.18 BENDIX 1213D3482 NSP
X X 0031037.19 BENDIX 1213D0362 NSP
X X 0031037.20 BENDIX 1213D0689 NSP
</TABLE>
Sqr19 Page 1
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO
CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT
- -----------------------------------------------------------------------------------------------------------------------
Phy. Inv. REQUEST TO KEEP FOR:
Found Trans. Bar Code CATEGORY
03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X X 0031037.21 TE254361-16 HDTM A2 AFT/A/D CONVERTER
X X 0031037.22 TE254361-17 HDTM A6 AFT P/S
X X 0031037.23 TE254361-18 LFAM ACOUSTIC MUX LINE DRIVE A2
X X 0031037.24 TE254361-19 LFAM A6 ACOUSTIC LINE DRIVER
X X 0031037.25 TE254361-20 HDTM A4 AFT TIMING
X X 0031037.26 TE254361-21 HDTM A1 8:1 MUX/GCA
X 0031037.28 TE254361-23 WORK STATION
X 0031037.29 TE254361-24 COMPUTER SYSTEM CONSISTING OF:
X 0031037.30 PART OF 24 SEAGATE ST-01 DRIVE CONTROLLER QTY 2
X 0031037.31 PART OF 24 40MB REMOVABLE HARD DRIVE DISK
X 0031037.32 PART OF 24 IEEE INTERFACE CARD 778092-01
X 0031037.33 PART OF 24 FLOPPY CONTROL
X 0031037.34 TE254361-25 COLOR MONITOR
X 0031037.35 TE254361-26 KEYBOARD
X 0031037.36 TE254361-27 MOUSE
X 0031037.37 TE254361-28 PRINTER
X 0031037.38 TE254361-29 FREQUENCY RESPONSE ANALYZER
X X 0031037.39 TE254361-30 SWITCH CONTROL UNIT AND BELOW
X X 0031037.40 PART OF 30 RELAY MULTIPLEXER
X X 0031037.41 PART OF 30 MATRIX SWITCH
X X 0031037.42 PART OF 30 RACK FLANGE KIT
X X 0031037.43 PART OF 30 RACK FLANGE KIT
X X 0031037.44 PART OF 30 RACK FLANGE KIT
X X 0031037.45 TE254361-31 POWER SUPPLY
X X 0031037.46 TE254361-32 40 DB AMPL
X X 0031037.47 TE254361-33 PROG DIG MULTIMETER
X 0031037.48 TE254361-34A DIGITAL THERMOMETER
X X 0031037.67 TE254361-34B DIGITAL THERMOMETER
X X 0031037.49 TE254361-35 RAPID COOL REFRIG. CIRCULATOR
X X 0031037.50 TE254361-36 PROM A14 TDM
X X 0031037.51 TE254361-37 DATA DECODE STATUS A12 TDM
X X 0031037.52 TE254361-38 DIGITAL MULTIPLEXER TDM A15
X X 0031037.53 TE254361-39 PM/FL CAL TONE GEN A28 TDM
X X 0031037.54 TE254361-40 12:1 ACOUSTIC MUX A10
X 0031037.55 TE254361-41 AC COUPLER - FITS
X X 0031037.56 TE254361-42 ACOUSTIC CAN INTERFACE FIXTURES
X 0031037.57 TE254361-43 SPECIAL PNEUMATIC FITTINGS
X 0031037.58 PRESSURE CALIBRATOR 5000 BAAB
X 0031037.59 TE254361-45 OSCILLATOR TEST BOX
X 0031037.60 TE254361-46 HDTM TEXT FIXTURE
X 0031037.61 TE254361-47 CABLE
X 0031037.62 TE254361-48 MODULE/CAN INTERFACE BOX
X X 0031037.63 TE254361-49 DYNAMIC SIGNAL ANALYZER
X X 0031037.64 PART OF 49 RACK MOUNT KIT
X 0031037.65 TE254361-50 MODULE/CAN INTERFACE BOX
X X 0031037.66 TE254361-51 LFAM A7 6:1 ACOUSTIC MUX
<CAPTION>
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
X X 0031037.21 BENDIX 1213D4608 NSP
X X 0031037.22 BENDIX 1213D3641 NSP
X X 0031037.23 BENDIX 1213D0138 NSP
X X 0031037.24 BENDIX 1213D1451 NSP
X X 0031037.25 BENDIX 1213D3592 NSP
X X 0031037.26 BENDIX 1213D3551 NSP
X 0031037.28 NSP
X 0031037.29 NSP
X 0031037.30 NSP
X 0031037.31 NSP
X 0031037.32 NSP
X 0031037.33 650210 NSP
X 0031037.34 SAMTRON 900504848 NSP
X 0031037.35 FUJITSU F6033649 NSP
X 0031037.36 LU5190C0655 NSP
X 0031037.37 PANASONIC 1624 PI624-001 NSP
X 0031037.38 SCHLUMBERGER 302803 NSP
X X 0031037.39 HP HP3488A NSP
X X 0031037.40 HP HP44470A NSP
X X 0031037.41 HP HP44470A NSP
X X 0031037.42 HP 50623973 NSP
X X 0031037.43 HP 50623972 NSP
X X 0031037.44 HP 50623974 NSP
X X 0031037.45 HP HP6633A S/N 3004A-02631 NSP
X X 0031037.46 HP (INSIDE) HP465A S/N 530-01146 NSP
X X 0031037.47 HP HP3478A S/N 291 1A63677 NSP
X 0031037.48 FLUKE 2180A S/N 5130002 NSP
X X 0031037.67 FLUKE NSP
X X 0031037.49 S/N 910411 MDL 9500 NSP
X X 0031037.50 BENDIX 1213D3612 NSP
X X 0031037.51 BENDIX 1213D3673 NSP
X X 0031037.52 BENDIX 1213D3664 NSP
X X 0031037.53 BENDIX 1213D3584 NSP
X X 0031037.54 BENDIX 1213D1449/1450 NSP
X 0031037.55 BENDIX NSP
X X 0031037.56 BENDIX NSP
X 0031037.57 BENDIX S/N 1-5 NSP
X 0031037.58 EATON A1239 NSP
X 0031037.59 BENDIX NSP
X 0031037.60 BENDIX NSP
X 0031037.61 BENDIX NSP
X 0031037.62 BENDIX NSP
X X 0031037.63 HP HP3561A NSP
X X 0031037.64 NSP
X 0031037.65 BENDIX NSP
X X 0031037.66 BENDIX 1213D1448 NSP
</TABLE>
Sqr19 Page 2
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO
CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT
- -----------------------------------------------------------------------------------------------------------------------
Phy. Inv. REQUEST TO KEEP FOR:
Found Trans. Bar Code CATEGORY
03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0030986.00 4 HARNESS TESTER
X 0030986.01 TE254362-1 MONITOR CTX 14"
X 0030986.02 TE254362-2 PRINTER
X 0030986.03 TE254362-3 COMPUTER
X 0030986.04 TE254362-4 TESTER
X 0030986.05 TE254362-5 RACK
X 0030986.06 TE254362-6 INTERFACE FIXTURE
X 0030986.07 TE254362-7 INTERFACE CABLE
X 0030986.07 TE254362-7 INTERFACE CABLE
X 0030986.07 TE254362-7 INTERFACE CABLE
X 0030986.07 TE254362-7 INTERFACE CABLE
X 0030986.07 TE254362-7 INTERFACE CABLE
X 0030986.07 TE254362-7 INTERFACE CABLE
X 0030986.07 TE254362-7 INTERFACE CABLE
X 0030986.07 TE254362-7 INTERFACE CABLE
X 0030986.08 TE254362-8 INTERFACE CABLE
Loss Report filed 4/29/97 0030986.09 TE254362-9 ECL CAL ADAPTOR
0030987.00 5 PRESSURE TESTER CABLES
X 0030987.01 TE254399-1 BLIND FLANGE PENETRATION CABLE AFT
X 0030987.02 TE254399-1 BLIND FLANGE PENETRATION CABLE AFT
X 0030987.03 TE254399-2 BLIND FLANGE PENETRATION CABLE FWD
X 0030987.04 TE254399-2 BLIND FLANGE PENETRATION CABLE FWD
X 0030987.05 TE254399-3 PRESSURE BALANCE OIL FILL PENANT CABLE AFT
X 0030987.06 TE254399-3 PRESSURE BALANCE OIL FILL PENANT CABLE AFT
X 0030987.07 TE254399-4 PRESSURE BALANCE OIL FILL PENANT CABLE FW
X 0030987.08 TE254399-4 PRESSURE BALANCE OIL FILL PENANT CABLE FW
X X 0030987.09 TE254399-5 BLIND FLANGE PENETRATION CABLE
X X 0030987.10 TE254399-5 BLIND FLANGE PENETRATION CABLE
X X 0030987.11 TE254399-6 PBOF PENDANT CABLE FWD
X X 0030987.12 TE254399-7 PBOF PENDANT CABLE FFT
0030988.00 6 MISC TEST FIXTURE
X 0030988.01 TE254401 SN1 MODULE DRUM REEL
X 0030988.02 TE254401 SN2 MODULE DRUM REEL
X 0030988.03 TE254401-2 MODULE CART
X 0030988.04 TE254346 EXTENSION CABLE 50 FT CONTINUITY
TEST SET-UP
X 0030988.05 TE254349 COMPASS (IN GREEN BAG)
X 0030988.06 TE254363 TEST FIXTURE HEADING BENCH (WOODEN)
X 0030988.07 TE254367 TOW CABLE IF CABLE PO
X 0030988.08 TE254406 LINE DRIVER INTERFACE BOX
X X 0030988.09 TE254368 SAMPLE AND HOLD TEST BOX
X 0030988.10 TE254381 NPN XSTR PULSE T/F
X 0030988.11 TE254385 CABLE FITS BOX
X 0030988.12 TE254400 PENDANT CABLE FOWARD
<CAPTION>
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0030986.00 $ 74,859.00
X 0030986.01 CVG5439 DBLCVG5431 NSP
X 0030986.02 PANASONIC KX-P1180 PCJ5Z6KX-P1180 NSP
X 0030986.03 POWER FLEX AIR 0264621 NSP
X 0030986.04 ECLYPSE 501 5011010 NSP
X 0030986.05 NSP
X 0030986.06 BENDIX NSP
X 0030986.07 BENDIX SN 1 NSP
X 0030986.07 BENDIX SN 2 NSP
X 0030986.07 BENDIX SN 3 NSP
X 0030986.07 BENDIX SN 4 NSP
X 0030986.07 BENDIX SN 5 NSP
X 0030986.07 BENDIX SN 6 NSP
X 0030986.07 BENDIX SN 7 NSP
X 0030986.07 BENDIX SN 8 NSP
X 0030986.08 BENDIX SN 1 & 2 NSP
Loss Report filed 4/29/97 0030986.09 BENDIX NSP
0030987.00 $[ILLEGIBLE]
X 0030987.01 BENDIX SN 1 NSP
X 0030987.02 BENDIX SN 2 NSP
X 0030987.03 BENDIX SN 1 NSP
X 0030987.04 BENDIX SN 2 NSP
X 0030987.05 BENDIX SN 1 NSP
X 0030987.06 BENDIX SN 2 NSP
X 0030987.07 BENDIX SN 1 NSP
X 0030987.08 BENDIX SN 2 NSP
X X 0030987.09 SN 1 NSP
X X 0030987.10 SN 2 NSP
X X 0030987.11 NSP
X X 0030987.12 NSP
0030988.00 $ 71,912.00
X 0030988.01 NSP
X 0030988.02 NSP
X 0030988.03 NSP
X 0030988.04
NSP
X 0030988.05 STOCKER/YALE DAAK01-89-C-0125 NSP
X 0030988.06 NSP
X 0030988.07 BENDIX (ON CART) NSP
X 0030988.08 BENDIX NSP
X X 0030988.09 BENDIX NSP
X 0030988.10 BENDIX NSP
X 0030988.11 BENDIX NSP
X 0030988.12 BENDIX NSP
</TABLE>
Sqr19 Page 3
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO
CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT
- -----------------------------------------------------------------------------------------------------------------------
Phy. Inv. REQUEST TO KEEP FOR:
Found Trans. Bar Code CATEGORY
03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X X 0030988.13 TE254405-2 CABLE LINE DRIVER
Loss Report filed 4/2/97. 0030988.14 TE254344 FUNCTIONAL GAIN TEST BOX
0030989.00 7 MISC TEST ADAPTORS
X X 0030989.01 T220396 HDLG FIX. CAROUSEL MODULE TRANSPORT REEL
X X 0030989.02 T220397 CART ATTACHED TO T220396
X X 0030989.03 T220398 FWD TENSION ADAPTER
X X 0030989.04 T220399 AFT TENSION ADAPTER
X 0030989.05 TE254325 SN 1 BREAKOUT BOX AFT
X 0030989.06 TE254325 SN 2 BREAKOUT BOX AFT
X 0030989.07 TE254326 SN 1 BREAKOUT BOX FWD
X 0030989.08 TE254326 SN 2 BREAKOUT BOX FWD
X 0030989.09 TE254331 HANGING SCALE HS-264
X 0053415.00 TE254408 CAL T BOX
X 0 TE254409 REFERENCE PREAMP/POSTAMP
X 0 TE254410 TDM D/A FILTER
X 0 TE254345 ADAPTER PENDANT, AFT
X 0030989.12 TE254418 MSC CHAMBER
X 0030989.13 TE254412 INTERFACE CABLE
X 0 TE254412 INTERFACE CABLE
X [ILLEGIBLE] [ILLEGIBLE] INTERFACE CABLE
X 0030989.15 TE254414 INTERFACE CABLE
X 0030989.16 TE254415 INTERFACE CABLE
X 0 TE254415 INTERFACE CABLE
X 0 TE254415 INTERFACE CABLE
X 0 TE254415 INTERFACE CABLE
X 0031016.01 TE254332 ADAPTER CABLE FWD
X 0031016.02 TE254332 ADAPTER CABLE FWD
X 0031016.03 TE254332 ADAPTER CABLE FWD
X 0031016.04 TE254332 ADAPTER CABLE FWD
X 0031016.05 TE254333 ADAPTER CABLE AFT
X 0031016.06 TE254333 ADAPTER CABLE AFT
Loss Report filed 4/29/97 0031016.07 TE254333 ADAPTER CABLE AFT
X 0031016.08 TE254333 ADAPTER CABLE AFT
X 0031016.09 TE254389 SN 3 CABLE
X 0031016.10 TE254388 SN 3 CABLE
0030960.00 8 ACOUSTIC TEST SET #1
X 0030960.01 TE254321 ACOUSTIC MODULE TEST SET #1
X 0030960.02 TE254321-1 CONTROL PANEL (AMTS)
X 0030960.03 TE254321-2 AC POWER PANEL
X 0030960.04 TE254310 DIGITAL STORAGE O'SCOPE
X 0030960.05 TE254311 DIGITAL MULTIMETER
X 0030960.06 TE254318 FREQ RESPONSE ANALYZER
X 0030960.07 TE254388 CABLE INTERFACE FWD (S/N 1)
X 0030960.08 TE254389 CABLE INTERFACE AFT (S/N 1)
<CAPTION>
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
X X 0030968.13 BENDIX NSP
Loss Report filed 4/2/97. 0030968.14 BENDIX NSP
0030989.00 $ 12,378.00
X X 0030989.01 NSP
X X 0030989.02 BENDIX NSP
X X 0030989.03 BENDIX TENSIONING SYSTEM NSP
X X 0030989.04 BENDIX TENSIONING SYSTEM NSP
X 0030989.05 BENDIX SN 1 NSP
X 0030989.06 BENDIX SN 2 NSP
X 0030989.07 BENDIX SN 1 NSP
X 0030989.08 BENDIX SN 2 NSP
X 0030989.09 NSP
X 0053415.00 BENDIX NSP
X 0 BENDIX NSP
X 0 BENDIX NSP
X 0 BENDIX NSP
X 0030989.12 BENDIX NSP
X 0030989.13 BENDIX SN 1 NSP
X 0 BENDIX SN 2 NSP
X [ILLEGIBLE] BENDIX SN 1 TO 15 NSP
X 0030989.15 BENDIX SN 1 TO 15 NSP
X 0030989.16 BENDIX SN 1 NSP
X 0 BENDIX SN 2 NSP
X 0 BENDIX SN 3 NSP
X 0 BENDIX SN 4 NSP
X 0031016.01 BENDIX S/N 1 NSP
X 0031016.02 BENDIX S/N 2 NSP
X 0031016.03 BENDIX S/N 3 NSP
X 0031016.04 BENDIX S/N 4 NSP
X 0031016.05 BENDIX S/N 1 NSP
X 0031016.06 BENDIX S/N 2 NSP
Loss Report filed 4/29/97 0031016.07 BENDIX S/N 3 NSP
X 0031016.08 BENDIX S/N 4 NSP
X 0031016.09 BENDIX S/N 3 NSP
X 0031016.10 BENDIX S/N 3 NSP
0030960.00
X 0030960.01 BENDIX NSP
X 0030960.02 BENDIX NSP
X 0030960.03 BENDIX NSP
X 0030960.04 PHILIPS PM3367A DQ02003 NSP
X 0030960.05 FLUKE 8842A 6068303 NSP
X 0030960.06 SCHLUMBERGER SI 1250 303063 NSP
X 0030960.07 BENDIX NSP
X 0030960.08 BENDIX NSP
</TABLE>
Sqr19 Page 4
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO
CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT
- -----------------------------------------------------------------------------------------------------------------------
Phy. Inv. REQUEST TO KEEP FOR:
Found Trans. Bar Code CATEGORY
03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0030991.00 9 ACOUSTIC TEST SET #2
X 0030991.01 TE254322 ACOUSTIC MODULE TEST SET #2
X 0030991.02 TE254322-1 CONTROL PANEL (AMTS)
X 0030991.03 TE254322-2 AC POWER PANEL
X 0030991.04 TE254314 DIGITAL STORAGE OSCILLOSCOPE
X 0030991.05 TE254318 DIGITAL MULTIMETER
X 0030991.06 TE254378 FREQ RESPONSE ANALYZER
X 0030991.07 TE254388 CABEL INTERFACE FWD (S/N 2)
X 0030991.08 TE254389 CABEL INTERFACE AFT (S/N 2)
0031006.00 10 HDTM TEST SET
X 0031006.01 TE254324 HDTM TEST SET
X 0031006.02 TE254324-1 CONTROL PLANEL HDTM
X 0031006.03 TE254324-2 AC POWER PANEL
X 0031006.04 TE254324-3 POWER SUPPLY PANEL HDTM
X 0031006.05 TE254324-4 CABLE FRONT PANEL/ADAPTER CBL
X 0031006.06 TE254372 DIGITAL MULTIMETER
X 0031006.07 TE254377 DIGITAL STORAGE OSCILLOSCOPE
11 SYSTEM TEST FIXTURES
0031007.00 BURN-IN TEST SET
X 0031007.01 TE254375 BURN-IN TEST SET
X 0031007.02 TE254375-1 POWER SUPPLY
X 0031007.03 TE254375-2 UNIVERSAL MODULE POWER
X 0031007.04 TE254375-3 TDM POWER AND LOAD
X 0031007.05 TE254375-4 AC POWER PANEL
X 0031007.06 TE254375-5 RESISTIVE LOAD BOX
X 0031007.07 TE254375-7 W4 CABLE ASSY
X 0031007.08 TE254375-8 W5 CABLE ASSY
X 0031007.09 TE254309 SIGNAL ANALYZER
X X 0031007.10 TE254404 MONITOR/CAL TEST BOX
X X 0031007.11 TE254405 LINE DRIVER TEST BOX
X X 0031007.12 TE254405-1 INTERFACE CABLE LINE DRIVER
0031008.00 12 COMPUTER SETUP
X 0031008.01 TE254390 COMPUTER
X 0031008.02 TE254390-1 MONITOR
X 0031008.03 TE254390-2 KEYBOARD
X 0031008.04 TE254390-3 SURGE PROTECTOR
X 0031008.05 TE254390-4 MOUSE
X 0031008.06 TE254391 LASER JET PRINTER
X 0031008.07 TE254392 COMPUTER WORKSTAND
0031009.00 COMPUTER SET-UP
X X 0031009.00 TE254393 COMPUTER
<CAPTION>
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0030991.00
X 0030991.01 BENDIX NSP
X 0030991.02 BENDIX NSP
X 0030991.03 BENDIX NSP
X 0030991.04 PHILIPS PM3367A DQ002007 NSP
X 0030991.05 FLUKE 8842A 5071303 NSP
X 0030991.06 SCHLUMBERGER Sl1250 303216 NSP
X 0030991.07 BENDIX NSP
X 0030991.08 BENDIX NSP
0031006.00 $335,097.00
X 0031006.01 BENDIX NSP
X 0031006.02 BENDIX NSP
X 0031006.03 BENDIX NSP
X 0031006.04 BENDIX NSP
X 0031006.05 BENDIX NSP
X 0031006.06 FLUKE 8842A 5311282 NSP
X 0031006.07 PHILIPS 3387A DM531001 NSP
$[ILLEGIBLE]
0031007.00 NSP
X 0031007.01 BENDIX NSP
X 0031007.02 EM TCR15054-1-0D 91J-7572 NSP
X 0031007.03 BENDIX NSP
X 0031007.04 BENDIX NSP
X 0031007.05 BENDIX NSP
X 0031007.06 BENDIX NSP
X 0031007.07 BENDIX NSP
X 0031007.08 BENDIX NSP
X 0031007.09 HP 35680A
X X 0031007.10 BENDIX
X X 0031007.11 BENDIX
X X 0031007.12 BENDIX
0031008.00 $ 24,806.00
X 0031008.01 EVEREX 386/25 EBS10920066 NSP
X 0031008.02 NEC MULTISYNC 3D 11C03786 NSP
X 0031008.03 EVEREX 116920-001 13046080 NSP
X 0031008.04 KENSINGTON NSP
X 0031008.05 LOGITECH NSP
X 0031008.06 HP 33461A 3103JG0800 NSP
X 0031008.07 NSP
0031009.00 $ 24,806.00
X X 0031009.00 EVEREX 386/25 EBS10920075 NSP
</TABLE>
Sqr19 Page 5
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO
CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT
- -----------------------------------------------------------------------------------------------------------------------
Phy. Inv. REQUEST TO KEEP FOR:
Found Trans. Bar Code CATEGORY
03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X X 0031009.02 TE254393-1 MONITOR
X X 0031009.03 TE254393-2 KEYBOARD
X X 0031009.04 TE254393-3 SURGE PROTECTOR
X X 0031009.05 TE254393-4 MOUSE
X X 0031009.06 TE254394 PRINTER
X X 0031009.07 TE254395 COMPUTER TABLE
0031010.00 COMPUTER SET-UP
X 0031010.01 TE254396 COMPUTER
X 0031010.02 TE254396-1 MONITOR
X 0031010.03 TE254396-2 KEYBOARD
X 0031010.04 TE254396-3 SURGE PROTECTOR
X 0031010.05 TE254396-4 MOUSE
X 0031010.06 TE254397 PRINTER
X 0031010.07 TE254398 COMPUTER STAND
13 MODULE WIRING TESTERS
X 0031011.00 TE254327 TEST FIXT VLF MODULE CONTINUITY/SHORT
X 0031012.00 TE254328 LF CONTINUITY TEST FIXTURE
X 0031013.01 TE254329 MF CONTINUITY TEST FIXTURE
X 0031014.01 TE254330 TEST FIXTURE MODULE CONTINUITY/SHORT
0031015.00 14 ACOUSTIC SOUND SOURCE
X 0031015.01 TE254335 MOBILE ELECT SOUND SOURCE
X 0031015.02 TE254335-1 CABLE MESS
X 0031015.03 TE254335-2 SPEAKER ENCLOSURE
0031018.00 15 TDM TEST SET
X 0031018.01 TE254323 TDM TEST SET
X 0031018.02 TE254315 MULTIMETER
X 0031018.03 TE254370 PHILLIPS PM 6662
X 0031018.04 TE254319 DIGITAL STORAGE O'SCOPE
X 0031018.05 TE254323-1 TDMT PANEL
X 0031018.06 TE254312 POWER SUPPLY
X 0031018.07 TE254323-3 TEST SET PWR PNC
X 0031018.08 TE254323-2 RACK PWR SUPPLY
X 0031018.09 TE254323-4 CABLE
X 0031018.10 TE254323-5 BLOWER
X 0031018.11 TE254376 ADABPTER CABLE
0031019.00 16 ACOUSTIC MODULE
TEST SET
X 0031019.01 TE254374 ACOUSTIC MODEL TEST SET
X 0031019.02 TE254313 DIGITAL STORAGE OSCOPE
X 0031019.03 TE254320 DIGITAL MULTIMETER
X 0031019.04 TE254374-1 CONTROL PANEL
X 0031019.05 TE254374-2 P/S AC CONTROL
<CAPTION>
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
X X 0031009.02 NEC MULTISYNC 3D 11C03805 NSP
X X 0031009.03 NSP
X X 0031009.04 KENSINGTON NSP
X X 0031009.05 NSP
X X 0031009.06 HP LASER JET 3P 3103JG1HCC NSP
X X 0031009.07 NSP
0031010.00 $ 24,806.00
X 0031010.01 EVEREX 388 EBS10920084 NSP
X 0031010.02 NEC MULTISYNC 04M14708 NSP
X 0031010.03 EVEREX 05756230 NSP
X 0031010.04 KENSINGTON 8012088 NSP
X 0031010.05 LOGITECH LT099122475 NSP
X 0031010.06 HP LASER JET 3P 3103JG1HH1 NSP
X 0031010.07 NSP
X 0031011.00 $ 28,883.00
X 0031012.00 BENDIX $ 28,883.00
X 0031013.01 BENDIX $ 28,883.00
X 0031014.01 $ 28,883.00
0031015.00 $ 38,608.00
X 0031015.01 BENDIX NSP
X 0031015.02 BENDIX NSP
X 0031015.03 BENDIX NSP
0031018.00 $490,709.00
X 0031018.01 NSP
X 0031018.02 FLUKE 8842A 5071309 NSP
X 0031018.03 PHILLIPS PM6662 628798 NSP
X 0031018.04 PHILLIPS 3307A DQ002006 NSP
X 0031018.05 NSP
X 0031018.06 KEPCOATE ATE 150-7M NSP
X 0031018.07 NSP
X 0031018.08 NSP
X 0031018.09 NSP
X 0031018.10 NSP
X 0031018.11 NSP
0031019.00 $212,493.00
X 0031019.01 BENDIX NSP
X 0031019.02 PHILLIPS PM3367A DQ002006 NSP
X 0031019.03 FLUKE 8842A NSP
X 0031019.04 BENDIX NSP
X 0031019.05 BENDIX NSP
</TABLE>
Sqr19 Page 6
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO
CONTRACT N00024-90-C-6013 SQQ SPECIAL TEST EQUIPMENT
- -----------------------------------------------------------------------------------------------------------------------
Phy. Inv. REQUEST TO KEEP FOR:
Found Trans. Bar Code CATEGORY
03/24/97 CAN VIM PWA TB-16 Number TE NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X X 0031019.06 TE254317 FREQUENCY RESPONSE ANALYZER
X 0031020.00 17 TE254386 CROSSOVER MODULE #1
X 0031021.00 TE254387 CROSSOVER MODULE #2
X 0031022.00 18 TE254407 ESS TEST STATION
X 0031022.01 TE254407-1 EMI POWER SUPPLY
X 0031022.02 TE254407-2 CONTROL PANEL
X 0031022.03 TE254407-3 PATCH PANEL
X 0031022.04 TE254407-4 POWER SUPPLY PANEL
X 0031022.05 TE254407-5 AC CONTROL PANEL
X 0031022.06 TE254407-6 UNIVERSAL MODULE CABLE SN 1-4
X 0031022.07 TE254407-7 TDM CABLE
X 0031022.08 TE254407-8 VLF TEST ADAPTER AN 1 & 2 & 3
X 0031022.09 TE254407-9 LF TEST ADAPTER SN 1 & 2
X 0031022.10 TE254407-10 MF TEST ADAPTER SN 1 & 2
X 0031022.11 TE254407-11 HF TEST ADAPTER SN 1 & 2
X 0031022.12 TE254407-12 HDTM TEST ADAPTER SN 1 & 2
X 0031022.13 TE254407-13 CABLE
X 0031017.00 TE254334 [ILLEGIBLE] TEST SET
X 0031017.01 TE254334-1 COMPUTER CABLE MSC TEST
X 0031017.02 TE254334-2 CABLE
X 0031017.03 TE254334-3 CABLE
X 0031017.04 TE254334-4 CABLE
X 0 TE254334-5 BATTERY CHARGE CABLE
Total Count 263
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
X X 0031019.06 SCHLUMBER S11250 303059 NSP
X 0031020.00 BENDIX $ 34,703.50
X 0031021.00 BENDIX $ 34,703.50
X 0031022.00 BENDIX $ 30,000.00
X 0031022.01 BENDIX
X 0031022.02 BENDIX
X 0031022.03 BENDIX
X 0031022.04 BENDIX
X 0031022.05 BENDIX
X 0031022.06 BENDIX
X 0031022.07 BENDIX
X 0031022.08 BENDIX
X 0031022.09 BENDIX
X 0031022.10 BENDIX
X 0031022.11 BENDIX
X 0031022.12 BENDIX
X 0031022.13 BENDIX
X 0031017.00 BENDIX $ 92,100.00
X 0031017.01 BENDIX NSP
X 0031017.02 BENDIX NSP
X 0031017.03 BENDIX NSP
X 0031017.04 BENDIX NSP
X 0 BENDIX NSP
Total Count 263 Total Value: $ 2,046,145.00
</TABLE>
Sqr19 Page 7
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO
CONTRACT N00024-90-C-6013 SQQ SPECIAL TOOLING
Phy. Inv. REQUEST TO KEEP FOR:
- -----------------------------------------------------------------------------------------------------------------------
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number CATEGORY TOOL NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
X 0030729.00 1 SWAGE BUTTON SWAGER T220368A SWAGER
X 0053374.00 T220368B PUMP
X 0053372.00 T220368C METER
X 0053376.00 T220368D REGULATOR
X 0030722.00 2 TENSIONING SYSTEM T220369 TENSIONING SYSTEM
X 0030731.00 3 TENSION FIXTURE T220370-1 TENSIONING FIXTURE
X 0030732.00 T220370-2 TENSIONING FIXTURE
X 0053401.00 4 HOSE TEMPERING SYSTEM T220371A TROUGH
Loss Report Filed 5/28/97. T220371B BOILER
X 0053405.00 T220371C-1 AIR PURGER
X 0053406.00 T220371C-2 AIR PURGER ARMSTRONG
X 0030734.00 5 HOSE DRYING RECK T220372 HOSE DRYING RACK (ON WALL)
X 0030735.00 6 HOSE GRINDING SYSTEM T220373-1 HOSING GRINDING SYSTEM (2)
X 0030736.00 T220373-2
X 0030737.00 7 SKOVIL SWAGER T220374 SKOVIL SWAGER
X X [ILLEGIBLE] 8 HEIGHT GUAGE T220376-1 HEIGHT GUAGE
X X [ILLEGIBLE] T220376-1A FIXTURE
X X [ILLEGIBLE] T220376-1B FIXTURE
X X 0053386.00 T220376-1C FIXTURE
X X 0053388.00 T220376-1D FIXTURE
X X 0053389.00 T220376-1E FIXTURE
X X 0053390.00 T220376-1F FIXTURE
X X 0053391.00 T220376-1G FIXTURE
X 0030739.00 9 MODULE BOOTING SYSTEM T220379 AIR REGULATOR
X 0053412.00 T220366-1 CLAMP
X 0053403.00 T220366-2 CLAMP
X 0053410.00 T220403-B TUBES
X 0053415.00 T220403-B1 TUBES
X 0030740.00 10 ISOPAR FILLING SYSTEM T220380 ISOPAR FILLING SYSTEM
X 0030741.00 11 ISOPAR FILLING FIXTURE T220381 ISOPAR FILLING FIXTURE
X 0053407.00 T220384-1 VACUUM CHAMBER FILL FIXTURE
X 0053408.00 T220384-2 VACUUM CHAMBER FILL FIXTURE
X 0030742.00 12 REELING HANDLER T220383 REELING HANDLER
X X 0030743.00 13 RF LOAD COIL T220386A RF LOAD COIL
X X 0030744.00 T220386B RF LOAD COIL
X X 0030763.00 14 CAN HLDG/HEAT SINK FIX. T220387 CAN HOLDING/HEAT SINK FIXTURE
X X 0030768.00 15 HEADER HOLDING/HEAT SINK T220388 HEADER HOLDING/HEAT SINK FIXTURE
<CAPTION>
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
X 0030729.00 $13,713.00
X 0053374.00 NSP
X 0053372.00 NSP
X 0053376.00 NSP
X 0030722.00 $68,545.00
X 0030731.00 $ 833.00
X 0030732.00 $ 833.00
X 0053401.00 $53,735.00
Loss Report Filed 5/28/97. NSP
X 0053405.00 NSP
X 0053406.00 NSP
X 0030734.00 $ 6,155.00
X 0030735.00 $12,872.00
X 0030736.00
X 0030737.00 $ 8,327.00
X X [ILLEGIBLE] [ILLEGIBLE]
X X [ILLEGIBLE] NSP
X X [ILLEGIBLE] NSP
X X 0053386.00 NSP
X X 0053388.00 NSP
X X 0053389.00 NSP
X X 0053390.00 NSP
X X 0053391.00 NSP
X 0030739.00 $ 5,052.00
X 0053412.00 NSP
X 0053403.00 NSP
X 0053410.00 NSP
X 0053415.00 NSP
X 0030740.00 $ 5,998.00
X 0030741.00 $ 1,144.00
X 0053407.00 NSP
X 0053408.00 NSP
X 0030742.00 $47,413.00
X X 0030743.00 $ 2,192.00
X X 0030744.00 $ 2,192.00
X X 0030763.00 $ 700.00
X X 0030768.00 $ 700.00
</TABLE>
Sqr19 Page 8
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL DATE MARCH 1, 1996 LOCATION: NPO
CONTRACT N00024-90-C-6013 SQQ SPECIAL TOOLING
- -----------------------------------------------------------------------------------------------------------------------
Phy. Inv. REQUEST TO KEEP FOR:
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number CATEGORY TOOL NUMBER DESCRIPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
X X 0030747.00 16 HELIUM LEAK TESTER T220389 HELIUM LEAK TESTER
Loss Report Filed 4/28/97 0030748.00 17 TOW ASSY FIXTURES T220390 TORSION TEST ADAPTER
X X 0053400.00 18 DESSICATOR SYSTEM T220375 DESSICATOR SYSTEM
X X 0030750.00 19 CAN ASSY VACUUM CHAMBER T220377
X X 0053411.00 T220377A VACUUM OVEN
X X 0053400.00 T220377B DIRECT DRIVE VACUUM PUMP
X 0030753.00 20 EXTRACT/INSERTION TOOLS T220378
X 0030751.00 T220378A HYDRAULIC CRIMPER
X 0030752.00 T220378B HYDRAULIC CRIMPER
X 0053414.00 T220378C AUTOMATIC CRIMPER
X 0 T220378D AUTOMATIC CRIMPER
X 0030754.00 21 BOOTING SYSTEM WINCH T220385 BOOTING SYSTEM WINCH
X Only keep 04-9-97 X 0030766.00 22 TAKE-UP REEL T220453 TAKE-UP REEL
X 0030754.00 23 BOUYANCY TEST SYSTEM T220454 BOUYANCY TEST SYSTEM
X [ILLEGIBLE] T220454A CARDINAL SCALE
X [ILLEGIBLE] T220454B LOAD CELLS
X [ILLEGIBLE] T220454C LOAD CELLS
X 0053400.00 T220454D LOAD CELLS
X 0053401.00 T220454E LOAD CELLS
X 0053402.00 T220454F SUMMING BOX
X 0030757.00 24 STRINGING ASSY TENSION T220455 STRINGING ASSY TENSION SYSTEM
X 0030757.00 SYSTEM T220455A MOTOR
X 0030758.00 25 DROP TEST PLATFORM T220456 DROP TEST PLATFORM
X Only keep 04-9-97 X [ILLEGIBLE] 26 VACUUM PUMP T220522 VACUUM PUMP BARBEE VALVE
<CAPTION>
Found Trans. Bar Code
03/24/97 CAN VIM PWA TB-16 Number MAKE MODEL SERIAL # VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
X X 0030747.00 $23,877.00
Loss Report Filed 4/28/97 0030748.00 $ 2,868.00
X X 0053400.00 $ 3,641.00
X X 0030750.00 $ 4,545.00
X X 0053411.00 COLE PALMER INS ND5053-10 NSP
X X 0053400.00 COLE PALMER INS SA55KFL-5517 NSP
X 0030753.00 $20,479.00
X 0030751.00 NSP
X 0030752.00 NSP
X 0053414.00 NSP
X 0 NSP
X 0030754.00 $ 7,364.00
X Only keep 04-9-97 X 0030766.00 $45,444.00
X 0030754.00 $ 8,205.00
X [ILLEGIBLE] 738 NSP
X [ILLEGIBLE] NSP
X [ILLEGIBLE] NSP
X 0053400.00 NSP
X 0053401.00 NSP
X 0053402.00 NSP
X 0030757.00 $ 6,779.00
X 0030757.00 NSP
X 0030758.00 $ 3,556.00
X Only keep 04-9-97 X [ILLEGIBLE] $21,000.00
</TABLE>
Sqr19 Page 9
<PAGE>
<TABLE>
<CAPTION>
CONTRACT N00024-90-C-6013 LOCATION: NPO
SQQ AGENCY PECULIAR
Items on this listing are required for further CAN work. Requesting keep.
- ------------------------------------------------------------------------------------------------------------------------------------
PART
NUMBER
OR TE Serial
Found BARCODE No. NUMBER Number DESCRIPTION
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
X 0021843.00 1213D0338 133 CAN ASSEMBLY
X 0021844.00 1213D0357 720 CAN ASSEMBLY, GCA SAMPLE AND HOLD
X 0021657.00 1213D0358 136 CAN ASSEMBLY, CAL/GCA COMMAND RECEIVER
X 0021666.00 1213D0359 085 CAN ASSEMBLY, A/D CONVERTER
X 0021845.00 1213D0359 218 CAN ASSEMBLY, A/D CONVERTER
X 0021846.00 1213D0369 043 CAN ASSEMBLY, HEADING SENSOR ELECTRONICS
X 0021653.00 1213D0689 549 CAN ASSEMBLY, +39V ACST, VOLTAGE REGULATOR
X 0021847.00 1213D0920 137 CAN ASSEMBLY, INVERSE GCA/OUT-OF-BAND FILTER
X 0021848.00 1213D1057 273 CAN ASSEMBLY, DEPTH SENSOR ELECTRONICS
X 0021861.00 1213D1448 160 CAN ASSEMBLY, ACOUSTIC MULTIPLEXER (12 TO 1) LF
X 0021849.00 1213D1449 186 CAN ASSEMBLY, ACOUSTIC MULTIPLEXER (12 TO 1) MF
X 0021862.00 1213D1450 385 CAN ASSEMBLY, ACOUSTIC MULTIPLEXER (12 TO 1) HF
X 0021850.00 1213D1451 2552 CAN ASSEMBLY, ACOUSTIC MULTIPLEXER LINE DRIVER
X 0021851.00 1213D3482 742 CAN ASSEMBLY, ACOUSTIC MULTIPLEXER (3 TO 1) VLF
X 0021852.00 1213D3528 2047 CAN ASSEMBLY, PRE-AMPLIFIER (LF)
X 0021853.00 1213D3529 2735 CAN ASSEMBLY, PRE-AMPLIFIER (MF)
X 0021854.00 1213D3530 5361 CAN ASSEMBLY, PRE-AMPLIFIER (HF)
X 0021855.00 1213D3531 189 CAN ASSEMBLY, PRE-AMPLIFIER (HF)
X 0021652.00 1213D3546 258 CAN ASSEMBLY, OVER VOLTAGE PROTECTION
X 0022238.00 1213D3559 0034 CAN ASSEMBLY,
X 0021656.00 1213D3584 071 CAN ASSEMBLY, PM/FC & CAL SQUARE WAVE GENERA
X 0021856.00 1213D3602 033 CAN ASSEMBLY, OSCILLATOR
X 0021660.00 1213D3612 268 CAN ASSEMBLY, PROM
X 0021661.00 1213D3612 270 CAN ASSEMBLY, PROM
X 0021654.00 1213D3651 264 CAN ASSEMBLY, NAD/VLF VOLTAGE REGULATOR
X 0021655.00 1213D3657 071 CAN ASSEMBLY, FORWARD POWER SUPPLY
X 0021662.00 1213D3664 048 CAN ASSEMBLY, DIGITAL MULTIPLEXOR
X 0021663.00 1213D3664 125 CAN ASSEMBLY, DIGITAL MULTIPLEXOR
<CAPTION>
PART
NUMBER
OR TE USED
Found BARCODE No. NUMBER ON VALUE PHYSICAL LOCATION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
X 0021843.00 1213D0338 CAN $2,470.00 TDM Test
X 0021844.00 1213D0357 CAN $3,700.00 TDM Test
X 0021657.00 1213D0358 CAN $3,090.00 TDM Test
X 0021666.00 1213D0359 CAN $4,940.00 GFE LOCK UP
X 0021845.00 1213D0359 CAN $4,940.00 TDM Test
X 0021846.00 1213D0369 CAN GFE LOCK UP
X 0021653.00 1213D0689 CAN $2,470.00 TDM Test
X 0021847.00 1213D0920 CAN $2,470.00 TDM Test
X 0021848.00 1213D1057 CAN $3,700.00 GFE LOCK UP
X 0021861.00 1213D1448 CAN $1,240.00 GFE LOCK UP
X 0021849.00 1213D1449 CAN $1,240.00 GFE LOCK UP
X 0021862.00 1213D1450 CAN $1,240.00 GFE LOCK UP
X 0021850.00 1213D1451 CAN $1,240.00 GFE LOCK UP
X 0021851.00 1213D3482 CAN $2,470.00 GFE LOCK UP
X 0021852.00 1213D3528 CAN $2,470.00 GFE LOCK UP
X 0021853.00 1213D3529 CAN $2,470.00 GFE LOCK UP
X 0021854.00 1213D3530 CAN $2,470.00 GFE LOCK UP
X 0021855.00 1213D3531 CAN $2,470.00 GFE LOCK UP
X 0021652.00 1213D3546 CAN $2,470.00 TDM Test
X 0022238.00 1213D3559 CAN $28,930.00 STRING ASSY DAMAGED
X 0021656.00 1213D3584 CAN $3,210.00 TDM Test
X 0021856.00 1213D3602 CAN $324.00 GFE LOCK UP
X 0021660.00 1213D3612 CAN $3,090.00 GFE LOCK UP
X 0021661.00 1213D3612 CAN $3,090.00 GFE LOCK UP
X 0021654.00 1213D3651 CAN $2,470.00 TDM Test
X 0021655.00 1213D3657 CAN $2,470.00 TDM Test
X 0021662.00 1213D3664 CAN $2,470.00 TDM Test
X 0021663.00 1213D3664 CAN $2,470.00 GFE LOCK UP
</TABLE>
Sqr19 Page 10
<PAGE>
<TABLE>
<CAPTION>
CONTRACT N00024-90-C-6013 LOCATION: NPO
SQQ AGENCY PECULIAR
Items on this listing are required for further CAN work. Requesting keep.
- ------------------------------------------------------------------------------------------------------------------------------------
PART
NUMBER
OR TE Serial
Found BARCODE No. NUMBER Number DESCRIPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
X 0021659.00 1213D3673 253 CAN ASSEMBLY, DATA/DECODER/STATUS
X 0021664.00 1213D3683 266 CAN ASSEMBLY, CALIBRATION
X 0021857.00 1213D3714 669 CAN ASSEMBLY, PRE-AMPLIFIER (LF)
X 0021858.00 1213D3715 557 PRE-AMPLIFIER (MF)
X 0022237.00 1213D3759 167 TDM (W/O HOSE ASSEMBLY, STRINGING ASSEMBLY)
X 0021859.00 1213D3766 2255 CAN ASSEMBLY, PRE-AMPLIFIER (VLF)
X 0021860.00 1213D3826 558 CAN ASSEMBLY, PRE-AMPLIFIER (HF)
Total Count: 35
<CAPTION>
PART
NUMBER
OR TE USED
Found BARCODE No. NUMBER ON VALUE PHYSICAL LOCATION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
X 0021659.00 1213D3673 CAN $4,270.00 TDM Test
X 0021664.00 1213D3683 CAN $2,470.00 TDM Test
X 0021857.00 1213D3714 CAN $2,470.00 GFE LOCK UP
X 0021858.00 1213D3715 CAN $2,470.00 GFE LOCK UP
X 0022237.00 1213D3759 MOD $76,340.00 TDM Test
X 0021859.00 1213D3766 CAN $1,240.00 GFE LOCK UP
X 0021860.00 1213D3826 CAN $1,240.00 GFE LOCK UP
Total Count: 35 Total Value: $186,584.00
</TABLE>
Sqr19 Page 11
<PAGE>
<TABLE>
<CAPTION>
CONTRACT N00024-90-C-6013 LOCATION: NPO
SQQ AGENCY PECULIAR
Items on this list are to be return to USN.
- ------------------------------------------------------------------------------------------------------------------------------------
PART
NUMBER
OR TE Serial
Found BARCODE No. NUMBER Number DESCRIPTION
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
X 0022239.00 0411C0042 3282-021 SHIPPING CONTAINER
X 0022240.00 0411C0042 3282-023 SHIPPING CONTAINER
X 0022241.00 0411C0042 3282-024 SHIPPING CONTAINER
X 0022242.00 0411C0042 3282-022 SHIPPING CONTAINER
0028385.00 0411C0042 None SHIPPING CONTAINER
0022236.00 1213D3533 0003 ACOUSTIC MODULE, VLF
0022234.00 1213D2161 0117 VIBRATION ISOLATION MODULE, FORWARD
X 0021665.00 1213D3779 043(0022) CAN ASSEMBLY, TRANSMIT/DRIVE/DECODE
0022236.00 1213D4065 0021 ACOUSTIC MODULE MF
X [ILLEGIBLE] [ILLEGIBLE] 0005 TOW CABLE ASSEMBLY
Total Count: 10
<CAPTION>
PART
NUMBER
OR TE USED
Found BARCODE No. NUMBER ON VALUE PHYSICAL LOCATION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
X 0022239.00 0411C0042 MOD $1,500.00 SHIPPED
X 0022240.00 0411C0042 MOD $1,500.00 SHIPPED
X 0022241.00 0411C0042 MOD $1,500.00 SHIPPED
X 0022242.00 0411C0042 MOD $1,500.00 SHIPPED
0028385.00 0411C0042 MOD $1,850.00 SHIPPED
0022236.00 1213D3533 CAN $49,840.00 SHIPPED
0022234.00 1213D2161 $10,530.00 SHIPPED
X 0021665.00 1213D3779 CAN $3,700.00 SOLDER TRAINING LAB
0022236.00 1213D4065 $65,240.00 SHIPPED
X [ILLEGIBLE] [ILLEGIBLE] $8,000.00 SHIPPED
Total Count: 10 Total Value: $145,160.00
</TABLE>
Sqr19 Page 12
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 1
Contract Number: N00024-90-C-6031 Description: ST/STE P.O. 644594 Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T220181 9752RINS 07/17/96 07/09/96 Y HOLE PSOITION GAGE REV B 8006905 1 437 437
TE254158-5 D7A 03/18/92 07/11/96 N CABLE, W5-2 SIGNAL 1 406 400
Tooling 1 437
Test Equip. 1 400
Total 2 837
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 1
Contract Number: N00024-91-C-6001 Description: ST/STE P.O. 644594 Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T219954-1 C4A OOS 03/12/96 06/27/96 Y COMP HGT GAGE .030 8006925 1 69 69
T219954-2 C4A OOS 05/26/94 06/27/96 Y COMP HGT GAGE .030 8006925 1 69 69
T219955-1 C4A 06/25/96 05/28/96 Y COMP HGT GAGE .025 8006925 1 58 58
T219955-2 C4A OOS 10/01/96 06/27/96 Y COMP HGT GAGE .025 8006925 1 58 58
T219955-3 D6F POS 02/14/97 06/27/96 Y COMP HGT GAGE .025 8006925 1 58 58
T219955-4 D6F POS 02/14/97 06/27/96 Y COMP HGT GAGE .025 8006925 1 58 58
T219956ABC C7C 01/13/97 08/19/96 N BONDING FIXTURE REV B 8006925 1 1320 1320
T219961 TOWSON 04/27/94 09/30/96 N COMP PREP FIXTURE 8005880 1 609 609
8006940
8006950
8006950
8006955
8006925
8006935
8006930
8006945
T219978A/B1 C6A 10/23/95 07/08/96 N BONDING FIXTURE 8006850 1 398 398
T219978A/B2 C6A 10/23/95 07/08/96 N BONDING FIXTURE 8006850 1 398 398
T219980-1 C6A 09/27/96 06/27/96 Y HGT GAGE .275 x 1.9 8006925 1 96 96
8006960
8006930
T219980-2 C4A OOS 02/17/97 06/28/96 Y HGT GAGE .275 x 1.9 8006925 1 96 96
8006930
8006960
T219980-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .275 x 1.9 8006930 1 96 96
8006925
8006960
T219980-4 D6F POS 02/14/97 06/27/96 Y HGT GAGE .275 x 1.9 8006925 1 96 96
8006930
8006960
T219981-1 C4A OOS 05/26/94 06/28/96 Y HGT GAGE .275 x 2.1 8006925 1 54 54
8006960
8006930
T219981-2 C4A 09/27/96 06/27/96 Y HGT GAGE .275 x 2.1 8006960 1 54 54
8006925
8006930
T219981-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .275 x 2.1 8006925 1 54 54
8006960
8006930
T219981-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .275 x 2.1 8006925 1 54 54
8006960
8006930
T219982-1 C4A OOS 05/31/94 06/27/96 Y HGT GAGE .345 x 1.92 8006935 1 17 17
8006955
T219982-2 C4A OOS 05/27/94 06/27/96 Y HGT GAGE .345 x 1.92 8006935 1 17 17
8006955
T219982-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .345 x 1.92 8006955 1 17 17
8006935
T219982-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .345 x 1.92 8006935 1 17 17
8006955
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 2
Contract Number: N00024-91-C-6001 Description: ST/STE P.O. 644594 Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T219983-1 C4A 03/12/96 06/26/96 Y HGT GAGE .345 X 2.17 8006955 1 102 102
8006935
T219983-2 C4A OOS 10/19/95 06/27/96 Y HGT GAGE .345 X 2.17 8006955 1 102 102
8006935
T219983-3 D6F POS 02/14/97 06/27/96 Y HGT GAGE .345 X 2.17 8006955 1 102 102
8006935
T219983-4 D6F POS 02/14/97 06/26/96 Y HGT GAGE .345 X 2.17 8006935 1 102 102
8006955
T219984-1 C4A OOS 05/27/94 06/27/96 Y HGT GAGE .380 X 2.17 8006945 1 9 9
8006950
8006940
T219984-2 C4A OOS 05/27/94 06/27/96 Y HGT GAGE .380 X 2.17 8006950 1 9 9
8006945
8006940
T219984-3 D6F POS 02/14/97 06/20/96 Y HGT GAGE .380 X 2.17 8006940 1 9 9
8006945
8006950
T219984-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .380 X 2.17 8006940 1 9 9
8006950
8006945
T219985-1 C4A OOS 05/31/94 06/28/96 Y HGT GAGE .380 X 1.92 8006950 1 87 87
8006940
8006945
T219985-2 C4A 04/10/96 06/21/96 Y HGT GAGE .380 X 1.92 8006945 1 87 87
8006950
8006940
T219985-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .380 X 1.92 8006940 1 87 87
8006950
8006945
T219985-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .380 X 1.92 8006945 1 87 87
8006950
8006940
T219986-1 C4A OOS 03/03/95 06/28/96 Y HGT GAGE .493 X 1.950 8006880 1 22 22
T219986-2 C4A OOS 03/03/95 06/28/96 Y HGT GAGE .493 X 1.950 8006880 1 22 22
T219986-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .493 X 1.950 8006880 1 22 22
T219986-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .493 X 1.950 8006880 1 22 22
T219997-1 C4A 09/24/96 06/28/96 Y HGT GAGE .045 8006880 1 49 49
8006930
8006925
8006880
8006950
8006950
8006945
8006940
T219997-2 C4A 12/17/96 06/28/96 Y HGT GAGE .045 8006940 1 49 49
8006880
8006925
8006950
8006960
8006945
8006930
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 3
Contract Number: N00024-91-C-6001 Description: ST/STE P.O. 644594 Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T219998-1 C4A 09/27/96 06/21/96 Y HGT GAGE .040 8006880 1 49 49
8006950
8006925
8006930
8006940
8006945
8006950
T219998-2 C4A OOS 04/10/96 06/21/96 Y HGT GAGE .040 8006880 1 49 49
8006930
8006950
8006945
8006940
8006950
8006925
T219998-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .040 8006880 1 49 49
8006925
8006950
8006960
8006940
8006930
8006945
T219998-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .040 8006960 1 49 49
8006950
8006880
8006940
8006925
8006930
8006945
T219999-1 C4A OOS 05/31/94 06/28/96 Y HGT GAGE .325 X 2.17 8006925 1 71 71
T219999-2 C4A OOS 05/31/94 06/28/96 Y HGT GAGE .325 X 2.17 8006925 1 71 71
T219999-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .325 X 2.17 8006925 1 71 71
T219999-4 D6F POS 02/14/97 06/28/96 Y HEIGHT GAGE 8006925 1 71 71
T220000-1 C4A OOS 06/06/94 06/28/96 Y HGT GAGE .325 X .1.92 8006925 1 65 65
T220000-2 C4A OOS 06/29/94 06/28/96 Y HGT GAGE .325 X .1.92 8006925 1 65 65
T220000-3 D6F POS 02/14/97 06/28/96 Y HGT GAGE .325 X .1.92 8006925 1 65 65
T220000-4 D6F POS 02/14/97 06/28/96 Y HGT GAGE .325 X .1.92 8006925 1 65 65
T220008 C6A 02/26/92 07/08/96 N ROUTER DRILL FIXT REV D 8006900 1 649 648
8006898
T220033-1 9232C 06/14/96 06/14/96 Y MOLD MASTER PATTERN 8006900 1 422 422
T220033-2 9232C 06/14/96 06/14/96 Y MOLD MASTER PATTERN 8006900 1 422 422
T220043 C6A 10/25/96 10/25/96 N CABLE BRD, W4 EXTERNAL 8006965 1 365 365
T402918-1 C6B 03/09/92 07/08/96 N SPANNER WRENCH 1 75 75
T402918-2 C6B 03/09/92 07/08/96 N SPANNER WRENCH 1 73 73
T402918-3 C6B 03/09/92 07/08/96 N SPANNER WRENCH 1 73 73
T402922 9852E 04/30/97 06/28/96 Y CRIMP TOOL 8006917-301 1 158 158
T402931 C4A OOS 11/28/94 06/28/96 Y CRIMP TOOL 1 158 158
TE254115 D3F POS 02/11/97 07/10/96 N T/F MOTHER BOARD 8006910 1 650 650
TE254122 9852B 06/20/96 06/20/96 N TEXT FIXT A1&A2 BOARD 8006955 1 1000 1000
TE254123 9852B 06/20/96 06/20/96 N TEXT FIXT A3 BOARD 8006935 1 950 950
TE254124 9852B 06/20/96 06/20/96 N TEXT FIXT A4 BOARD 8006940 1 950 950
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 4
Contract Number: N00024-91-C-6001 Description: ST/STE P.O. 644594 Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TE254125 9852B 06/20/96 06/20/96 N TEST FIXT A5 BOARD 8006930 1 975 975
TE254126 9852B 06/20/96 06/20/96 N TEST FIXT A6 BOARD 8006945 1 950 950
TE254127 9852B 06/20/96 06/20/96 N A7/A8 BRD, TEST FIXT 8006950 1 5000 5000
TE254128 9852B 06/20/96 06/20/96 N TEST FIXT A8 BOARD 8006950 1 1000 1000
TE254129 9852E 05/18/90 06/21/96 N T/F A9 BD/XFMR HV COUP 8006880 1 900 1200 2100
TE254130 9852B 06/20/96 06/20/96 PMFL WORD GEN A1/A2BD 1 1500 1500
TE254131 9852E 06/13/96 06/13/96 Y SYSTEM T/S STIMULATOR 1 20000 22000 42000
TE254131-2 9852EHK 06/13/96 06/13/96 Y POWER SUPPLY 1 500 500
TE254131-3 9852B 06/14/96 06/14/96 N CABLE, W4 TARC PWR 1 400 400
TE254131-4 9852E 06/13/96 06/13/96 N CABLE, W5 TARC SIQ 1 400 400
TE254131-5 9852E 06/13/96 06/13/96 N CABLE, W6 STIM JUMPER 1 400 400
TE254131-6 9852E 06/13/96 06/13/96 N CABLE, W7 HV/LV P/S 1 400 400
TE254131-7 D7A 03/24/92 07/11/96 N CABLE, W8 HVPS/STIM 1 400 400
TE254131-8 9852E 06/13/96 06/13/96 N CABLE, W10 HVPS/HV FLT 1 400 400
TE254132 9852B 06/13/96 06/13/96 N ESP CABLE 95D 1 150 150
TE254133 9852B 06/14/96 06/14/96 N ESP CABLE 96D 1 170 170
TE254134 9852B 06/14/96 06/14/96 N ESP CABLE 97D 1 175 175
TE254138-1 9852B 06/14/96 06/14/96 N ESP CABLE J1, 1 CONN 8006910 1 150 150
TE254138-2 9852B 06/14/96 06/14/96 N ESP CABLE J2, 2 CON 8006910 1 150 150
TE254138-3 9852B 06/14/96 06/14/96 N ESP CABLE J3, 12 CONN 8006910 1 150 150
TE254138-4 9852B 06/14/96 06/14/96 N ESP CABLE J4, 13 CONN 8006910 1 150 150
TE254138-5 9852B 06/14/96 06/14/96 N ESP CABLE J5, 17 CONN 8006910 1 150 150
TE254138-6 9852B 06/14/96 06/14/96 N ESP CABLE J6, 22 CONN 8006910 1 150 150
TE254138-7 9852B 06/14/96 06/14/96 N ESP CABLE J7, 27 CONN 8006910 1 150 150
TE254138-8 9852B 06/14/96 06/14/96 N ESP CABLE J8, 32 CONN 8006910 1 150 150
TE254155 D6B 02/28/92 07/11/96 N TEST FIXTURE-A4, A5 UNIT #5 8006930 1 5000 5000
8006940
TE254156 9852B 06/20/96 06/20/96 TEST FIXTURE A6 8006945 1 6000 6000
TE254157 D6B 02/26/92 07/11/96 N TEST FIXTURE A9 8006880 1 4000 4000
TE254158 D7A 03/24/92 07/11/96 SYSTEM TEST SET STIM 1 1 140000 140000
TE254158-1 D6D 02/04/94 07/11/96 N BREAKOUT BOX 1 400 400
TE254158-3 D7A 03/18/92 07/11/96 N CABLE, W4 LOW VOLT P/S 1 300 300
TE254158-4 D7A 03/18/92 07/11/96 N CABLE, W5-1 SIGNAL 1 300 300
TE254158-6 D7A 03/18/92 07/11/96 N CABLE, W7 HV/LV P/S 1 400 400
TE254158-7 9852E 05/13/96 06/13/96 N CABLE, W5-3 SIGNAL 1 200 200
TE254158-8 D7A 03/18/92 07/11/96 N CABLE, INTERFACE W3 1 75 75
TE254159 9852E 04/06/95 06/21/96 Y SYSTEM TEST SET STIM 2 1 37500 37500
TE254159-1 9852E 04/06/95 06/21/96 Z LOAD 1 500 500
TE254171 9852BESP 06/14/96 06/14/96 N ESP CABLE 9E 1 200 200
TE254228-1 TELFWHSE 08/01/93 06/02/96 Y CABLE SIMULATOR (ENG) 1 8500 8500
TE254228-2 9852E 06/13/96 06/13/96 Y CABLE SIMULATOR (PROD) 1 8000 375 8375
TE254241 9855 E/L 10/04/95 07/23/96 N POWER SUPPLY, LOW VOLT 1 600 600
TE254255 D6B 08/12/96 08/12/96 N CABLE, STIMULATOR TEST 1 180 180
TE254265 D6D 02/04/94 07/11/96 N BURN-IN T/F A4 BRD 1 1900 1900
TE254271 9852E 06/13/96 06/13/96 N FILTER, HIGH VOLTAGE P/S 8016543 1 250 250
Tooling 61 7875
Test Equip. 48 276350
Total 109 284225
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
4-JUN-97 TOOL MASTER LIST Page: 1
Contract Number: N00024-92-C-6225 Description: NSIS (NORDEN) Customer: USN
Tool Number Location/Vendor Loc Date PM Date Cal Tool Description Part Number Qty Unit Cost Rework Tot. Cost
- ----------- --------------- -------- ------- -------------------- ----------- --- --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
T220598 D6F POS 02/11/97 07/12/96 N HOLDING FIXTURE 1 425 425
TE254411-1 8002 06/29/93 08/06/96 P.C. S/M 9207054 1 4525 4525
TE254411-2 8002 06/29/93 08/06/96 COLOR MONITOR, ARCUS 1 0 0
TE254411-3 D5D 08/15/96 08/15/96 N DIGITAL TAPE RECORDER 1 3695 3695
TE254411-4 8002 06/29/93 08/05/96 DATA TRANSLATION BOARD 1 3395 3395
Tooling 1 425
Test Equip. 4 11615
Total 5 12040
</TABLE>
<PAGE>
Schedule 4.23 - Entire Business
No items to schedule.
<PAGE>
Schedule 4.25 - Insurance
See following pages.
See also Schedule 4.11.
<PAGE>
================================================================================
[ALLIED SIGNAL LOGO] Title: Risk
AUTOMOBILE LIABILITY Management
DOMESTIC Manual
- ----------------------- ----------------
Supersedes: Date: Page: 1
5/96 5/97
- --------------------------------------------------------------------------------
AUTOMOBILE LIABILITY INSURANCE - U.S.
Insurance Company
The Travelers Indemnity Company
Policy No.
TC2EE-CAP-173T4473-TCT-97 Texas
Bond 470J1965 Massachusetts
TC2J-CAP-201T485-A-TIL-97 Virginia
TC2J-CAP-173T445-5-TIL-97 All Others (excluding Texas, Virginia, Massachusetts)
TJEAP-225T169-8-97 Massachusetts Excess
Coverage
This policy covers the legal liability of AlliedSignal Inc. which may result
from the ownership, maintenance, or use of any automobile (hired, non-owned,
long-term leased, or owned). Coverage includes bodily injury liability, property
damage liability, medical payments coverage, no fault coverage and
uninsured/underinsured motorists protection. There is no coverage under this
policy for physical damage to AlliedSignal Inc. units. This policy will pay
first dollar coverage for damages to third parties for which we are legally
liable, notwithstanding a $2,000,000 deductible each occurrence, bodily injury
and property damage combined, including expense. Travelers is reimbursed via a
daily cash transfer system for claims within the deductible area.
Policy Period
4/1/97 - 4/1/98
Limits of Liability
COVERAGE LIMITS OF LIABIlITY
- -------- -------------------
Bodily Injury and $2,000,000 per occurrence
Property Damage Liability Combined Single Limit
Medical Payments $5,000 Each Person
Uninsured/Underinsured Motorists Statutory Limits
Statutory No-Fault coverage in
states where applicable
Basis of Premium Charge
1 of 2
<PAGE>
Prior to renewal each year, the Risk Management Department sends each operation
a form to be completed. The form indicates the number of vehicles by category.
Premium is then charged on the number of vehicles in each of five classes
(automobiles, vans, trucks, tractors and buses) as well as three experience rate
levels relating to the operation's past losses.
Short-Term Leased Vehicles
(Less than one year)
For automobiles rented/leased with the Corporate American Express Card within
the United States, no matter which leasing company is used to lease a short-term
vehicle, the insurance waiver for the collision deductible should be accepted.
If not rented/leased with the Corporate American Express Card, it will be up to
the individual operating unit's management to decide whether or not the employee
waives or accepts the waiver for collision deductible. This decision should be
based on the costs/benefits of the operating unit's rental experience.
Use of Personal Automobile on Company Business
The AlliedSignal Inc. Corporate Risk Management Program does not provide
coverage for physical damage to an employee's vehicle or for the employee's
liability to third parties. An employee using their own automobile on company
business must look to their own personal insurance carrier for coverage.
At the discretion of Corporate Management the Corporate Automobile Liability
Policy will provide liability insurance in excess of the employee's personal
automobile liability limits while an employee is using his personal car on
company business.
Notice and Handling of Claims
A. Litigation
If you receive a copy of a Summons, Complaint, Petition or other legal
paper indicating that AlliedSignal Inc., one of its subsidiaries,
divisions or employees is involved in a lawsuit, immediately contact your
Regional Counsel. Forward legal papers to your counsel with copies to the
Corporate Risk Management Department.
B. Other Claims
The following Motor Vehicle Accident Reporting Form is to be completed in
full and returned to the Corporate Risk Management Department. The
information is necessary to attempt recovery from the adverse driver and
also enable proper credit of any recovery.
2 of 2
<PAGE>
================================================================================
[ALLIED SIGNAL LOGO] Title: Risk
BLANKET CRIME Management
Manual
- ----------------------- ----------------
Supersedes: Date: Page: 1
2/96 2/97
- --------------------------------------------------------------------------------
BLANKET CRIME INSURANCE
Insurance Company
National Union Fire Insurance Co. Federal Insurance Company
Coverage
This policy will reimburse AlliedSignal for loss of money, securities and other
property resulting from perils insured, i.e., employee dishonesty, safe
burglary, robbery, hold up, and forgery, subject to the limits of liability
stated below.
Policy Period
12/31/95 - 12/31/98
Limits of Liability
- --------------------------------------------------------------------------------
TYPE OF LOSS LIMIT DEDUCTIBLE
- --------------------------------------------------------------------------------
Employee Dishonesty
Loss Inside Premises
Loss Outside Premises
Depositors Forgery Coverage $50,000,000 $1,000,000
Loss of Precious Metals
Money Orders, Counterfeit
Paper & Credit Card Forgery*
- --------------------------------------------------------------------------------
* $1,000,000. Limitation on credit card forgery
Basis of Premium Charge
Premium is based on census and precious metals exposure.
Notice an Handling of Claims
Report losses to the Risk Management Department, Corporate Controller, the
Director of Corporate Services and the Director of Corporate Auditing in
accordance with Vol. I Section 1.6 of the AlliedSignal Controller's Manual.
1 of 1
<PAGE>
================================================================================
[ALLIED SIGNAL LOGO] Title: Risk
DIRECTORS & OFFICERS Management
LIABILITY Manual
- ----------------------- ----------------
Supersedes: Date: Page: 1
2/96 2/97
- --------------------------------------------------------------------------------
DIRECTORS & OFFICERS LIABILITY
For information on this coverage contact Lois Fuchs at (973) 455-5916.
1 of 1
<PAGE>
================================================================================
[ALLIED SIGNAL LOGO] Title: Risk
FIDUCIARY LIABILITY Management
Manual
- ----------------------- ----------------
Supersedes: Date: Page: 1
2/96 2/97
- --------------------------------------------------------------------------------
FIDUCIARY LIABILITY
Insurance Company
a) National Union
b) CNA Insurance
c) Reliance Insurance
d) ACE Insurance
Coverage
This coverage will pay on behalf of any individual construed to be a fiduciary
under ERISA and AlliedSignal Inc. and its subsidiaries, claims made during the
policy period for breach of fiduciary duty in the administration of Employee
Benefit Plans as governed under ERISA or similar Canadian, U.K.
or other foreign laws.
Policy Period
12/31/95 - 12/31/98
Limits of Liability
Contact the Risk Management Department for specific limit information.
Deductible
The Corporate deductible is $250,000 per loss (incl. defense). First dollar
coverage is provided to individual fiduciaries.
1 of 1
<PAGE>
================================================================================
[ALLIED SIGNAL LOGO] Title: Risk
GENERAL & AUTO LIABILITY Management
FOREIGN Manual
- ----------------------- ----------------
Supersedes: Date: Page: 1
5/96 5/97
- --------------------------------------------------------------------------------
COMPREHENSIVE GENERAL & AUTOMOBILE LIABILITY - FOREIGN
Insurance Company
Zurich-American Insurance Company
Policy No. CGL 68-63-617-04
Coverage - General Liability
This policy pays on behalf of or indemnifies AlliedSignal Inc. for all sums
which they shall become obligated to pay by reason of third party liability
imposed by law for damages because of bodily injury, sickness or disease, and/or
injury to or destruction of property, including the loss of use thereof, caused
by an occurrence.
Coverage under this policy also includes (but is not limited to) the following
types of liability claims: products (excluding aircraft products), completed
operations and contractual liability.
Policy Period
4/1/97 to 4/1/98
Limits of Liability (In US dollars)
General Liability
$2,000,000 combined single limit, per occurrence/$20,000,000 in the aggregate
$2,000,000 Products Liability and Completed Operations per
occurrence/$4,000,000 in the aggregate
Automobile Liability
Bodily Injury/Property Damage $2,000,000 combined single limit
Hired car and non-ownership coverage is included.
Deductibles
General Liability
None
Automobile Liability
1 of 3
<PAGE>
For owned automobiles, this coverage is excess and difference in
conditions over local statutory limits or $25,000 SIR, whichever is
greater.
Local Automobile Insurance Guidelines
Automobile insurance is broken down into 2 main categories:
1. Automobile Liability for bodily injury and property damage to others
2. Physical damage to the vehicle to include collision, theft, etc.
The purchase of physical damage insurance is prohibited by Corporate policy.
As respects automobile liability, this subject can be broken down into two more
categories:
A. Liability arising out of the use of owned or leased vehicles
B. Liability arising out of the use of vehicles not owned, hired or leased by
AlliedSignal. This category includes vehicles that are owned by
AlliedSignal employees and used on company business with the permission of
the company.
In item "A" above, the owned or leased vehicles must carry local automobile
liability insurance. In most countries, the local vehicle registration laws
require that the operating unit maintain automobile liability insurance for
those vehicles.
Non-owned vehicle coverage is provided as an adjunct to our general liability
program. Such coverage wilt also normally be provided on an admitted basis as
part of the locally issued general or automobile liability policies. It is
important to note, however, that this coverage does not extend to personal use
of employees' vehicles. It is intended to protect AlliedSignal and may,
depending on the discretion of the Risk Management Department, be extended as
excess coverage to its employees as respects liability arising from employees
using personal cars on company business. Therefore, it is imperative that all
employees continue to maintain their own personal automobile insurance.
With respect to the Zurich-American USA policy, it extends on a broader and
excess basis to all categories of automobile liability indicated above, over a
minimum primary limit of $25,000 or the local statutory limit, whichever is
greater.
On the subject of rented automobiles, the major rental firms with whom we deal
provide liability insurance as part of the rental agreement. Our international
program provides insurance protection for both AlliedSignal and the employee,
while on company business, for coverage in excess of that offered by the
automobile contract.
The Zurich-American program does not mandate that the local admitted automobile
insurance be placed with the Zurich-American network facility in the various
countries. However, with all other factors being equal, we strongly encourage
the use of the Zurich-American for the admitted automobile liability program.
Whether or not the Zurich-American is used, the J&H local facility is to be the
broker for the automobile insurances.
Basis of Premium Charge - General & Automobile Liability
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Premium is based on non-aircraft sales and number of vehicles.
Notice and Handling of Claims
The original of each report and of supporting papers are to be submitted to the
local Zurich representative servicing the area where the accident occurred, with
copies sent to the Risk Management Department at
201 Columbia Road
Morristown, New Jersey 07962
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[ALLIED SIGNAL LOGO] Title: Risk
GENERAL LIABILITY - DOMESTIC Management
Manual
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Supersedes: Date: Page: 1
5/96 5/97
- --------------------------------------------------------------------------------
GENERAL LIABILITY INSURANCE
Insurance Company
The Travelers Indemnity Company
U.S. Policy No. TC2J-GLSA-199T573-A-TIL-97
Coverage
This policy will pay on behalf of AlliedSignal Inc. & subsidiaries all sums the
insured is legally liable to pay, for damages arising from bodily injury and
property damage liability, resulting from a product or activity of the insured
and caused by an occurrence.
Coverage under this policy includes (but is not limited to) the following types
of liability claims products (excluding aircraft products), completed
operations, contractual liability. This policy will pay first dollar coverage
for damages to third parties for which we are legally liable, notwithstanding
our current deductible of $3,000,000 each occurrence, bodily injury and property
damage combined, including expenses. Travelers is reimbursed via a daily cash
transfer system for claims within the deductible area.
Policy Period
4/1/97 - 4/1/98
Limits of Liability (1)
A. General Liability (excl. products) -$3,000,000 each occurrence combined
limit for bodily injury, sickness, disease or death or physical injury to
or destruction of tangible property.
B. Product Liability (excl. aircraft products) and Completed Operations
Liability - $3,000,000 each occurrence combined limit for bodily injury
and property damage subject to an aggregate(2) of $10,000,000.
(1) Defense costs are paid in addition to the limits of liability.
(2) Aggregate is eroded by indemnity payment within both the deductible &
pure insurance areas.
Basis of Premium
8% is based on wages - this covers premises type exposure
60% is based on historical loss experience.
32% is based on non-aircraft sales.
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NOTICE AND HANDLING OF CLAIMS
A. Litigation
If you receive a copy of a Summons, Complaint, Petition or other legal
paper indicating that AlliedSignal Inc., one of its subsidiaries,
divisions, operating units or employees is involved in a lawsuit,
immediately contact the Law Department. Forward legal papers to your
assigned company Counsel with copies to the Risk Management Department
B. Other Claims and Incidents
Report all other claims and incidents under this coverage by submitting a
comprehensive narrative report to the Risk Management Department and The
Travelers Insurance Company. For serious claims telephone the Risk
Management Department and provide all available information.
Your written report should include all relevant aspects of the claim,
especially the following items:
1. Date of accident or loss
2. Persons involved and extent of their injuries
3. Extent of Property Damage
4. Short narrative of what took place
5. Copies of available accident reports and witness statements
The Risk Management Department and the local Travelers office will work
with you in every aspect of a claim under this coverage, so that final
disposition is made in the most beneficial and expeditious manner.
C. Environmental Claims
See Excess Liability Section.
GENERAL LIABILITY INSURANCE- CANADA
Insurance Company
The Guardian Insurance Company
Policy No. 1412000
Policy Period
4/1/97 - 4/1/98
Coverage
Coverage is the same as provided in the United States.
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<PAGE>
================================================================================
[ALLIED SIGNAL LOGO] Title: Risk
EMPLOYEE TRIP TRANSIT Management
Manual
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Supersedes: Date: Page: 1
5/96 5/97
- --------------------------------------------------------------------------------
EMPLOYEE TRIP TRANSIT
Insurance Company
Fireman's Fund Insurance Company
Policy No. OP-18530
Coverage
Provides worldwide coverage on household goods and personal effects of
AlliedSignal's officers and employees while in transit by any mode of
conveyance, including risks while on docks, platforms, wharves, sidings,
awaiting transshipments or being transshipped, and held covered while in
warehouses. Insured against "All Risks" of physical loss and/or damage from any
external cause exclusions considered uninsurable, such as nuclear, wear and
tear, insects, inherent vice and gradual deterioration. Coverage does not apply
to loss of accounts, bills, currency, deed, evidences of debt, money, notes or
securities. Jewelry and watches require prior Risk Management Department
approval at rates to be agreed upon. Coverage attaches from the time goods are
being packed for shipment and covering continuously until same are safely
delivered and unpacked at the final destination, but only at and between the
places as reported on AlliedSignal's monthly report required to be made under
the policy.
For questions on Monthly Reporting, please contact Fran Watkins in Morristown.
Policy Period
5/1/97-4/30/98
Limit of Liability
$400,000 any one shipment at any one time.
Deductible
None
Notice of Handling of Claims
Report to the AlliedSignal Risk Management Department who shall report prompt
notice to the Fireman's Fund Insurance Company.
All potential claims in excess of $500 shall be reported to:
Mr. Tom Lynch
Fireman's Fund Insurance Company
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Ocean Marine Claims
One Liberty Plaza
New York, NY 10006
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<PAGE>
================================================================================
[ALLIED SIGNAL LOGO] Title: Risk
MARINE CARGO Management
Manual
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Supersedes: Date: Page: 1
5/96 5/97
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OCEAN CARGO INSURANCE INCLUDING WAR RISK
Insurance Company
Fireman's Fund Insurance Company
Policy No. OP-18529 - Ocean Cargo
Policy No. OP-18530 - Household and Personal Effects
Coverage
This policy covers 100% interest in shipments worldwide (excluding shipments
within the US & Canada), by vessel and air freight for account of AlliedSignal
Inc. and its overseas customers on merchandise incidental to the business of the
insured.
Valuation of goods normally includes prepaid or advanced or guaranteed freight
or other charges incurred prior to shipment, plus 10%. Policy provides for
certain alternative valuation clauses.
Limits of Liability
1. $15,000,000 per any one vessel or conveyance including aircraft.
$400,000 per any one household effects shipment
$50,000 per package shipped by mail or parcel post and $50,000 in any one
package and/or baggage while in the custody of a messenger whether an
employee of AlliedSignal Inc. or otherwise.
2. Shipments originating within the United States and Canada are excluded if
the destination is also within the US or Canada.
3. War Risk applies only while goods are carried on overseas vessels or
aircraft. It does not apply prior to being on-board or after arrival at
intended port of discharge.
4. War Risk does not cover loss or damage caused by or resulting from
commandeering, preemption, requisition, nationalization or seizure or
destruction under quarantine or customs regulations.
5. Geographical Limits - coverage is on the basis known as "World to World",
i.e., from ports and places in the world to ports and places in the world.
6. All merchandise with exception of Dry Bulk Cargo and Liquid Bulk Cargo is
insured for "All Risks" conditions. Intracompany shipments are subject to
a $5,000 deductible. Note, in view of the sensitive nature of our
products, under deck stowage should always be requested from the Steamship
Companies.
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Dry Bulk Cargo is insured for "All Risks". However, claims for leakage and/or
shortage and/or loss in weight are subject to a one-half (.5%) deductible
applied to the insured value of the entire shipment.
Bulk Liquid Products are insured:
"All Risks" excluding shortage, leakage, and/or contamination unless caused by
or arising out of the vessel being stranded, sunk, burnt, or in collision.
Contamination resulting from stress of weather is covered.
Claims are payable subject to deductible for normal shortage.
Options are given to cover Bulk Liquid Cargo for:
a. "All Risks" excluding unexplained shortage and/or loss in weight.
Claims for differences between shipped and outturn weights are
subject to a .5% deductible applied to contents of each tank.
b. "All Risks" including coverage for all shortage and/or loss in
weight subject to deductible of .5% applied to contents of each
tank.
Warranties are in effect with respect to tank cleanliness, loading
and survey requirements.
7. Temporary detention coverage is provided for goods during interruption of
transit and in temporary storage for repacking, consolidation, inspection,
storage or allocation for up to 60 days.
8. Duty coverage on imports included where required.
9. Sixty (60) days notice of cancellation.
10. Foreign storage coverage is provided for goods in storage up to $500,000
each unnamed location. The risks of Earthquake and Flood are excluded at
unnamed locations; but these risks may be restored if location is named
within thirty (30) days of receipt of merchandise. A specific endorsement
must be secured to name the location and respective limit. Prompt notice
must be given when goods are placed in storage indicating location, amount
and goods at risk.
11. Contingency - For Exports Only
Depending on the Contracts of Sale, the buyer will arrange their own
Marine insurance, thus AlliedSignal will not insure the shipment on behalf
of the buyer under the Corporation's Ocean Marine Insurance Policy. For
one reason or another, title in the goods may revert to the seller, i.e.,
by exercise of rights of stoppage in transit or rejection of the goods by
the buyer. Or the buyer might refuse to pay for the merchandise because of
loss and/or damage.
In order to protect AlliedSignal's interest in the preceding, AlliedSignal
has the option provided such option is exercised prior to any known or
reported loss to insure all goods and/or merchandise sold to others
whereby AlliedSignal is not obligated to provide Ocean Cargo insurance for
the Contingency Interest of AlliedSignal Inc.
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This coverage will indemnify AlliedSignal for loss incurred due to perils
insured against under the Corporation's Ocean Marine Insurance Policy.
12. Exhibitions
All goods and/or merchandise property of AlliedSignal Inc. while on tour
and/or display in exhibitions, showrooms and/or trade shows or otherwise
including all incidental transit are covered under the Marine Insurance
Program. Excluding exhibitions, showrooms and/or trade shows, etc., in the
United States.
The limit of this coverage is $100,000. Excess coverage provided under
foreign property program.
13. Increased Value/Difference in Conditions - For Imports Only
Depending on the Contracts of Sale, AlliedSignal will purchase various
merchandise from vendors located outside the United States in which the
Seller will arrange the Ocean Marine Insurance. Thus in the event of loss
or damage, AlliedSignal will have to rely on the Sellers insurance to be
reimbursed for the loss.
In order to fully protect AlliedSignal's interest, AlliedSignal has the
option, provided such option is exercised prior to any known or reported
loss, to insure all goods and/or merchandise purchased by AlliedSignal on
Cost, Insurance, Freight (C.I.F.) or other terms of purchase whereby the
Marine insurance is provided by the seller or others for Difference in
Conditions and Increased Value as stated in the Corporation's Ocean Marine
Insurance Policy.
Policy Period
5/1/94 until cancelled.
Notice and Handling of Claims
In the event of loss:
- - Make every reasonable effort to minimize the loss. Act as a prudent
uninsured cargo owner would. Reasonable expenses incurred in minimizing a
loss are recoverable.
- - Take proper delivery exceptions and file claim against the transportation
carrier. Do the necessary to preserve insurer's recovery rights against
the carrier.
- - Promptly report the loss to AlliedSignal's Risk Management Department
(domestic shipment and imports) or insurer's settling agent (exports).
INTERNATIONAL SHIPMENTS
Import Shipments (From Foreign to U.S.)
Inspect Cargo
Before accepting your shipment from the carrier, carefully inspect the
cargo. If damages or shortages are observed, make the appropriate notation
on the delivery receipt. If damage is
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suspected but not readily apparent, note on the delivery receipt "Subject
to Inspection." At this time, take any practical steps to minimize the
loss.
File Claim on Carrier
Promptly file written claim against the transportation carrier. (See
sample claim letter).
Prompt notice is very important as claims can be disallowed within a short
period. For example, a claim for damage to an air shipment must be filed
within seven days. FAILURE TO FILE PROMPTLY AGAINST THE CARRIER MAY
PREJUDICE YOUR INSURANCE CLAIM.
File Insurance Claim
Promptly report the loss to AlliedSignal's Risk Management Department who will
in turn notify insurer.
If the loss exceeds $5,000 or involves unusual circumstances, the initial report
should be made by telephone, so that insurer might arrange to have a surveyor
inspect the damages promptly. The surveyor issues his report to insurer relating
the nature, cause and extent of loss.
Regardless of the amount of the loss, do not dispose of any damaged cargo until
settlement is agreed or advised to do so by the surveyor.
Claims Documentation
Cargo claims are essentially adjusted on the basis of documentation. It is your
obligation to demonstrate your claim by providing the Risk Management Department
with documentation which shows the loss was incurred during transit and which
substantiates the values being claimed.
The following documents are required for claims on imports:
- - File an itemized statement as to the amount claimed
- - Bills of Lading (Ocean, Air and Inland). If claim is for non-delivery of an
entire shipment all original ocean bills of lading are required.
- - Commercial Invoice
- - Packing List
- - Consumption Entry Report (if duty is insured).
- - Copy of claim against the carrier and reply, if any.
- - Delivery Receipt showing exceptions.
- - Trailer Interchange Receipt (for containerized shipments).
- - Carrier's confirmation of non-delivery (when claiming non-delivery of an
entire shipping package).
- - Repair/reconditioning invoices or estimates.
This list includes the documents commonly needed to demonstrate a cargo claim.
Be sure to submit any other documentation which would substantiate your claim.
General Average
In case a General Average is reported, the Average Adjusters require either a
cash deposit or a General Average Guarantee from an Underwriter authorized to do
business in the country where security is
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taken.
The cargo generally will not be released until the Average Adjusters receive the
Average Bond or Average Agreement and the General Average Guarantee.
Be prepared to furnish identification of the Average Adjuster, details of the
casualty, description and value of cargo, the Bill of Lading number and date,
and identification of the insurance declaration. Alexander & Alexander will then
arrange for the Underwriter to issue a General Average Guarantee or to post a
cash deposit.
The documentation required is as follows:
a. Invoice
b. Bill of Lading
c. Copy of the signed Average Bond or Average Agreement
d. Insurance Certificate or Insurance Declaration
After the cargo is released for delivery and the documentary requirements
fulfilled all subsequent claim negotiations will be between the Average Adjuster
and Underwriter.
Export (U.S. to Foreign) and Foreign (Foreign to Foreign) Shipments
On shipments terminating in foreign countries, the consignee basically follows
the same claim procedure as you do for imports. Instead of reporting the loss to
AlliedSignal's Risk Management Department, however, the consignee contacts the
insurer's survey agent as listed on the Special Marine Policy which he receives
with the shipping documentation.
The consignee pays the survey fee and submits his claim (including the survey
fee) to the nearest insurer settling agent shown on the Special Marine Policy.
He submits the Special Marine Policy and the survey report in addition to those
documents listed above for import shipments.
This claim procedure is clearly outlined on the reverse of the Special Marine
Policy.
HOUSEHOLD AND PERSONAL EFFECTS SHIPMENTS
Employees household goods and personal effects moves are insured against all
risks of physical loss or damage from an external cause up to the value declared
on AlliedSignal's relocation forms.
Domestic and Foreign to U.S. Moves
Inspect Cargo
Before accepting delivery, inspect your goods and note any apparent
damages on the delivery receipt. If you do not have an opportunity to make
a thorough inspection, sign the receipt with the notation "Subject to
further inspection."
File Claim Against the Moving Company
In the event of damage or shortage, promptly notify the moving company by
telephone and then follow-up with a written notice of claim. Under a
special arrangement with the insurer, the moving
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company will inspect the damages and settle the claim directly with you.
Claims Documentation
The following documents should usually be submitted to the moving company:
- Bill of Lading
- Valued Inventory
- Packing List/Inventory
- Delivery Receipt
- Repair Bill or Estimates
- Completed Claim Form (supplied by the moving company)
Foreign Moves
In the event of loss or damage to your goods when delivered to a foreign
destination, secure the above claim documentation (Household and Personal
Effects Shipments) and forward to the Risk Management Department.
GENERAL REMARKS
These procedures will serve as a guideline for everyday cargo claims handling.
If you encounter any difficulties in handling a particular claim, contact the
Risk Management Department for assistance.
You should also be sure to promptly notify the Risk Management Department of any
serious cargo loss.
SAMPLE LETTER FORM FOR
NOTICE OF LOSS TO CARRIER
TO BE WRITTEN ON YOUR LETTERHEAD
Vessel or Carrier's Name
Bill of Lading No.- Date
Description of Shipment
Estimate of Loss
Your own Reference No.
Gentlemen:
The captioned shipment was received short and/or damaged. We hold you fully
responsible for an estimated amount of $_______.
Please forward a copy of your delivery records covering this shipment so we may
file claim under our insurance.
A formal claim with supporting documents will be submitted when the exact amount
of loss has been determined.
Very truly yours,
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[ALLIED SIGNAL LOGO] Title: Risk
EXCESS LIABILITY Management
Manual
- ----------------------- ----------------
Supersedes: Date: Page: 1
5/96 5/97
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WORLDWIDE MARINE LIABILITIES
Insurance Company
European, US, Swiss & Bermudian Companies
Coverage
This insurance will pay on behalf of the Assured all sums for bodily injury and
property damage which the Assured shall become legally liable to pay or be
liable to pay by reason of contract or agreement including but not limited to
Protection and Indemnity Risks, including War Protection and Indemnity Risks for
AlliedSignal's barge fleet, collision, towers, removal of wreck, charterers,
charterers' demurrage, terminal or wharf owners or operators' liability.
Includes seepage and pollution coverage in accordance with Federal Water Quality
Improvement Act requirements.
Policy Period
4/1/97 - 4/1/98
Limits of Liability*
$200,000,000 any one occurrence and in the aggregate's excess of $3,000,000
(insured and/or self-insured) any one occurrence.
* Payment of Loss for joint ventures is determined as follows: Total loss of
joint venture times AlliedSignal's percentage of interest, unless otherwise
requested and endorsed on the policy.
** Additional limits respond on a "claims-made" excess basis.
- --------------------------------------------------------------------------------
BROAD FORM UMBRELLA LIABILITIES - WORLDWIDE
Insurance Company
Alchem Insurance Ltd., Bermudian, European, Swiss & American Companies
Coverage
Excess Liability Insurance is designed to add an additional amount of coverage
over and above some specific limit. Our excess liability policies provide
coverage over various primary underlying limits.
Underwriters shall indemnify the Assured for all sums which the Assured shall
be obligated to pay by
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reason of the liability:
a. imposed upon the Assured by law, or
b. assumed under contract or agreement by the Named Assured and/or any
officer, director, stockholder, partner or employee of the Named Assured,
while acting in his capacity as such, for damages on account of:
i. Personal Injuries
ii. Property Damage
iii. Advertising Liability
iv. Marine Liability
caused by or arising out of each occurrence happening anywhere in the world.
Policy Period
4/1/97 - 4/1/98
Limits of Liability*
$200,000,000 combined single limit attaching excess of the following:
US$3,000,000 any one occurrence Ultimate Net Loss whether insured or
self-insured as respects general and non-aircraft products liability.
US$2,000,000 any one occurrence Ultimate Net Loss whether insured or
self-insured as respects Automobile Liability
US$2,000,000 any one occurrence Ultimate Net Loss whether insured or
self-insured as respects Foreign Liability
US$1,000,000 Ultimate Net Loss per person as respects Employer's Liability
Occupational Disease (domestic). Excess of non-U.S. and Canada programs
declared to Risk Management Department.
Basis of Premium Allocation
50% is based on non-aircraft sales.
50% is based on historical loss experience.
* Payment of Loss for joint ventures is determined as follows: Total loss of
joint venture times
AlliedSignal's percentage interest, unless otherwise requested and endorsed on
the policy.
NOTE: Additional limits respond on a "claims-made" excess basis.
- --------------------------------------------------------------------------------
SEE PAGE AND POLLUTION LIABILITY
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Insurance Company
European, US, & Bermudian Companies
Coverage
To cover the Assured for all liabilities, costs and expenses for which they may
be held liable arising from seepage, pollution, contamination, containment,
confinement and cleanup expenses, (unless deliberate or resulting directly from
willful or conscious violation or non-compliance with rules, regulations or
law). Coverage is limited to accidental, unintended and unexpected occurrences.
All policies require that the occurrence can be identified as commencing at a
specific time and date during the term of the policies, that we learn of the
occurrence within a specified time soon after commencement and report same to
underwriters within a specified time*. Excludes coverage for claims involving
waste sites.
Policy Period
4/1/97 - 4/l/98
Limits of Liability**
Contact the Risk Management Department for specific limit information.
NOTICE AND HANDLING OF CLAIMS
Notice of Loss
First Notice of Loss should immediately be phoned to the Risk Management
Department. All losses must be reported to the Risk Management Department in
time for them to report the loss to the insurers within 20 days of commencement
of the loss.
* Time element wording varies by policy as shown on next page.
** Limits of liability for joint ventures are determined as follows: policy
limits times AlliedSignal's percentage of interest in the joint venture
unless otherwise arranged.
Pollution - Time Element Reporting Provisions
Discovery Within Reporting Within
7 days 40 days
Litigation
If you receive a copy of a Summons, Complaint, Petition or other legal paper
indicating that AlliedSignal Inc., one of its subsidiaries, divisions, operating
units or employees is involved in a lawsuit, immediately contact the Law
Department. Forward legal papers to your assigned company Counsel with copies to
the Risk Management Department.
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Other Claims and Incidents Involving Pollution
Report to the Risk Management Department all claims, lawsuits, and incidents
relating to waste disposal or plant manufacturing operations and which involve
alleged contamination of the environment. All claims are to be reported
irrespective of the date upon which the disposal or spillage occurred. Claims
and lawsuits that must be reported include the following:
o demands from any private party or governmental entity that action be
taken to remedy the alleged contamination
o information requests from any governmental agency or private party
o demands for reimbursement of costs expended and/or damages incurred
by any governmental agency or private party
o circumstances that involve negotiations with a governmental agency
where a written demand has not been made but where a consent order
is expected.
Reports of these claims to Risk Management should include a copy of the claim or
lawsuit, a synopsis of the events, if known, associated with the claim along
with an outside counsel recommendation or selection if the Law Department
determines that outside counsel is necessary.
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[ALLIED SIGNAL LOGO] Title: Risk
GLOBAL PROPERTY DAMAGE & Management
BUSINESS INTERRUPTION Manual
- ----------------------- ----------------
Supersedes: Date: Page: 1
10/95 10/96
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GLOBAL PROPERTY DAMAGE AND BUSINESS INTERRUPTION
Insurance Company
The insurance company is American International Underwriters for Allied's
International locations. In North America the primary insurers are Reliance,
Houston Casualty, National Union and Protection Mutual. These same insurers,
plus other U.S. & European insurers participate both in the primary layer, as
well as the excess layers.
Coverage
This is a blanket policy* covering the Corporation against loss or damage, on a
replacement cost basis**, to real and personal property, or the property of
others for which the Corporation is responsible at locations worldwide
(including while in transit). The policy insures against all risk of direct
physical loss or damage from any external cause, including boiler and machinery
breakdown and is subject to normal exclusions such as wear and tear, gradual
deterioration, extremes of temperature, war, nuclear and other exclusions
commonly considered uninsurable or the subject of other insurance such as
employee dishonesty.
The Policy covers Boiler and Machinery up to the full limit per occurrence. This
policy also provides business interruption insurance and contingent business
interruption insurance which is designed to pay for loss of profits and
continuing costs which result from damage to insured property and/or to those of
a supplier or receiver by an insured peril.
The policy has been extended to cover damage to electronic data processing
equipment; and for costs of reproducing media from duplicates or originals only.
Some limited amount of full reproduction expenses is provided. Included therein
is business interruption and/or extra expense coverage which provide for
reimbursement for loss of income and/or the assurance of funds to meet the
additional expenses incurred in returning to normal operations following an
Insured incident.
The policy automatically (subject to reporting to underwriters in a certain time
frame) covers new and acquired property and the interest of any company or
corporation which during the period of the policy is merged with, becomes a
subsidiary of, or becomes controlled by Allied or any subsidiary of Allied.
* This policy covers all Allied Signal's locations on a blanket basis (except
certain EMS locations, which are covered for $1.2 Billion each occurrence) which
means the entire amount of insurance can be applied to a single location.
** In the event of loss or damage to real and/or personal property which is not
repaired, rebuilt or replaced, such property will be valued at Actual Cash
Value.
Policy Period
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10/1/96 - 10/1/97 Renewed 10/1/97 - 10/1/98
Limits of Liability
Blanket limit combined on Real and Personal Property Insurance and Business
Interruption.
$350,000,000 for earthquake per occurrence and in the aggregate except Critical
Zone earthquake where it is $200 million per occurrence and in the aggregate for
ISO Critical Zone 1 (areas of the states include portions of California, Nevada,
Alaska and the Country of Canada) and $150 million per occurrence and in the
aggregate for one other Zone 1 equivalent International locations. In Japan
Zones 4, 5 or 6 there is a 60% indemnity provision. For Flood the per occurrence
and annual aggregate is $350,000,000, except in The Netherlands where the
occurrence/aggregate limit is $25,000,000.
$150,000,000 per occurrence for the following:
a) Extra Expense
b) Contingent Extra Expense
c) Rental Insurance
d) Transit
e) Contingent Business Interruption
f) Fine Arts
g) Valuable Papers and Records (including reproduction cost of media)
h) Leasehold Interest
i) Off Premises Power - Property Damage and Time Element - excluding losses
resulting from flood and earthquake.
j) Accounts Receivable
k) Debris Removal (except windblown debris)
l) Vessel impact damage to piers, wharves and docks
m) Expediting Expense
n) Installment Sales
o) Miscellaneous Unnamed Locations
p) Newly acquired property subject to reporting within 180 day of
acquisition.
q) Precious metals
r) Fire Department/Brigade Charges
s) Electronic Data Processing Equipment
t) Property in the course of construction (including testing)
Deductible
All claims for damage, loss of income, profit or expense arising out of any one
occurrence shall be adjusted as one loss and from the amount of such adjusted
loss, there shall be deducted the sum of $100,000 combined any one occurrence at
all locations, anywhere in the world except $250,000 combined any one occurrence
at all locations in the U.S., its territories and possessions, Puerto Rico and
Canada.
Earthquake Deductibles*
$10,000,000 for each loss Insured against the peril of earthquake involving all
locations situated within designated critical ISO Zone No. 1 (areas of the
states include portions of California, Nevada, Alaska and the Country of
Canada).
Deductibles:
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<PAGE>
1. $5,000,000 for each loss at the following locations:
Frankford
Hopewell
Orange
2. $2,500,000 for each loss at the following locations:
Chesterfield
Columbia
Moncure
3. $2,500,000 for each loss at the following locations:
Detroit (Tar Plant)
Ironton (Tar Plant)
Pottsville, PA
Longlaville, FR
Riedel-de-Haen, German
Rudolstadt, Germany
4. $100,000 for each loss involving property in transit.
* One carrier (Protection Mutual) has an earthquake deductible of 5% of the
maximum of $500,000 any one occurrence in Japan or Mexico and a deductible of 5%
to a maximum of $1,500,000 any one occurrence in Taiwan
5.a. 2% for each Property Damage loss insured against by the peril of
windstorm in the USA. at each location within designated areas (as defined
in Windstorm Endorsement Designated Areas), the amount to be deducted
shall be stated percentage of the one hundred percent reported property
damage values for each and every location (see Attachment A).
b. 5 days for each Time Element loss insured against by the peril of
windstorm in the U.S.A. at each location within the designated areas (as
defined in Windstorm Endorsement Designated Areas), the amount to be
deducted shall be the dollar equivalent of the stated number of days times
the daily plant value - computed by dividing the reported annual time
element values by the actual number of working days.
Notwithstanding 5 a and b above, the minimum amount to be deducted from the
total loss arising out of one windstorm occurrence shall in no event be less
than $250,000, while the maximum amount to be deducted shall in no event be
greater than $5,000,000.
Territory
Worldwide except Afghanistan, Albania, Angola, Bosnia-Herzegovina, Croatia,
Cuba, El Salvador, Iran, Iraq, Kampuchea (Cambodia), Laos, Lebanon, Libya,
Macedonia, North Korea, Outer Mongolia, Serbia, Syria, Tibet and Montenegro.
Those with a $10,000,000 per occurrence limit include Armenia, Azerbaijan,
Bulgaria, Belarus, Georgia, Kazakhstan, Kyrgystan, Moldava, Romania, Tajikistan,
Tibet, Turkmenistan, Uzbekistan and Russia.
Basis of Premium Charge
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Values for property damage and business interruption are completed and submitted
to the Risk Management Department annually. Premium is determined on the basis
of trended building, machinery and equipment replacement values, together with
inventory and estimated business interruption values as of December 31 each
year. In addition, loss experience is considered in expensing the cost of the
Insurance based upon each business area's proportion of total values.
Notice of Loss
The proper reporting of claims is important as it effects:
o The speed of loss settlement
o The prejudicing of your rights against the insurance company caused by
reporting delays, thereby violating the insurance policy conditions.
o The proper adjusting of the claim amount..
For all losses that may result in an insurable claim you should notify the
Corporate Risk Management Department and if the loss occurs outside North
America, you should immediately notify your local insurance broker when:
o The claims could exceed $10,000
o There is a possibility that the claim will be denied by the local
insurance company
o There is a dispute as to the settlement amount of the claim
All losses should be reported to the local broker and the Corporate Risk
Manager. Those claims insured by the Corporate Ocean Maine Cargo program should
be reported in accordance with the procedures set forth by the Corporate Risk
Management Department and reported to the Corporate ocean marine cargo broker in
New York.
The claims specialist are:
AlliedSignal Inc. Mr. Tim Cummings
Morristown, NJ Office Manager, Risk Management Services
Telephone: (973) 455-4527
AON NYO Mr. John Rhodes
Property/Business Vice President
Interruption Claims Telephone: (212) 441-2298
AON NYO Mr. Dante Petrizzo
Marine Claims Vice President
Telephone: (212) 441-1340
================================================================================
WINDSTORM ENDORSEMENT DESIGNATED AREAS
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<PAGE>
ALABAMA: Counties of Baldwin and Mobile
FLORIDA: Seacoast Zone I
Seacoast Zone 2
Seacoast Zone 3
All Other Counties (Inland)
AlliedSignal: Fort Lauderdale, Lynn Haven
GEORGIA: Counties in Brantley, Bryan, Camden, Charlton, Chatham,
Effingham, Glynn, Liberty, Long, McIntosh, Pierce and Wayne.
HAWAII: Entire State
LOUISIANA: Parishes of Acadia, Ascension, Assumption, Calcasieu,
Cameron, East Baton Rouge, East Feliciana, Iberia,
Iberville, Jefferson Davis, Lafayette, Lafourche,
Livingston, Orleans, Plaquemines, Pointe Coupee, St.
Bernard, St. Charles, St. Helena, St. James, St. John the
Baptist, St. Martin, St. Mary, St. Tammany, Tangipanoa,
Terrebonne, Vermillion, Washington, West Baton Rouge and
West Feliciana.
AlliedSignal: Geismar, Darrow - Ascension
Baton Rouge - W and E Baton Rouge
MISSISSIPPI: Counties of George, Hancock, Harrison, Jackson, Pearl River
and Stone.
N. CAROLINA: Counties of Besufort, Bertie, Bladen, Brunswick, Camden,
Carteret, Chowan, Columbus, Craven, Currituck, Dare, Duplin,
Gates, Greene, Hartford, Hude, Jones, Lenior, Martin, New
Hanover, Onslow, Pamlico, Pasquotank, Pender, Perquimans,
Pitt, Tyrell, and Washington.
PUERTO RICO: Entire Island including all Caribbean Islands.
S. CAROLINA: Counties of Beaufort, Berkeley, Charleston, Colleton,
Dorchester, Georgetown, Hampton, Horry, Jasper and
Williamsburg.
AlliedSignal: Conway, Charleston
TEXAS: Counties of Aransas, Bea, Brazoria, Brooks, Calhoun,
Cameron, Chambers, Fort Bend, Galveston, Goliad, Hardin,
Harris, Hidalgo, Jackson, Jefferson, Jim Wells, Kenedy,
Kleberg, Liberty, Live Oak, Matagorda, Nueces, Orange,
Refuglo, San Patricio, Victoria, Wharton and Willacy.
AlliedSignal: Orange, Brownsville
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<PAGE>
VIRGINIA: Counties of Accomac, Charles City, Chesapeake, Gloucester,
Isle of Wright, James City, Lancaster, Mathews, Middlesex,
Nansemond, New Kent, Norfolk, Northampton, Northumberland,
Prince George, Princess Ann, Southampton, Surry, Sussex,
Virginia Beach, Warwich and York.
AlliedSignal: Hopewell - Chesterfield County
Not in designated areas
Petersburg - Grant County
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<PAGE>
================================================================================
[ALLIED SIGNAL LOGO] Title: Risk
WORKERS' COMPENSATION - DOMESTIC Management
Manual
- ----------------------- ----------------
Supersedes: Date: Page: 1
7/96 5/97
- --------------------------------------------------------------------------------
WORKERS' COMPENSATION - DOMESTIC
Insurance Company
The Travelers Insurance Company
Policy No. Applicable State
- ---------- ----------------
TC2EEUB-196T365-l-97 Texas
TC2JUB-204T578-2-97 Minnesota
TDRJ-UB-196T362-6-97 Hawaii, Massachusetts, Oregon, Wisconsin
TC2J-UB-202T831-8-97 All Others States
Self-insured Excess Policies
Policy #: 4155588 Arizona, California, Louisiana, New
Jersey, Ohio, Rhode Island, South
Carolina, Washington
Insurer: National Union
Insurance Co.
Limits of Liability; Statutory
181000532 Maine - Insured by Maine Employers Insurance Co.
Coverage
The Travelers Insurance Company will provide coverage for statutory benefits in
all states in the United States, except Maine and monopolistic State Fund
jurisdictions (Nevada, North Dakota, Ohio, Washington, West Virginia and
Wyoming) and self-insured states. Allied is legally self-insured for workers'
compensation in Ohio, Arizona, Louisiana, Rhode Island, New Jersey, Florida,
California, South Carolina and Washington. Travelers Insurance Company (CSSC) is
our claims administrator in Ohio, Louisiana, Rhode Island, California, South
Carolina and Washington. Kemper Insurance (NATLSCO) is our claims administrator
in New Jersey, Florida and Arizona for claims with a date of occurrence after
April 1, 1996. Travelers was the claims administrator for these three states
prior to April 1, 1996. Kemper will provide Employer's Liability coverage, as
well as coverage for Longshoremen's and Harbor Workers Act Benefits for New
Jersey, Florida and Arizona. Travelers will provide those coverages for all
other states.
Limits of Liability
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<PAGE>
1. Workers' Compensation - Statutory limits in all insured states of the
United States
2. Employees Liability - $1,000,000 by accident, $1,000,000 by disease
3. Longshoremen's & Harbor Workers' Act including masters and members of crew
for all operations worldwide. The Jones Act, Defense Base Act and Outer
Continental Shelf Act are also covered subject to terms and conditions of
these acts.
Location Retained Limits Per Occurrence
Except for Nevada, North Dakota, West Virginia and Wyoming, AlliedSignal is
financially self-insured in all states. We retain the first $1 million of each
occurrence. Each location is responsible for the first $250,000 per occurrence.
Losses from $250,000 to $1 million are retained at Corporate.
Policy Period
4/1/97 - 4/1/98
Basis of Premium Charge
Workers' compensation premium is allocated in two segments. Payroll and
estimated claims costs are the base used in determining administrative cost
which is allocated annually. Included in the administrative cost are Travelers'
engineering services (inspections, schools, etc.), state taxes, special fund
assessments, cost of excess insurance and expense and profit of Travelers.
Secondly, there is a quarterly charge that includes claim losses based upon
total incurred liability, up to a maximum of $250,000 per occurrence and a
claims administration fee. Claim losses include all new claims filed during the
current period plus increase and/or decrease in the incurred liability for prior
periods. Claims and the incurred liability appear on the quarterly loss run. The
claims administration fee is 11% for accidents occurring prior to April 1, 1986,
and 8% after April 1, 1986.
Locations in State Funds (Wyoming, West Virginia, Nevada, North Dakota) pay
premium directly to a division of the respective State Governments. The State
Agency is responsible for payment of statutory benefits and administration of
the claims.
The cost of this premium is allocated based upon payroll and estimated claims
costs.
For accidents that occur on or after April 1, 1996, Kemper Insurance Company is
the workers' compensation claims administrator for locations in Arizona, Florida
and New Jersey. Travelers Insurance retains responsibility for claims that
occurred in these states before April 1, 1996. Travelers also retains
responsibility for claims in all other states.
The following Claims Service Requirements (CSR) will be followed by both the
Travelers Insurance Company and Kemper Insurance Company in administering our
claim files. Travelers refers to these instructions as Special Account
Communication (SAC). Kemper uses the title National Account Claim Bulletin.
ALLIEDSIGNAL CLAIM SERVICE REQUIREMENTS (CSR)
Acknowledgement - Workers' Compensation
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The Workers' Compensation system has been programmed to produce a claim
acknowledgment printout. All claim acknowledgments will be mailed to: The
location submitting the loss.
Adjuster Notes - Workers' Compensation
Instant access to your claim information is available through our adjuster notes
facility. The customer will see the development of the specific claim especially
in the two key areas of reserve rationale and action plan for resolution.
Sharing of information is the key.
Quarterly Contact - Workers' Compensation
We have agreed with both AlliedSignal officials and the producer that Workers'
Compensation supervisory personnel will maintain a program of open
communications between Travelers, Kemper and AlliedSignal personnel in
conjunction with our handling of Workers' Compensation cases. Each AlliedSignal
location will have a Workers' Compensation coordinator, designated by the plant
manager, who will be our contact. The Claim Supervisor file handler handling
Workers' Compensation claims should maintain at least quarterly contact with the
Workers' Compensation coordinator designated at each location, so that cases of
interest may be reviewed, or any other topics can be discussed.
File Review Meetings - Workers' Compensation
AlliedSignal Inc. has agreed to hold file review meetings as needed. If
requested by AlliedSignal, these file review meetings will be held to discuss
open claim files designated by the customer or recommended by Travelers/Kemper
as cases significant in nature. After each file is discussed, a joint action
plan should be agreed to and made part of the file. These meetings should take
place in our office or the AlliedSignal location.
Requests for Special Reports or Services
Occasionally, the AlliedSignal Workers' Compensation Coordinator will ask for
special reports or implementation of a program/service that is beyond the
services outlined in these instructions. While close local communications are
encouraged, any such arrangement (to be performed on a routine basis) should be
submitted to the Claim Account Executive for discussion with AlliedSignal Risk
Management. This will assure continuity in the services provided AlliedSignal
Inc.
Annual Visitations
On an annual basis, a personal visit will be made to the AlliedSignal location
to review the CSR instructions, application of best practices, communications
and any problem areas. During these meetings a detailed review of the CSR
instructions should be completed to insure we are in compliance. This visitation
should be completed during the first quarter and may be part of a regular
quarterly meeting. The AlliedSignal Inc. annual visitation form must be
completed and sent to the Claim Account Executive.
"Red Flag" Claims - Workers' Compensation
There will be occasions when the field office will receive notification from the
customer expressing special interest in a claim. This will be termed a "Red
Flag" claim by AlliedSignal. This special interest may be expressed at the time
of first notice, or at any other time while the claim remains open. When a claim
is submitted by the AlliedSignal location and a form letter is attached to the
first report identifying
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<PAGE>
the claim as a "RED FLAG" case, we have agreed to the following special handling
guidelines:
o Acknowledge receipt of the case to the AlliedSignal representative who
submitted it.
o The claim handler will initiate a telephone call to the AlliedSignal
representative to establish a game plan for investigation and management
of the case. The claim handler will outline in a letter to AlliedSignal
location the proposed investigation and action to be completed.
o As the case develops, we will maintain communications with the
AlliedSignal location.
o After completion of the investigation, we will discuss the case by
telephone with the AlliedSignal location and explain our decision on
compensability. If there is a difference of opinion on compensability and
agreement cannot be reached, the AlliedSignal location will contact Tim
Cummings and Travelers offices should contact the Claim Account Executive.
If any problems or disagreements arise, notify the Claim Account Executive.
Employer's Liability Claims - Workers' Compensation
Any time an employer's liability claim is established, acknowledgment of the
claim should be sent to: (I-1).
Independent Medical Exams and Medical Consultation Referrals After 60 Days of
Disability - Workers' Compensation
When an employee has been disabled or is anticipated to be disabled for 60 days
or more an independent medical examination or medical consultation referral
should be considered. The supervisor managing the claims should discuss the
feasibility of an independent exam or consultation with the location submitting
the claim. If the location submitting the claim AGREES NOT to schedule IME or
refer the employee for a medical consultation the claim file should be
documented accordingly.
Medical Services Department
AlliedSignal Inc. has an in house Medical Services Department which is available
for consultation on any claim. This medical staff is a valuable resource and we
should take advantage of their service. Members of this department may contact
you directly on selected cases. If you or our medical vendor require the
assistance of AlliedSignal's medical staff, contact (I-1).
Some of the locations, especially the larger ones with a medical representative
are interested in receiving copies of the medical reports. We should attempt to
accommodate the customers needs for this medical information.
Alternative and Modified Work - Workers' Compensation
AlliedSignal Inc. has put in place an aggressive alternative and modified work
program in all their locations. Before making any lost time benefit payments you
should discuss with the AlliedSignal location whether the injured worker has
returned or will return to alternative or modified work. Continuous contact with
the AlliedSignal Workers' Compensation coordinator should be maintained on any
employee who is receiving lost time benefits to return these employees to work.
4 of 8
<PAGE>
The process for returning employees to Alternative Work at AlliedSignal is to
determine the capabilities of the employee. The AlliedSignal location will
determine what restrictions they can accommodate. It is most important the
AlliedSignal location know the current capabilities of every disabled employee.
The AlliedSignal location representative is to be kept current on the medical
status of disabled employees. Every effort should be made to set target dates
for return to regular or alternative work.
o The purpose of this process is to aggressively track for return to work,
employees on temporary total disability. If the nature of the claim allows
for a more rapid assessment and finalization of the claim, we would
certainly encourage you to identify your recommendations to AlliedSignal.
If an employee is paid Temporary Total benefits, we will provide the
following:
After 90 and 180 days on temporary total disability, identify in a report to the
location Workers' Compensation Coordinator, copy T. Cummings the following
information. Send a copy of the 90 day report to the Plant Manager.
90 Days of Temporary Total
- Basis for disability - Why is the employee out of work?
- What efforts have been made to find alternative work?
- When will the employee be returning to work?
- Identify the chances of the employee ever returning to alternative
work, regular job or permanent modified job at AlliedSignal. What
can the locations do to provide temporary or permanent job modified
job at AlliedSignal. What can the locations do to provide temporary
or permanent job modification?
- Should we consider Rehabilitation/Retraining?
- Provide an action plan to return the employee to work or to resolve
the claim.
- If the location has determined that they cannot take this employee
back to work, we need to identify to the locations the possible cost
of this claim. What are the alternatives for resolving this claim
and the cost structure of each?
180 of Temporary Total
- Same information as in 90 day report.
- At this time, the report must identify the specific action with a
time table and the financial consequence that will be taken to
resolve this claim.
- Subsequent reports as determined by the claim and the time table for
resolution.
Vocational Rehabilitation - Workers' Compensation
Before assigning a case for vocational rehabilitation we will discuss the
reason(s) for the vocational rehabilitation with the location submitting the
loss. The AlliedSignal location may have other pertinent information concerning
the injured party that will assist in the vocational rehabilitation process.
5 of 8
<PAGE>
Claim Checks - Temporary Total, Permanent Partial & Temporary Partial
Workers' Compensation
All checks issued in payment of Temporary Total, Permanent Partial and Temporary
Partial disability benefits are to be made payable to the injured employee and
mailed to the customer at the customer's location reporting the loss. If that
practice is not permitted in the state involved, mail the check to the employee
and furnish the insured's location the Workers' Compensation payment summary.
Serious Catastrophic Injuries - Workers' Compensation
When we learn that a claim involves a serious or catastrophic injury, the
AlliedSignal Risk Management Department should be notified immediately. The
following injuries are examples, but are not intended to be all encompassing.
Fatalities.
Amputation Of One Or More Extremities.
Severe Brain Or Brain Stem Injury.
Second Or Third Degree Burns.
Heart Cases.
Disability Of 60 Days.
Occupational Disease.
Notify (I-1) by telephone and direct a detailed letter to the insured outlining
the diagnosis, facts of the accident and plans for future handling. The letter
should be sent to: Reporting Location, Copies to (I-1) and (B).
Actuarial Reserve - Workers' Compensation
When you are recommending a file for actuarial reserve, send a copy of your
recommendation to: Reporting Location, Copies to (I-1) and (B).
Reserve/Estimate Advisory Report - Workers' Compensation
In all cases wherein claim reserve/estimate of $20,000 or more is established,
or at the time of any claim reserve/estimate change of $20,000 or more,
immediately direct a letter outlining the factors affecting the reserve amount,
including facts of the accident, nature and extent of injuries as well as
pertinent investigation details to: The location submitting the loss, copies to
(I-1) and (B).
Selection of Counsel - Workers' Compensation
The insured has agreed to utilize our regular panel and staff attorneys in
defense of law suits. However, on certain cases the customer may prefer to use
their own outside counsel for cases in litigation. We have agreed to accommodate
these exception requests.
If you feel that working with the law firm chosen by the customer will prove to
be a problem, contact the Claim Account Executive. If a decision is made to
change and assigned Defense Attorney, concurrence must be received from
AlliedSignal's Risk Management Department. Direct a letter outlining the facts
for the basis of the proposed change to: (I-1), copy to the Claim Account
Executive.
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<PAGE>
Legal Correspondence - Workers' Compensation
You should instruct the defense attorney to send copies of all legal
correspondence to: The location submitting the loss.
Pre-Settlement Review - Workers' Compensation
In any case which may have a settlement value of $1.00 to $24,999 we have agreed
to review the case with the customer, before settlement negotiations are
initiated. This is to be accomplished by letter, setting forth details of the
case, and explaining our intentions for handling. This letter is to be directed
to: The location submitting the loss.
We will make every effort to consult with the customer prior to settling any
Workers' Compensation claim of $25,000 or greater. This review should be
accomplished in a letter which outlines the claim in detail, including our
rationale for settlement. This letter is to be directed to: The location
reporting the loss and (I-1).
If a mutually acceptable resolution regarding the settlement value cannot be
reached, then contact the Claim Account Executive.
Settlements - Workers' Compensation
Before entering into settlement negotiations where the claimant is represented
by an attorney to settle a Workers' Compensation claim for any former
AlliedSignal employee (no longer working at AlliedSignal) or any active employee
that is currently disabled and has indicated he or she is going to file or has
filed a separate action against AlliedSignal for wrongful termination, ADA
violations, etc., contact Patrick McGovern (973) 455-5069 or Lisa Parlato (East
Coast) (973) 455-2150 or Joseph Gore (West Coast) (310) 512-2959. If there are
any questions on this procedure please contact (I-1), Tim Cummings at (973)
455-4527.
Surveillance - Workers' Compensation
If a request is made by AlliedSignal for immediate or emergency surveillance or
if the claims handler feels there is a need our office will give the assignment
to the best surveillance company available that can handle immediate
surveillance. There should not be any delay in making the assignment. The
surveillance company should confirm the assignment with the AlliedSignal
location that made the request.
The Workers' Compensation system has been programmed to produce a closing notice
printout. All closing notices will be mailed to: The location submitting the
loss.
Closing Notices - Workers' Compensation
The Workers' Compensation system has been programmed to produce a closing notice
printout. All closing notices will be mailed to: The location submitting the
loss.
Lines of Communication
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<PAGE>
(I-1) Mr. Tim W. Cummings
Manager, Risk Management Services
AlliedSignal Inc.
101 Columbia Road
Morristown, NJ 07962-1219
(973) 455-4527
(973) 455-3866 - FAX
(B) Mr. Richard Catarelli
J&H/Marsh & McLennan
125 Broad Street
New York, NY l0004
(212) 574-8261
(212) 574-8985 - FAX
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<PAGE>
================================================================================
[ALLIED SIGNAL LOGO] Title: Risk
WORKERS' COMPENSATION - Management
FOREIGN Manual
- ----------------------- ----------------
Supersedes: Date: Page: 1
5/96 5/97
- --------------------------------------------------------------------------------
WORKERS' COMPENSATION/EMPLOYER'S LIABILITY - FOREIGN
Insurance Company
Zurich-American Insurance Company
Policy No. WC68-63-618-04 - Voluntary Foreign
Policy No. WC79-74-372-04 - Defense Base Act
Coverage
Workers' Compensation - Coverage A
1. Voluntary Foreign Workers' Compensation master US policy coverage
provides benefits according to the state statute where the employee
was hired on claims filed for all US Nationals and those Foreign
Nationals on US dollar payroll anywhere in the world excluding the
United States of America, its territories or possessions, Canada,
Cuba; Cambodia, Laos, Albania, North Korea, and Viet Nam.
2. Defense Base Act, US Code (1946) Title 42, Sections 1651-54, (Public
Law 208, 77th Congress, as amended) and the provisions applicable
thereto of the Longshoremens' and Harbor Workers' Compensation Acts.
Please contact the Risk Management Department and your Regional
Counsel prior to entering into any contract requiring Defense Base
Act coverage.
Employer's Liability - Coverage B
All covered employees, United States and Foreign Nationals, anywhere in
the world except excluded countries as mentioned above to a limit of
$2,000,000 (US dollars) under the master policy in the US. Excess limits
covered under Foreign General Liability and Broad Form Umbrella
Liabilities.
Policy Period
4/1/97 - 4/1/98
Basis of Premium
Payroll is the base used in determining the premium.
Loss Limit
The losses used in computing the retrospective premium shall be limited to a
maximum of $150,000 per occurrence.
1 of 2
<PAGE>
Notice and Handling of Claims
Claims filed under this policy should be mailed to:
Risk Management Department
Attn: Tim Cummings
101 Columbia Road
Morristown, NJ 07962
973-455-4527
973-455-3866 (FAX)
Supporting data, i.e., physician's statement, medical bills, etc. should
accompany first notice. Please contact the Risk Management Department for
assistance.
Local Workers' Compensation/Employer's Liability Insurance Guidelines
As Workers' Compensation/Employer's Liability Laws vary by country, AlliedSignal
operating units must arrange local Employer's Liability and/or Workers'
Compensation coverage, as required by statute, through their local J&H/Unison
representative.
2 of 2
<PAGE>
- --------------------------------------------------------------------------------
1 All-Gefahren-(Sach- AIG Europe F11171.3914008 JIA
und BU-)Versicherung
- --------------------------------------------------------------------------------
2 Gebaude-Feuerversicherung Sun Alliance F42.92.099969-A Uber HON
- --------------------------------------------------------------------------------
3 Industrie-(Betriebs- Zurich 3/H/7.850.796 J&H
und Produkt-)Haftpflicht
- --------------------------------------------------------------------------------
4 Umwelt-Industrie-Haftpflicht Zurich 3/H/7.850.797 J&H
- --------------------------------------------------------------------------------
5 Auslandsreise- Europa 7889 JIA
Krankenversicherung
- --------------------------------------------------------------------------------
6 Gruppen-Unfall INA 53GE001880 JIA
- --------------------------------------------------------------------------------
7 Reisegepack Victoria 74380/1/111 JIA
- --------------------------------------------------------------------------------
8 Sportboot-Kasko Victoria 129390-111-953 JIA
- --------------------------------------------------------------------------------
9 Kraftfahrzeuge HDI diverse JIA
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Versicherung Versicherer Versicharungs- von / bis Deckungs- Pramie DM
dauer summe incl. Vers.-Steuer
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
All-Gefahren-(Sach- und BU-) AIG Europe jahrweise 01.10.-30.09. 50.600.000,- 51.069,00
Versicherung
- ------------------------------------------------------------------------------------------------------------------------------------
Gebaude-Feuerversicherung Sun Alliance jahrweise 01.07.-01.07. 19.150.000,- 14.968,90
- ------------------------------------------------------------------------------------------------------------------------------------
Industrie-(Betriebs- und Zurich International jahrweise 01.04.-31.03. 1.372.307,- 20.079,50
Produkt-)Haftpflicht
- ------------------------------------------------------------------------------------------------------------------------------------
Umwelt-Industrie- Zurich International jahrweise 01.04.-31.04. 1.372.307,- 1.894,10
Haftpflichtversicherung
- ------------------------------------------------------------------------------------------------------------------------------------
Auslandsreise- EUROPA jahrweise 01.01.-31.12. gem. ss. 4+5 AVB 450,00
Krankenversicherung
- ------------------------------------------------------------------------------------------------------------------------------------
Gruppen-Unfallversicherung CIGNA jahrweise 01.01.-31.12. Gr.I 100/280 3.841,10
Gr.II+IV 50/100
Gr.V 100/200
Gr.III+VI 25/50
- ------------------------------------------------------------------------------------------------------------------------------------
Reisegepack-Versicherung VICTORIA jahrweise 01.01.-31.12. 7.500,- / 10.000,- 1.466,30
- ------------------------------------------------------------------------------------------------------------------------------------
Sportboot-Kasko VICTORIA jahrweise 31.12.-31.12. 290.000,- 3.001,50
- ------------------------------------------------------------------------------------------------------------------------------------
Kfz: KI - DC 409 HDI jahrweise 01.01.-01.01. Haftpflicht: 1.524,90 11.337,40
- -------------------------------- ----------
Kfz: KI - AS 554 7,5 Mio pro Person 997,60
- -------------------------------- ----------
Kfz: KI - AS 908 779,60
- -------------------------------- ----------
Kfz: KI - AS 885 Kasko: 1.416,10
- -------------------------------- ----------
Kfz: KI - DA 605 VK mit 1.000,-SB 990,40
- -------------------------------- ----------
Kfz: KI - AS 760 TK mit 300,-SB 1.552,50
- -------------------------------- ----------
Kfz: KI - AS 403 1.038,50
- -------------------------------- ----------
Kfz: KI - AS 105 990,10
- -------------------------------- ----------
Kfz: KI - AS 121 2.047,70
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
ZURICH
INTERNATIONAL
DEUTSCHLAND
V e r t r a g
Uber eine Industrie-Haftpflichtversicherung
Nr. 3/H/7850 796/97
zwischen
Allied Signal
Elac Nautic GmbH
NeufeldstraBe
24118 Kiel
als Versicherungsnehmer
und
Zurich International
(Deutschland)
Versicherungs-Aktiengesellschaft
Bockenheimer LandstraBe 2-4
60323 Frankfurt am Main
als Versicherer.
Fur die Vertragsverwaltung, Schadenmeldung und sonstige
Betreuung ist zustandig die
Landesdirektion Frankfurt Jaspers Industrie Assekuranz
Bockenheimer LandstraBe 2-4 GmbH & Co. KG
Opernplatz 2
60323 Frankfurt am Main
Tel.-Nr. (069) 97116-0 60313 Frankfurt am Main
Willenserklarungen, Anzeigen und Zahlungen einer Vertragspartei
gelten der anderen Partei mit Zugang bei der genannten Maklerfirma.
als unmittelbar zugegangen. Der Makler hat die Willenserklarung
etc. unverzuglich weiterzuleiten.
- --------------------------------------------------------------------------------
R e c h n u n g (Erlauterung siehe Ziff. 1.2.4)
Beitrag fur die Zeit vom
31.03.1994 bis 31.03.1996
Der Beitrag wurde bereits mit separater Rechnung erhoben.
- --------------------------------------------------------------------------------
Kiel, den 18.7.96 Frankfurt am Main, den 16.01.1996
[LOGO] Allied Signal Zurich International
ELAC Nautik GmbH (Deutschland)
NeufledtstraBe Tel. 0431/883-0 Versicherungs-Aktiengesellschaft
D-24118 Kiel
/s/ [Illegible] /s/ [Illegible]
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 All-Gefahren-(Sach- und BU-)Versicherung AIG Europe F11171.3914008 JIA
- -----------------------------------------------------------------------------------------------
2 Gebaude-Feuerversicherung Sun Alliance F42.92.099969-A uber
HON
- -----------------------------------------------------------------------------------------------
3 Industrie-(Betriebs- und Produkt-)Haftpflicht Zurich 3/H/7.850.796 J&H
- -----------------------------------------------------------------------------------------------
4 Umwelt-Industrie-Haftpflicht Zurich 3/H/7.850.797 J&H
- -----------------------------------------------------------------------------------------------
5 Auslandsreise-Krankenversicherung Europa 7889 JIA
- -----------------------------------------------------------------------------------------------
6 Gruppen-Unfall INA 53GE001880 JIA
- -----------------------------------------------------------------------------------------------
7 Reisegepack Victoria 74380/1/111 JIA
- -----------------------------------------------------------------------------------------------
8 Sportboot-Kasko Victoria 129390-111-953 JIA
- -----------------------------------------------------------------------------------------------
9 Kraftfahrzeuge HDI diverse JIA
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Versicherung Versicherer Versicharungs- von / bis Deckungs- Pramie DM
dauer summe incl. Vers.-Sieuer
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
All-Gefahren-(Sach- und BU-) AIG Europe jahrweise 01.10.-30.09. 50.600.000,- 51.069,00
Versicherung
- ------------------------------------------------------------------------------------------------------------------------------------
Gebaude-Feuerversicherung Sun Alliance jahrweise 01.07.-01.07. 19.150.000,- 14.968,90
- ------------------------------------------------------------------------------------------------------------------------------------
Industrie-(Betriebs- und Zurich International jahrweise 01.04.-31.03. 1.372.307,- 20.079,50
Produkt-)Haftpflicht
- ------------------------------------------------------------------------------------------------------------------------------------
Umwelt-Industrie- Zurich International jahrweise 01.04.-31.04. 1.372.307,- 1.894,10
Haftpflichtversicherung
- ------------------------------------------------------------------------------------------------------------------------------------
Auslandsreise- EUROPA jahrweise 01.01.-31.12. gem. ss. 4+5 AVB 450,00
Krankenversicherung
- ------------------------------------------------------------------------------------------------------------------------------------
Gruppen-Unfaltversicherung CIGNA jahrweise 01.01.-31.12. Gr.I 100/280 3.841,10
Gr.II+IV 50/100
Gr.V 100/200
Gr.III+VI 25/50
- ------------------------------------------------------------------------------------------------------------------------------------
Reisegepack-Versicherung VICTORIA jahrweise 01.01.-31.12. 7.500,- / 10.000,- 1.466,30
- ------------------------------------------------------------------------------------------------------------------------------------
Sportboot-Kasko VICTORIA jahrweise 31.12.-31.12. 290.000,- 3.001,50
- ------------------------------------------------------------------------------------------------------------------------------------
Kfz: KI - DC 409 HDI jahrweise 01.01.-01.01. Haftpflicht: 1.524,90 11.337,40
- -------------------------------- ----------
Kfz: KI - AS 554 7,5 Mio pro Person 997,60
- -------------------------------- ----------
Kfz: KI - AS 908 779,60
- -------------------------------- ----------
Kfz: KI - AS 885 Kasko: 1.416,10
- -------------------------------- ----------
Kfz: KI - DA 605 VK mit 1.000,-SB 990,40
- -------------------------------- ----------
Kfz: KI - AS 760 TK mit 300,-SB 1.552,50
- -------------------------------- ----------
Kfz: KI - AS 403 1.038,50
- -------------------------------- ----------
Kfz: KI - AS 105 990,10
- -------------------------------- ----------
Kfz: KI - AS 121 2.047,70
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[INA LOGO] INSURANCE COMPANY OF NORTH AMERICA
Akttiengesellschaft - Gegrundet 1792 - Philadelphia Pa., USA
Direktion fur Deutschland
Reuterweg 47, 8 Frankfurt/M.1 Tel.: 0611/720831
GRUPPEN-UNFALLVERSICHERUNGSSCHEIN NR. 53 GE 001880
Versicherungsnehmer: Firma HONEYWELL ELAC NAUTIK GmbH
Westring 425-429
2300 Kiel 1
Versicherer: Insurance Company of North America
Direktion fur Deutschland
Reuterweg 47, 6000 Frankfurt/Main
Versicherte Personen /
Versicherungssummen: Siehe Abschnitt I - Deklaration -
Versicherungsdauer: 22. Mai 1978 bis 1. Januar 1980
- je mittage 12 Uhr -
Der Vertrag verlangert sich stillschwei-
gend mit dem Ablauf der Vertragszeit um
ein Jahr und weiter von Jahr zu Jahr,
wenn nicht drei Monate vor dem jeweili-
gen Ablauf der anderen Partei eine
schriftliche Kundigung zugegangen ist.
Versicherungsbedingungen: Allgemeine Unfallversicherungs-
Bedingungen (AUB)
Zusatzbedingungen fur die Kinder-
Unfallversicherung
Zusatzbedingungen fur die Gruppen-
Unfallversicherung
Besondere Vereinbarungen und Bestim-
mungen; diese gehen den gedruckten voran.
Jahresbeitrag: DM 3.313,50 fallig am 1. Januar jeden
Jahres zuzuglich 5% Versicherungssteuer.
R E C H N U N G :
- -----------------
Beitrag 22.5.1978-1.1.1979 DM 1.002,50
Beitrag 1.1.1979/80 DM 2.901,60
-----------
DM 3.904,10
5% Versicherungssteuer DM 195,20
-----------
Einlosungsbetrag DM 4.099,30
===========
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 All-Gefahren-(Sach- und BU-)Versicherung AIG Europe F11171.3914008 JIA
- -----------------------------------------------------------------------------------------------
2 Gebaude-Feuerversicherung Sun Alliance F42.92.099969-A uber
HON
- -----------------------------------------------------------------------------------------------
3 Industrie-(Betriebs- und Produkt-)Haftpflicht Zurich 3/H/7.850.796 J&H
- -----------------------------------------------------------------------------------------------
4 Umwelt-Industrie-Haftpflicht Zurich 3/H/7.850.797 J&H
- -----------------------------------------------------------------------------------------------
5 Auslandsreise-Krankenversicherung Europa 7889 JIA
- -----------------------------------------------------------------------------------------------
6 Gruppen-Unfall INA 53GE001880 JIA
- -----------------------------------------------------------------------------------------------
7 Reisegepack Victoria 74380/1/111 JIA
- -----------------------------------------------------------------------------------------------
8 Sportboot-Kasko Victoria 129390-111-953 JIA
- -----------------------------------------------------------------------------------------------
9 Kraftfahrzeuge HDI diverse JIA
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Versicherung Versicherer Versicharungs- von / bis Deckungs- Pramie DM
dauer summe incl. Vers.-Steuer
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
All-Gefahren-(Sach- und BU-) AIG Europe jahrweise 01.10.-30.09. 50.600.000,- 51.069,00
Versicherung
- ------------------------------------------------------------------------------------------------------------------------------------
Gebaude-Feuerversicherung Sun Alliance jahrweise 01.07.-01.07. 19.150.000,- 14.968,90
- ------------------------------------------------------------------------------------------------------------------------------------
Industrie-(Betriebs- und Zurich International jahrweise 01.04.-31.03. 1.372.307,- 20.079,50
Produkt-)Haftpflicht
- ------------------------------------------------------------------------------------------------------------------------------------
Umwelt-Industrie- Zurich International jahrweise 01.04.-31.04. 1.372.307,- 1.894,10
Haftpflichtversicherung
- ------------------------------------------------------------------------------------------------------------------------------------
Auslandsrelse- EUROPA jahrweise 01.01.-31.12. gem. ss. 4+5 AVB 450,00
Krankenversicherung
- ------------------------------------------------------------------------------------------------------------------------------------
Gruppen-Unfaltversicherung CIGNA jahrweise 01.01.-31.12. Gr.I 100/280 3.841,10
Gr.II+IV 50/100
Gr.V 100/200
Gr.III+VI 25/50
- ------------------------------------------------------------------------------------------------------------------------------------
Reisegepack-Versicherung VICTORIA jahrweise 01.01.-31.12. 7.500,- / 10.000,- 1.466,30
- ------------------------------------------------------------------------------------------------------------------------------------
Sportboot-Kasko VICTORIA jahrweise 31.12.-31.12. 290.000,- 3.001,50
- ------------------------------------------------------------------------------------------------------------------------------------
Kfz: KI - DC 409 HDI jahrweise 01.01.-01.01. Haftpflicht: 1.524,90 11.337,40
- -------------------------------- ----------
Kfz: KI - AS 554 7,5 Mio pro Person 997,60
- -------------------------------- ----------
Kfz: KI - AS 908 779,60
- -------------------------------- ----------
Kfz: KI - AS 885 Kasko: 1.416,10
- -------------------------------- ----------
Kfz: KI - DA 605 VK mit 1.000,-SB 990,40
- -------------------------------- ----------
Kfz: KI - AS 760 TK mit 300,-SB 1.552,50
- -------------------------------- ----------
Kfz: KI - AS 403 1.038,50
- -------------------------------- ----------
Kfz: KI - AS 105 990,10
- -------------------------------- ----------
Kfz: KI - AS 121 2.047,70
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EUROPA [LOGO]
VERSICHERUNGEN
Krankenversicherung AG
- --------------------------------------------------------------------------------
Gurppenversicherungsvertrag
fur die Krankheitskostenversicherung im Ausland
nach dem Tarif GK1
Vertrags-Nr.
Zwischen HONEYWELL Regelsysteme GmbH
KaiserleistraBe 39
6050 Offenbach/Main
im folgenden "Versicherungsnehmer" genannt
und der
EUROPA Krankenversicherung AG
PiusstraBe 137,5000 Koln 41
im folgenden "EUROPA Kranken" genannt
wird folgender Versicherungsvertrag geschlossen:
<PAGE>
SCHEDULE 4.26 - AFFILIATE TRANSACTIONS
---------------------------------------
ELAC
- ----
o Manufacturing Licence and Technical Assistance Agreememtn with Ocean Systems
for Dipping Sonar Repair
o Tax organic unit with AS Deutchland GmbH
o Profit & Loss carry over with AS Deutchland GmbH
o Cash pool with AS Deutchland GmbH
o Long term agreement for cable repair with AS Aerospace GmbH
OCEAN SYSTEMS
See Schedule 1.3(j).
OS manufactures hybrids for other AlliedSignal operations.
<PAGE>
SCHEDULE 6.2(a) - Retention Agreements
--------------------------------------
See Schedule 4.11.
<PAGE>
SCHEDULE 6.5(b) - Actuarial Methods and Assumptions
---------------------------------------------------
See following pages.
<PAGE>
Schedule 6.5(b)
Actuarial Methods and Assumptions
================================================================================
Actuarial Valuation for Accounting Purposes
Actuarial Cost Method
Projected Unit Credit Cost Method*.
Market-Related Value of Assets
Market-related value equals fair market value adjusted for investment earnings
and losses. Such investment experience is reflected in market-related value as
follows:
o Actual earnings on fixed-income investments are reflected immediately;
o Expected earnings on other assets are reflected immediately;
o Actual earnings on other assets less expected earnings on other assets are
reflected ratably over three years--one-third in the year folowing the
gain or loss, two-thirds in the second year following, and 100% in all
subsequent years.
The Company reported that fixed income investments represented 28.3% and 29.3%
of total trust assets as of December 31, 1996 and December 31, 1995,
respectively. The Company also reported 1996 rates of return of 8.2% for the
fixed income segment and 16.6% for the total trust. Based on this information,a
1996 rate of return of 19.9% was calculated for the other assets of the trust.
Actuarial Assumptions
(1) Discount Rate: 7.00% compounded annually.
(2) Expected Long-Term Rate of Return on Assets: 10% per year.
(3) Compensation Increases**: Present compensation is assumed to increase 5%
per year to retirement.
(4) Retirement: For Salaried plan, an average retirement age of approximately
61, with incidence at specific ages as follows:
=======================================================
Age Probability Age Probability
=======================================================
55 5% 61 20%
56 6% 62 30%
57 7% 63 20%
58 8% 64 30%
59 9% 65 100%
60 10%
*Standard Unit Credit for non-pay-related plan.
**Pay-related plan only.
<PAGE>
Schedule 6.5(b)
Actuarial Methods and Assumptions (continued)
================================================================================
For Bendix Hourly: The assumed retirement age is based upon the early
retirement provisions of the particular location according to the
following:
(a) For units providing "30-and-out" retirements, the retirement age is
the later of age 56 or the completion of 30 years of service but not
later than age 62 with ten years of service;
(b) Age 64 for units providing unreduced benefits at age 62;
(c) Otherwise, age 65.
All early retirements are assumed to be voluntary. No involuntary
retirements or plant shutdowns are assumed.
(5) Mortality:
Nondisabled Lives 1971 Group Annuity
Disabled Lives 1977 Railroad Board
(6) Withdrawal:
(a) Salaried Plan: Table B-1 (See Page 3).
(b) Hourly Plan: Table B-2 (See Page 3).
(7) Disability: Table B-3 (See Page 3).
(8) Social Security: Future wage indices are based on an increase of 4.5% per
year. Past wages are estimated on the basis of Social Security Index
Factors. Future cost of living increases are assumed to be 4% per year.
(9) Marital Status: With regard to any preretirement surviving spouse annuity
provisions of the plan, the assumption is made that the male of the couple
is three years older than the female and that 85% of male participants and
65% of female participants are married.
(10) IRC Section 415 Limits: Reflect the single and dual plan limits based on
estimated, defined contribution account balances, and percentage of
employees electing joint and survivor payment forms. This limit is
projected at an assumed 4% annual cost-of-living incrase rate.
(11) IRC Section 401(a)(17) Pay Limit: $160,000 for 1997. This limit is
projected at an assumed 4% annual cost-of-living increase rate.
<PAGE>
Schedule 6.5(b)
Actuarial Methods and Assumptions (continued)
================================================================================
Table B-1
Probability of Withdrawal
==========================
Age Rate
==========================
25 12.0%
35 7.5%
45 5.0%
55 0.0%
60 0.0%
Table B-2
Probability of Withdrawal
==============================================
Age Male Female
==============================================
25 .099 .149
35 .048 .069
45 .016 .028
55 .000 .000
60 .000 .000
Table B-3
Probability of Disability
===============================================
Percentage of
Participants at Indicated
Age Assumed to Become
Disabled in the Next Year
---------------------------
Age Male Female
===============================================
25 .0855% .0490%
35 .1506% .1340%
45 .3305% .2975%
55 .9410% .7615%
60 1.9600% .9300%
All participants assumed to become disabled are assumed to become eligible for
social security disability benefits and, if applicable, for long-term disability
benefits.
<PAGE>
SCHEDULE 7.15
LETTERS OF CREDIT
-----------------
RETAINED L/Cs (ALLIEDSIGNAL to remain as account party):
--------------------------------------------------------
<TABLE>
<CAPTION>
Bank Ref. Beneficiary Bank Amount* Issue Date Expiry Date
- --------- ----------- ---- ------- ---------- -----------
<S> <C> <C> <C> <C> <C>
PG634585/ DPA-Korea Chase $87,400 6/19/96 10/30/98
P259525
P 386605 DPA-Korea Chase $1,485,000 6/27/97 7/31/01
P 386610* DPA-Korea Chase $2,970,000* 6/27/97 12/31/00
T 388424 Min. Def. Spain CIBC $818.00 11/12/97 6/30/99
94-NED- MacDonald CIBC Cdn$7,947,595 1/25/94 7/20/99
116441 Dettwiler & Associates
94-NED- MacDonald CIBC Cdn$500,000 1/25/94 7/20/00
116442 Dettwiler & Associates
Intercompany Wahnbachtalsperrenverband DM 3,067,150
(re ELAC
Watertech.)
</TABLE>
Any other L/C or similar obligation not listed below as an Assumed L/C shall be
a Retained L/C.
Assumed L/Cs (purchaser to become account party):
-------------------------------------------------
Bank Ref. Beneficiary Bank Amount* Issue Date Expiry Date
- --------- ----------- ---- ------- ---------- -----------
P 386610* DPA-Korea Chase $8,910,000* 6/27/97 12/31/00
P 348778 SSM/Turkey Chase $3,107,490.92 12/22/97 3/23/01
P 348779 SSM/Turkey Chase $932,247.28 12/22/97 3/23/04
P 348780 SSM/Turkey Chase $11,433,827.00 12/23/97 3/23/01
The ELAC Guarantees and Bank Bonds set forth in Schedule 4.7 shall be Assumed
L/Cs.
* Note: L/C P-386610 is a retained L/C as to $2,970,000
and an Assumed L/C as to the remainder of its face amount.
<PAGE>
SCHEDULE 4.4 - TITLE
The items set forth on Schedule B to the title report prepared by Chicago
Title Insurance Company dated October 2, 1997, order no. 007135632 X52, which is
hereby incorporated by reference.
<PAGE>
SCHEDULE 4.5
No items to schedule.
<PAGE>
SCHEDULE 4.6 - ENVIRONMENTAL DISCLOSURE
The following documents, which have been delivered to Purchaser, are
incorporated herein by reference:
1. Environmental, Health and Safety Disclosure Document
AlliedSignal Ocean Systems, Sylmar, CA
Prepared for AlliedSignal Electronic Systems
June 30 to July 2, 1997
2. Phase I Environmental Site Assessment
15825 Roxford Street, Sylmar, CA
July 1997
OCEAN SYSTEMS PERMITS
City of Los Angeles, Department of Building and Safety, Certificates of
Occupancy
Permit No.'s: LA76447/60 VN00435/73 VN50140/76
LA76448/60 LA64337/73 VN39348/76
VN92138/66 LA77430/73 VN89736/79
VN98941/66 VN16035/74 VN93597/79
LA72477/68 LA16583/75 VN40476/82
LA72479/68 LA16584/75 LA20231/85
VN87685/72 VN44208/76 VN98937/86
VN83102/72 VN41832/76 VN15222/62
VN81765/72 VN43697/76 VN13124-62
VN968742/73 VN39986/76
City of Los Angeles, Department of Building and Safety Water Conservation
Program
Certificate of Compliance No. 310437
City of Los Angeles Fire Permit
Permit No.'s 777456-33/F/701
777456-33/F/828
City of Los Angeles Office of the City Clerk, Tax and Permit Division
Hazardous Material Certificate Renewal No. 587720-23/F/803
City of Los Angeles Certificates of Disclosure of Hazardous Substances
Account No. 587720-23/F/206
City of Los Angeles, Department of Building and Safety and Division of
Occupational
<PAGE>
Safety and Health of the State of California, Certificates of Inspection and
Permit to Operate Steam Boiler or Pressure Vessel
Permit No.'s AC09411
AC09412
AC4018
AC4019
AC4020
City of Los Angeles, Department of Public Works and Bureau of Sanitation,
Industrial Wastewater Permit
User No. IU000068
Permit No. W482195
City of Los Angeles, Department of Public Works and Bureau of Sanitation,
Industrial Waste Permit No. 482195
County of Los Angeles, Hazardous Waste License No. 103 453285
County of Los Angeles, Public Health License, SIC# 3699 13
South Coast Air Quality Management District
Permit No.'s M35231 Spray Booth
M09716 Spray Booth
P19724 Bake Oven
D29049 Surface Prep. Tank
Application No.'s 327865 Spray Booth/UV Cure
327866 Degreaser
<PAGE>
Schedule 4.7 - Material Changes
No items to schedule.
<PAGE>
Schedule 4.9 - Compliance With Law
No items to schedule.
<PAGE>
Schedule 4.10 - Consents
Certain of the permits and licenses referenced in Schedule 4.6 may require
action by the Purchaser in the form of notification, reapplication or otherwise,
upon a change in ownership.
<PAGE>
4.12 Permits and Licenses
See schedule 4.6.
<PAGE>
Schedule 4.14 - Insurance
See following pages.
<PAGE>
================================================================================
A[LOGO]lliedSignal [Illegible] Risk
GLOBAL PROPERTY DAMAGE & Management
BUSINESS INTERRUPTION Manual
- --------------------------------------------------------------------------------
Supersedes: Date: Page: 1
10/95 10/98
- --------------------------------------------------------------------------------
GLOBAL PROPERTY DAMAGE AND BUSINESS INTERRUPTION
Insurance Company
The insurance company is American International Underwriters for Allied's
International locations. In North America the primary insurers are Reliance,
Houston Casualty, National Union and Protection Mutual. These same insurers,
plus other U.S. & European insurers participate both in the primary layer, as
well as the excess layers.
Coverage
This is a blanket policy * covering the Corporation against Loss or damage, on a
replacement cost basis **, to real and personal property, or the property of
others for which the Corporation is responsible at locations worldwide
(including while in transit). The policy insures against all risk of direct
physical loss or damage from any external cause, including boiler and machinery
breakdown and is subject to normal exclusions such as wear and tear, gradual
deterioration, extremes of temperature, war, nuclear, and other exclusions
commonly considered uninsurable or the subject off other insurance such as
employee dishonesty.
The Policy covers Boiler and Machinery up to the full limit per occurrence. This
policy also provides business interruption insurance and contingent business
interruption insurance which is designed to pay for loss of pro fits and
continuing costs which result from damage to insured property and/or to those
of a supplier or receiver by an insured peril.
The policy has been extended to cover damage to electronic data processing
equipment; and for costs of reproducing media from duplicates or originals only.
Some limited amount of full reproduction expenses is provided. Included therein
is business interruption and/or extra expense coverage which provide for
reimbursement for loss of income and/or the assurance of funds to meet the
additional expenses incurred in returning to normal operations following an
Insured incident.
The policy automatically (subject to reporting to underwriters in a certain time
frame) coven new and acquired property and the interest of any company or
corporation which during the period of the policy is merged with, becomes a
subsidiary of, or becomes controlled by Allied or any subsidiary of Allied.
*This policy covers all Allied Signal's locations on a blanket basis (except
certain EMS locations, which are covered (or $1.2 Billion each occurrence)
which means the entire amount of insurance can be applied to a single location.
** In the event of loss or damage to real and/or personal property which is not
repaired, rebuilt or replaced, such property will be valued at Actual Cash
Value.
Policy Period
1 of 6
<PAGE>
10/1/96 - 10/1/97 RENEWED 10/1/97 - 10/1/98
Limits of Liability
Blanket limit combined on Real and Personal Property Insurance and Business
Interruption.
$350,000,000 for earthquake per occurrence and in the aggregate except Critical
Zone earthquake where it is $200 million per occurrence and in the aggregate for
ISO Critical Zone 1 (areas of the states include portions of California, Nevada,
Alaska and the Country of Canada) and $150 million per occurrence and in the
aggregate for one other Zone I equivalent International locations. In Japan
Zones 4, 5 or 6 there is a 60% indemnity provision. For Flood the per occurrence
and annual aggregate is $350,000,000, except in The Netherlands where the
occurrence/aggregate limit is $25,000,000.
$150,000,000 per occurrence for the following:
a) Extra Expense
b) Contingent Extra Expense
c) Rental Insurance
d) Transit
e) Contingent Business Interruption
f) Fine Arts
g) Valuable Papers and Records (including reproduction cost of media)
h) Leasehold Interest
i) Off Premises Power - Property Damage and Time Element - excluding losses
resulting from flood and earthquake.
j) Accounts Receivable
k) Debris Removal (except windblown debris)
1) Vessel impact damage to piers, wharves and docks
m) Expediting Expense
n) Installment Sales
o) Miscellaneous Unnamed Locations
p) Newly acquired property subject to reporting within 180 day of acquisition.
q) Precious metals
r) Fire Department/Brigade Charges
s) Electronic Data Processing Equipment
t) Property in the course of construction (including testing)
Deductible
All claims for damage, loss of income, profit or expense arising out of any one
occurrence shall be adjusted as one loss and from the amount of such adjusted
loss, there shall be deducted the sum of $100,000 combined any one occurrence at
all locations, anywhere in the world except $250,000 combined any one occurrence
at all locations In the U.S., its territories and possessions, Puerto Rico and
Canada.
Earthquake Deductibles*
$10,000,000 for each loss Insured against the peril of earthquake involving all
locations situated within designated critical ISO Zone No. 1 (areas of the
states include portions of California, Nevada, Alaska and the Country of Canada)
Deductibles:
2 of 6
<PAGE>
1. $5,000,000 for each loss at the following locations:
Frankford
Hopewell
Orange
2. $2,500,000 for each loss at the following locations:
Chesterfield
Columbia
Moncure
3. $2,500,000 for each loss at the following locations:
Detroit (Tar Plant)
Ironton (Tar Plant)
Pottsville, PA
Longlaviile, FR
Riedel-de-Haen, German
Rudolstadt, Germany
4. $100,000 for each loss involving property in transit.
*One carrier (Protection Mutual) has an earthquake deductible of 5% of the
maximum of $500,000 any one occurrence in Japan or Mexico and a deductible of 5%
to a maximum of $1,500,000 any one occurrence in Taiwan.
5. a. 2% for each Property Damage loss insured against by the peril of
windstorm in the U.S.A. at each location within designated areas (as
defined in Windstorm Endorsement Designated Areas), the amount to be
deducted shall be stated percentage of the one hundred percent
reported property damage values for each and every location (see
Attachment A).
b. 5 days for each Time Element loss insured against by the peril of windstorm
in the U.S.A. at each location within the designated areas (as
defined in Windstorm Endorsement Designated Areas), the amount to be
deducted shall be the dollar equivalent of the stated number of days
times the daily plant value - computed by dividing the reported
annual time element values by the actual number of working days.
Notwithstanding 5 a and b above, the minimum amount to be deducted from the
total loss arising out of one windstorm occurrence shall in no event be less
than $250,000, while the maximum amount to be deducted shall in no event be
greater than $5,000,000.
Territory
Worldwide except Afghanistan, Albania, Angola, Bosnia-Herzegovina, Croatia,
Cuba, El Salvador, Iran, Iraq, Kampuchea (Cambodia), Laos, Lebanon, Libya,
Macedonia, North Korea, Outer Mongolia, Serbia, Syria, Tibet and Montenegro.
Those with a $10,000,000 per occurrence limit include Armenia, Azerbaijan,
Bulgaria, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldava, Romania,
Tajikistan, Tibet, Turkmenistan, Uzbekistan and Russia.
Basis of Premium Charge
3 of 6
<PAGE>
Values for property damage and business interruption are completed and submitted
to the Risk Management Department annually. Premium is determined on the basis
of trended building, machinery and equipment replacement values, together with
inventory and estimated business interruption values as of December 31 each
year. In addition, loss experience is considered in expensing the cost of the
Insurance based upon each business area's proportion of total values.
Notice of Loss
The proper reporting of claims is important as it effects:
o The speed of loss settlement
o The prejudicing of your rights against the insurance company caused
by reporting delays, thereby violating the insurance policy
conditions.
o The proper adjusting of the claim amount.
For all losses that may result in an insurable claim you should notify the
Corporate Risk Management Department and if the loss occurs outside North
America, you should immediately notify local insurance brook when:
o The claims could exceed $10,000
o There is a possibility that the claim will be denied by the local
insurance company
o There is a dispute as to the settlement amount of the claim
All losses should be reported to the local broker and the Corporate Risk
Manager. Those claims insured by the Corporate Ocean Maine Cargo program should
be reported in accordance with the procedures set forth by the Corporate Risk
Management Department and reported to the Corporate ocean marine cargo broker in
New York.
The claims specialists are:
AlliedSignal Inc. Mr. Tim Cummings
Morristown, NJ Office Manager Risk Management Services
Telephone: (972) 455-4527
AON NYO Mr. John Rhodes
Property/Business Interruption Claims Vice President
Telephone: (212) 441-2298
AON NYO Mr. Dante Petrizzo
Marine Claims Vice President
Telephone: (212) 441-1340
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WINDSTORM ENDORSEMENT DESIGNATED AREAS
4 of 6
<PAGE>
ALABAMA: Counties of Baldwin and Mobile
FLORIDA: Seacoast Zone 1
Seacoast Zone 2
Seacoast Zone 3
All Other Counties (Inland)
AlliedSignal: Fort Lauderdale, Lynn Haven
GEORGIA: Counties in Brantley, Bryan, Camden, Charlton, Chatham, Effingham,
Glynn, Liberty, Long, McIntosh, Pierce and Wayne.
HAWAII: Entire State
Louisiana: Parishes of Acadia, Ascension, Assumption, Calcasieu, Cameron,
East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson
Davis, Lafayette, Lafourche, Livingston, Orleans, Plaquemines,
Pointe Coupee, St. Bernard, St Charles, St. Helena, St. James, St.
John the Baptist, St. Martin, St Mary, St Tammany, Tangipanos,
Terrebonne, Vermilion, Washington, West Baron Rouge and West
Feliciana.
AlliedSignal: Geismar, Darrow - Ascension
Baton Rouge - W and E Baton Rouge
MISSISSIPPI: Counties of George, Hancock, Harrison, Jackson, Pearl River and
Stone.
N. CAROLINA: Counties of Besufort, Bertie, Bladen, Brunswick, Camden, Carteret,
Chowan, Columbus, Craven, Currituck, Dare, Duplin, Gates, Greene;
Hartford, Hude, Jones, Lenior, Martin, New Hanover, Onslow,
Pamlico, Pasquotank, Bender, Perquimans, Pitt, Tyrell, and
Washington.
PUERTO RICO: Entire Island including all Caribbean Islands,
S. CAROLINA: Counties Beaufort, Berkeley, Charleston, Colleton, Dorchester,
Georgetown, Hampton, Horry, Jasper and Williamsburg.
AlliedSignal: Conway, Charleston
TEXAS: Counties of Aransas, Bea, Brazoria, Brooks, Calhoun, Cameron,
Chambers, Port fluid, Galveston, Goliad, Hardin, Harris, Hidalgo,
Jackson, Jefferson, Jim Wells, Kenedy, Kleberg, Liberty, live Oak,
Matagorda, Nueces, Orange, Refugio, San Patricio, Victoria,
Wharton and Willacy.
AlliedSignal Orange, Brownsville
5 of 6
<PAGE>
VIRGINIA: Counties of Accomao, Charles City, Chesapeake, Gloucester, Isle of
Wright, James City, Lancaster, Mathews, Middlesex, Nansemond, New
Kent, Norfolk, Northampton, Northumberland, Prince George,
Princess Ann, Southampton, Surry, Sussex, Virginia Beach, Warwich
and York.
AlliedSignal: Hopewell - Chesterfield
County
Not in designated
areas
Petersburg - Grant County
6 of 6
<PAGE>
EXHIBIT VIII.2
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT dated as of March 4, 1998 is entered into by
and between L-3 COMMUNICATIONS CORPORATION, a Delaware corporation
("Assignee"), and FAP TRUST, a Connecticut trust ("Assignor").
WITNESSETH
WHEREAS, Assignor is a party to a Stock Purchase Agreement dated as of
February 9, 1998 (the "Stock Purchase Agreement") pursuant to which Seller
intends to acquire all of the outstanding capital stock of Ilex Systems, Inc.
(the "Company"); and
WHEREAS, pursuant to the Stock Purchase Agreement, Assignor, the Company,
all of the stockholders of the Company (the "Sellers") and The First National
Bank of Chicago, a national banking association ("Escrow Agent"), have entered
into that certain Escrow Agreement dated as of February __, 1998 (the "Escrow
Agreement") for the purpose of establishing a fund to satisfy certain
indemnification obligations of the Sellers that may arise under the Stock
Purchase Agreement and to facilitate the payment of the cash purchase price
adjustment contemplated thereby; and
WHEREAS, Assignor and Assignee have entered into an Asset Purchase
Agreement dated as of February 10, 1998 (the "Asset Purchase Agreement")
pursuant to which Assignee will acquire substantially all of the assets and
assume substantially all of the liabilities of the Company; and
WHEREAS, in connection with the Asset Purchase Agreement and the
transactions contemplated thereby, Assignor desires to assign to Assignee its
entire right, title and interest in, under and to the Escrow Agreement, and
Assignee desires to take such assignment from Assignor, all upon the terms and
conditions set forth below:
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. Assignment of the Escrow Agreement. Assignor hereby assigns to
Assignee all of Assignor's right, title and interest in, under and to the
Escrow Agreement, and Assignee hereby assumes all of Assignor's duties and
obligations under the Escrow Agreement.
2. Assertion of Claims Under the Escrow Agreement. Assignor and Assignee
understand that any and all claims which Assignee may have under the Escrow
Agreement will in most instances, but not in all, be based on facts and
circumstances that constitute both breaches of certain representations,
warranties and covenants of Assignor contained in the Asset Purchase Agreement
and breaches of similar representations, warranties and
<PAGE>
covenants of the Company and the Sellers contained in the Stock Purchase
Agreement. Accordingly, Assignor and Assignee agree as follows:
(i) For purposes of this Section 2, capitalized terms used but not
otherwise defined herein shall have the respective meanings given to them
in the Escrow Agreement.
(ii) Assignor shall promptly provide written notice to Assignee
upon its becoming aware of any facts or circumstances that give rise to a
breach of representation, warranty or covenant under the Stock Purchase
Agreement. Assignee shall promptly provide written notice to Assignor
upon its becoming aware of any facts or circumstances that give rise to a
breach of representation, warranty or covenant under the Asset Purchase
Agreement.
(iii) Assignee agrees that it will promptly provide Escrow Agent
with a Notice of Claim in all instances where Assignee's claims pursuant
to the Asset Purchase Agreement may also be asserted by Assignor pursuant
to the Stock Purchase Agreement (a "Matching Claim"). The following
procedure shall be followed by Assignor and Assignee in connection with
each Matching Claim:
(a) Upon submission by Assignee to Escrow Agent of a Notice
of Claim with respect to any Matching Claim, Assignee shall direct
Escrow Agent in writing to make any disbursements required in
respect thereof directly to Assignee; and
(b) Upon the determination of the amount, if any, payable to
Assignee with respect to such Matching Claim, whether by
negotiation or litigation, and disbursement by Escrow Agent to
Assignee of such amount out of the Escrow Fund in respect of any
Matching Claim, Assignee agrees that such Matching Claim shall be
deemed fully paid and satisfied and neither Assignor nor Escrow
Agent shall have any further liability to Assignee with respect to
such Matching Claim, nor shall Assignee have any right to seek any
additional payments out of the Escrow Fund pursuant to the Asset
Purchase Agreement with respect to such Matching Claim.
(iv) In consideration of the mutual promises contained in this
Agreement, Assignee agrees that it will, if known, provide Escrow Agent
with a Notice of Claim in respect of any and all claims that may be
asserted by Assignor pursuant to the Stock Purchase Agreement but may not
be asserted by Assignee pursuant to the Asset Purchase Agreement (an
"Assignor Claim"). The following procedure shall be followed by Assignor
and Assignee in connection with each Assignor Claim:
(a) Upon submission by Assignee to Escrow Agent of a Notice
of Claim with respect to any Assignor Claim, Assignee shall direct
Escrow Agent in writing to make any disbursements required in
respect thereof directly to Assignee; and
-2-
<PAGE>
(b) Upon determination of the amount, if any, payable to
Assignee with respect to such Assignor Claim, whether by
negotiation or litigation, and disbursement by Escrow Agent to
Assignee of such amount out of the Escrow Fund in respect of any
Assignor Claim, Assignee shall within two business days thereafter
remit to Assignor by certified check or wire transfer to an account
designated by Assignor in writing an amount equal to the amounts
disbursed to Assignee with respect to such Assignor Claim, and
Assignor agrees that its claim shall be deemed fully paid and
satisfied upon receipt of such certified check or wire transfer and
that neither Assignee nor Escrow Agent shall have any further
liability to Assignor with respect to that claim, nor shall
Assignor have any right to seek any additional payments out of the
Escrow Fund pursuant to the Stock Purchase Agreement with respect
to that claim. Assignee shall not in any way be responsible to
Assignor with respect to any such claim except for the requirement
to deliver to Assignor amounts disbursed to Assignee with respect
to such claim from the Escrow Fund.
(v) Assignee agrees to pursue any Matching Claim only under the
claims procedures set forth in this Agreement and the Escrow Agreement.
(vi) Assignee shall promptly deliver to Assignor copies of any and
all Award Notices, Notices of Claims, Notices of Releases, Objections and
Withdrawal Notices received by it pursuant to Section 5 of the Escrow
Agreement.
(vii) Assignor and Assignee shall cooperate with each other
regarding the submission of any and all Notices of Claims to Escrow Agent
in connection with the Escrow Agreement, and each of them agree to take
any and all such reasonable actions that either of them deem necessary or
appropriate to otherwise effectuate the purpose and intent of this
Section 2.
3. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
4. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
5. Arbitration. Any dispute under this Agreement which is not settled by
mutual agreement among the parties hereto, shall be finally settled by binding
arbitration in New York, New York, conducted by and in accordance with the
rules then in effect of the Judicial Arbitration and Mediation Service. Each
party shall bear its own costs and attorneys' and witness' fees. The prevailing
party in any arbitration, as determined by the arbitration panel, shall be
entitled to an award against the other party in the amount of the prevailing
party's costs and reasonable attorneys' fees. In making any such award, the
arbitration panel shall take into consideration the outcome of the proceeding
and the reasonableness of the conduct of each such party in connection with the
dispute, in light of
-3-
<PAGE>
the facts known to such party at the time such party engaged in such conduct.
The arbitrator shall not have authority to award punitive damages hereunder.
6. Entire Agreement. This Agreement and the Asset Purchase Agreement
constitute the entire agreement between Assignor and Assignee with respect to
the subject matter hereof. This Agreement cancels and supersedes all prior
agreements, understandings and negotiations between the parties to this
Agreement with respect to the subject matter of this Agreement. This Agreement
may only be varied or modified by a written document executed by each of the
parties hereto.
7. Assignment. The rights and benefits of the parties under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of such parties. Neither this Agreement nor any rights
or benefits hereunder may be assigned or transferred by any party hereto
without the prior written consent of all other parties hereto.
8. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to Assignee:
L-3 Communications Corporation
600 Third Avenue
New York, NY 10016
Telecopier Number: (212) 805-5494
Attention: Christopher C. Cambria
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier Number: (212) 455-2502
Attention: William E. Curbow
And if to Assignor:
FAP Trust
c/o First Union National Bank
10 State House Square
Hartford, CT 06103-3698
Telecopier Number: (860) 247-1356
Attention: W. Jeffrey Kramer
-4-
<PAGE>
With copies to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Telecopier Number: (415) 983-1200
Attention: Graham Taylor
and
Bingham Dana LLP
100 Pearl Street
Hartford, CT 06103
Telecopier Number: (860) 527-5188
Attention: James G. Scantling
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
party notice in the manner herein set forth.
9. Further Assurances. Each of the parties to this Agreement shall
execute such other documents and instruments and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof.
10. No Recourse. It is expressly understood and agreed that this
Agreement is executed and delivered on behalf of Assignor by First Union
National Bank ("First Union"), not in its individual capacity but solely as
Trustee under the trust agreement under which Assignor is organized, in the
exercise of the powers and authority conferred and vested in it as the Trustee
thereunder, and each of the representations, warranties, undertakings and
agreements herein made on the part of Assignor is made and intended not as a
personal representation, warranty, undertaking or agreement by First Union but
is made and intended for the purpose of binding only the trust estate created
by the trust agreement under which Assignor is organized (the "Trust Estate"),
and all persons having any claim against First Union or Assignor by reason of
the transactions contemplated by this Agreement shall for payment or
satisfaction thereof not seek recourse against First Union except in its
capacity as trustee and then only to the extent of the Trust Estate.
-5-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNEE
L-3 COMMUNICATIONS
CORPORATION
By: /s/ Christopher Cambria
-------------------------------
Name: Christopher Cambria
Title: Vice President
ASSIGNOR:
FAP TRUST
By: FIRST UNION NATIONAL BANK, not
in its individual capacity but
solely as trustee
By:
-------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
Consented to by:
THE FIRST NATIONAL BANK OF
CHICAGO as Escrow Agent under the
Escrow Agreement
By:
-------------------------------
Name:
Title:
6
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNEE
L-3 COMMUNICATIONS
CORPORATION
By:
-------------------------------
Name:
Title:
ASSIGNOR:
FAP TRUST
By: FIRST UNION NATIONAL BANK, not
in its individual capacity but
solely as trustee
By: /s/ W. Jeffrey Kramer
-------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
Consented to by:
THE FIRST NATIONAL BANK OF
CHICAGO as Escrow Agent under the
Escrow Agreement
By:
-------------------------------
Name:
Title:
6
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNEE
L-3 COMMUNICATIONS
CORPORATION
By:
-------------------------------
Name:
Title:
ASSIGNOR:
FAP TRUST
By: FIRST UNION NATIONAL BANK, not
in its individual capacity but
solely as trustee
By:
-------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
Consented to by:
THE FIRST NATIONAL BANK OF
CHICAGO as Escrow Agent under the
Escrow Agreement
By: /s/ John R. Prenolville
-------------------------------
Name: John R. Prenolville
Title: Vice President
6
<PAGE>
EXHIBIT VIII.7
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT dated as of March 4, 1998 is entered into by
and between L-3 COMMUNICATIONS CORPORATION a Delaware corporation, ("Assignee")
and FAP TRUST, a Connecticut trust ("Assignor").
WITNESSETH
WHEREAS, Assignor is a party to a Stock Purchase Agreement dated as of
February 9, 1998 (the "Stock Purchase Agreement") pursuant to which Seller
intends to acquire all of the outstanding capital stock of Ilex Systems, Inc.
(the "Company"); and
WHEREAS, pursuant to the Stock Purchase Agreement, Assignor and Joseph
Lopez ("Seller") have entered into that certain Confidentiality and
Non-Competition Agreement dated as of February __, 1998 (the "Non-Competition
Agreement"); and
WHEREAS, Assignor and Assignee have entered into an Asset Purchase
Agreement dated as of February 10, 1998 (the "Asset Purchase Agreement")
pursuant to which Assignee will acquire substantially all of the assets and
assume substantially all of the liabilities of the Company; and
WHEREAS, in connection with the Asset Purchase Agreement and the
transactions contemplated thereby, Assignor desires to assign to Assignee its
entire right, title and interest in, under and to the Non-Competition
Agreement, and Assignee desires to take such assignment from Assignor, all upon
the terms and conditions set forth below:
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. Assignment of the Non-Competition Agreement. Pursuant to and in
accordance with terms of Section 8 of the Non-Competition Agreement, Assignor
hereby assigns to Assignee all of Assignor's right, title and interest in,
under and to the Non-Competition Agreement, and Assignee hereby assumes all of
Assignor's duties and obligations under the Non-Competition Agreement.
2. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
3. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
4. Entire Agreement. This Agreement and the Asset Purchase Agreement
constitute the entire agreement between Assignor and Assignee with respect to
the subject matter hereof. This Agreement cancels and supersedes all prior
agreements, understandings and negotiations between the parties to this
Agreement with respect to the subject matter of this Agreement. This Agreement
may only be varied or modified by a written document executed by each of the
parties hereto.
5. Assignment. The rights and benefits of the parties under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of such parties. Neither this Agreement nor any rights
or benefits hereunder may be assigned or transferred by any party hereto
without the prior written consent of all other parties hereto.
6. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to Assignee:
L-3 Communications Corporation
600 Third Avenue
New York, NY 10016
Telecopier Number: (212) 805-5494
Attention: Christopher C. Cambria
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier Number: (212) 455-2502
Attention: William E. Curbow
And if to Assignor:
FAP Trust
c/o First Union National Bank
10 State House Square
Hartford, CT 06103-3698
Telecopier Number: (860) 247-1356
Attention: W. Jeffrey Kramer
-2-
<PAGE>
With copies to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Telecopier Number: (415) 983-1200
Attention: Graham Taylor
and
Bingham Dana LLP
100 Pearl Street
Hartford, CT 06103
Telecopier Number: (860) 527-5188
Attention: James G. Scantling
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
party notice in the manner herein set forth.
7. Further Assurances. Each of the parties to this Agreement shall
execute such other documents and instruments and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof.
8. No Recourse. It is expressly understood and agreed that this
Agreement is executed and delivered on behalf of Assignor by First Union
National Bank ("First Union"), not in its individual capacity but solely as
Trustee under the trust agreement under which Assignor is organized, in the
exercise of the powers and authority conferred and vested in it as the Trustee
thereunder, and each of the representations, warranties, undertakings and
agreements herein made on the part of Assignor is made and intended not as a
personal representation, warranty, undertaking or agreement by First Union but
is made and intended for the purpose of binding only the trust estate created
by the trust agreement under which Assignor is organized (the "Trust Estate"),
and all persons having any claim against First Union or Assignor by reason of
the transactions contemplated by this Agreement shall for payment or
satisfaction thereof not seek recourse against First Union except in its
capacity as trustee and then only to the extent of the Trust Estate.
-3-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNEE
L-3 COMMUNICATIONS
CORPORATION
By: /s/ Christopher Cambria
-------------------------------
Name: Christopher Cambria
Title: Vice President
ASSIGNOR:
FAP TRUST
By: FIRST UNION NATIONAL BANK, not
in its individual capacity but
solely as trustee
By:
-------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
4
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNEE
L-3 COMMUNICATIONS
CORPORATION
By:
-------------------------------
Name: Christopher Cambria
Title: Vice President
ASSIGNOR:
FAP TRUST
By: FIRST UNION NATIONAL BANK, not
in its individual capacity but
solely as trustee
By: /s/ W. Jeffrey Kramer
-------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
5
<PAGE>
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT dated as of March 4, 1998 is entered into by
and between L-3 COMMUNICATIONS CORPORATION, a Delaware corporation,
("Assignee") and FAP TRUST, a Connecticut trust ("Assignor").
WITNESSETH
WHEREAS, Assignor is a party to a Stock Purchase Agreement dated as of
February 9, 1998 (the "Stock Purchase Agreement") pursuant to which Seller
intends to acquire all of the outstanding capital stock of Ilex Systems, Inc.
(the "Company"); and
WHEREAS, pursuant to the Stock Purchase Agreement, Assignor and Donald
Potter ("Seller") have entered into that certain Confidentiality and
Non-Competition Agreement dated as of February __, 1998 (the "Non-Competition
Agreement"); and
WHEREAS, Assignor and Assignee have entered into an Asset Purchase
Agreement dated as of February 10, 1998 (the "Asset Purchase Agreement")
pursuant to which Assignee will acquire substantially all of the assets and
assume substantially all of the liabilities of the Company; and
WHEREAS, in connection with the Asset Purchase Agreement and the
transactions contemplated thereby, Assignor desires to assign to Assignee its
entire right, title and interest in, under and to the Non-Competition
Agreement, and Assignee desires to take such assignment from Assignor, all upon
the terms and conditions set forth below:
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. Assignment of the Non-Competition Agreement. Pursuant to and in
accordance with terms of Section 8 of the Non-Competition Agreement, Assignor
hereby assigns to Assignee all of Assignor's right, title and interest in,
under and to the Non-Competition Agreement, and Assignee hereby assumes all of
Assignor's duties and obligations under the Non-Competition Agreement.
2. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
3. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
4. Entire Agreement. This Agreement and the Asset Purchase Agreement
constitute the entire agreement between Assignor and Assignee with respect to
the subject matter hereof. This Agreement cancels and supersedes all prior
agreements, understandings and negotiations between the parties to this
Agreement with respect to the subject matter of this Agreement. This Agreement
may only be varied or modified by a written document executed by each of the
parties hereto.
5. Assignment. The rights and benefits of the parties under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of such parties. Neither this Agreement nor any rights
or benefits hereunder may be assigned or transferred by any party hereto
without the prior written consent of all other parties hereto.
6. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to Assignee:
L-3 Communications Corporation
600 Third Avenue
New York, NY 10016
Telecopier Number: (212) 805-5494
Attention: Christopher C. Cambria
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier Number: (212) 455-2502
Attention: William E. Curbow
And if to Assignor:
FAP Trust
c/o First Union National Bank
10 State House Square
Hartford, CT 06103-3698
Telecopier Number: (860) 247-1356
Attention: W. Jeffrey Kramer
-2-
<PAGE>
With copies to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Telecopier Number: (415) 983-1200
Attention: Graham Taylor
and
Bingham Dana LLP
100 Pearl Street
Hartford, CT 06103
Telecopier Number: (860) 527-5188
Attention: James G. Scantling
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
party notice in the manner herein set forth.
7. Further Assurances. Each of the parties to this Agreement shall
execute such other documents and instruments and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof.
8. No Recourse. It is expressly understood and agreed that this
Agreement is executed and delivered on behalf of Assignor by First Union
National Bank ("First Union"), not in its individual capacity but solely as
Trustee under the trust agreement under which Assignor is organized, in the
exercise of the powers and authority conferred and vested in it as the Trustee
thereunder, and each of the representations, warranties, undertakings and
agreements herein made on the part of Assignor is made and intended not as a
personal representation, warranty, undertaking or agreement by First Union but
is made and intended for the purpose of binding only the trust estate created
by the trust agreement under which Assignor is organized (the "Trust Estate"),
and all persons having any claim against First Union or Assignor by reason of
the transactions contemplated by this Agreement shall for payment or
satisfaction thereof not seek recourse against First Union except in its
capacity as trustee and then only to the extent of the Trust Estate.
-3-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNEE
L-3 COMMUNICATIONS
CORPORATION
By: /s/ Christopher Cambria
-------------------------------
Name: Christopher Cambria
Title: Vice President
ASSIGNOR:
FAP TRUST
By: FIRST UNION NATIONAL BANK, not
in its individual capacity but
solely as trustee
By:
-------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
4
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNEE
L-3 COMMUNICATIONS
CORPORATION
By:
-------------------------------
Name: Christopher Cambria
Title: Vice President
ASSIGNOR:
FAP TRUST
By: FIRST UNION NATIONAL BANK, not
in its individual capacity but
solely as trustee
By: /s/ W. Jeffrey Kramer
-------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
4
<PAGE>
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT dated as of March 4, 1998 is entered into by
and between L-3 COMMUNICATIONS CORPORATION, a Delaware corporation,
("Assignee") and FAP TRUST, a Connecticut trust ("Assignor").
WITNESSETH
WHEREAS, Assignor is a party to a Stock Purchase Agreement dated as of
February 9, 1998 (the "Stock Purchase Agreement") pursuant to which Seller
intends to acquire all of the outstanding capital stock of Ilex Systems, Inc.
(the "Company"); and
WHEREAS, pursuant to the Stock Purchase Agreement, Assignor and Erwin P.
Frech, Jr. ("Seller") have entered into that certain Confidentiality and
Non-Competition Agreement dated as of February __, 1998 (the "Non-Competition
Agreement"); and
WHEREAS, Assignor and Assignee have entered into an Asset Purchase
Agreement dated as of February 10, 1998 (the "Asset Purchase Agreement")
pursuant to which Assignee will acquire substantially all of the assets and
assume substantially all of the liabilities of the Company; and
WHEREAS, in connection with the Asset Purchase Agreement and the
transactions contemplated thereby, Assignor desires to assign to Assignee its
entire right, title and interest in, under and to the Non-Competition
Agreement, and Assignee desires to take such assignment from Assignor, all upon
the terms and conditions set forth below:
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. Assignment of the Non-Competition Agreement. Pursuant to and in
accordance with terms of Section 8 of the Non-Competition Agreement, Assignor
hereby assigns to Assignee all of Assignor's right, title and interest in,
under and to the Non-Competition Agreement, and Assignee hereby assumes all of
Assignor's duties and obligations under the Non-Competition Agreement.
2. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
3. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
4. Entire Agreement. This Agreement and the Asset Purchase Agreement
constitute the entire agreement between Assignor and Assignee with respect to
the subject matter hereof. This Agreement cancels and supersedes all prior
agreements, understandings and negotiations between the parties to this
Agreement with respect to the subject matter of this Agreement. This Agreement
may only be varied or modified by a written document executed by each of the
parties hereto.
5. Assignment. The rights and benefits of the parties under this
Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of such parties. Neither this Agreement nor any rights
or benefits hereunder may be assigned or transferred by any party hereto
without the prior written consent of all other parties hereto.
6. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to Assignee:
L-3 Communications Corporation
600 Third Avenue
New York, NY 10016
Telecopier Number: (212) 805-5494
Attention: Christopher C. Cambria
With a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier Number: (212) 455-2502
Attention: William E. Curbow
And if to Assignor:
FAP Trust
c/o First Union National Bank
10 State House Square
Hartford, CT 06103-3698
Telecopier Number: (860) 247-1356
Attention: W. Jeffrey Kramer
-2-
<PAGE>
With copies to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Telecopier Number: (415) 983-1200
Attention: Graham Taylor
and
Bingham Dana LLP
100 Pearl Street
Hartford, CT 06103
Telecopier Number: (860) 527-5188
Attention: James G. Scantling
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
party notice in the manner herein set forth.
7. Further Assurances. Each of the parties to this Agreement shall
execute such other documents and instruments and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof.
8. No Recourse. It is expressly understood and agreed that this
Agreement is executed and delivered on behalf of Assignor by First Union
National Bank ("First Union"), not in its individual capacity but solely as
Trustee under the trust agreement under which Assignor is organized, in the
exercise of the powers and authority conferred and vested in it as the Trustee
thereunder, and each of the representations, warranties, undertakings and
agreements herein made on the part of Assignor is made and intended not as a
personal representation, warranty, undertaking or agreement by First Union but
is made and intended for the purpose of binding only the trust estate created
by the trust agreement under which Assignor is organized (the "Trust Estate"),
and all persons having any claim against First Union or Assignor by reason of
the transactions contemplated by this Agreement shall for payment or
satisfaction thereof not seek recourse against First Union except in its
capacity as trustee and then only to the extent of the Trust Estate.
-3-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNEE
L-3 COMMUNICATIONS
CORPORATION
By: /s/ Christopher Cambria
-------------------------------
Name: Christopher Cambria
Title: Vice President
ASSIGNOR:
FAP TRUST
By: FIRST UNION NATIONAL BANK, not
in its individual capacity but
solely as trustee
By:
-------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
4
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Assignment
Agreement to be executed and delivered as of the date first above written.
ASSIGNEE
L-3 COMMUNICATIONS
CORPORATION
By:
-------------------------------
Name: Christopher Cambria
Title: Vice President
ASSIGNOR:
FAP TRUST
By: FIRST UNION NATIONAL BANK, not
in its individual capacity but
solely as trustee
By: /s/ W. Jeffrey Kramer
-------------------------------
Name: W. Jeffrey Kramer
Title: Vice-President
4
<PAGE>
EXHIBIT 11
L-3 COMMUNICATIONS HOLDINGS, INC.
COMPUTATION OF BASIC EARNINGS PER SHARE
AND DILUTED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED MARCH 31, ENDED DECEMBER 31,
1998 1997
--------------- ------------------
<S> <C> <C>
BASIC:
Net income.................................... $ 2,613 $16,715
=============== ==================
Weighted average common share outstanding .... 20,152 20,000
=============== ==================
Basic earnings per share: $ 0.13 $ 0.84
=============== ==================
DILUTED:
Net income.................................... $ 2,613 $16,715
=============== ==================
Common and potential common shares:
Weighted average common shares outstanding ... 20,152 20,000
Assumed exercise of options................... 2,819 2,482
Assumed purchase of common shares for
treasury..................................... (2,167) (2,470)
--------------- ------------------
Common and potential common shares........... 20,804 20,012
=============== ==================
Diluted earnings per share..................... $ 0.13 $ 0.84
=============== ==================
</TABLE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion in this registration statement on Form S-1 of (i)
our report dated February 2, 1998 on our audits of the consolidated financial
statements of L-3 Communications Holdings, Inc. and subsidiaries as of
December 31, 1997 and for the nine months then ended, the combined financial
statements of the Predecessor Company for the three months ended March 31,
1997, and as of December 31, 1996 and for the year then ended, and (ii) our
report, dated March 20, 1997, on our audits of the combined financial
statements of the Loral Acquired Businesses for the three months ended March
31, 1996 and for the year ended December 31, 1995, and (iii) our report,
dated February 23, 1998, on our audit of the combined financial statements of
AlliedSignal Ocean Systems (a wholly owned operation of AlliedSignal, Inc.)
as of and for the year ended December 31, 1997. Our report on the combined
financial statements of the Predecessor Company as of and for the year ended
December 31, 1996 indicates that our opinion, insofar as it relates to the
financial statements of the Lockheed Martin Communications Systems Division
as of December 31, 1996 included in such combined financial statements, is
based solely on the report of other auditors. We also consent to the
reference to our Firm under the caption "Experts".
Coopers & Lybrand L.L.P.
New York, New York
April 23, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 7, 1997, with respect to the combined
financial statements of Lockheed Martin Communications Systems Division as of
and for the years ended December 31, 1996 (not presented separately herein)
and 1995, included in Amendment No. 2 to Registration Statement (Form S-1 No.
333-46975) and related Prospectus of L-3 Communications Holdings, Inc. for
the registration of its common stock.
Ernst & Young LLP
Washington, D.C.
April 22, 1998
<PAGE>
EXHIBIT 23.31
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 27, 1998, with respect to the financial
statements of Satellite Transmission Systems Division of California
Microwave, Inc., included in Amendment No. 2 to the Registration Statement
(Form S-1 No. 333-46975) and related Prospectus of L-3 Communications
Holdings, Inc. for the registration of its common stock.
Ernst & Young LLP
Melville, New York
April 24, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
ILEX Systems, Inc:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the Prospectus.
KPMG Peat Marwick LLP
San Jose, California
April 23, 1998
