<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
----------------
FOR FISCAL YEAR ENDED OCTOBER 31, 1994 COMMISSION FILE NUMBER 1-5407
WHITTAKER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4033076
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
10880 WILSHIRE BOULEVARD 90024
LOS ANGELES, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 475-9411
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -----------------------
<S> <C>
Common Stock, par value $.01 per share New York Stock Exchange
Pacific Stock Exchange
Series A Participating Cumulative New York Stock Exchange
Preferred Stock Purchase Rights Pacific Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
$5.00 Cumulative Convertible Preferred Stock
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((S)229.405 of the Securities Exchange Act of 1934) is
not contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_]
State the aggregate market value of the voting stock held by nonaffiliates of
the Registrant: $162,341,049 as of December 30, 1994.
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date: 8,486,174 shares of Common
Stock as of December 30, 1994.
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<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
WHERE
DOCUMENT INCORPORATED
-------- ------------
<S> <C>
Definitive Proxy Statement for the Annual Meeting of Part III
Stockholders to be held March 24, 1995 to be filed pursu-
ant to Section 14(a) of the Securities Exchange Act of
1934 (the "Proxy Statement")
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS.
THE REGISTRANT
Whittaker Corporation ("Whittaker," the "Company," or the "Registrant") was
incorporated in California in 1947 and became a Delaware corporation in 1986.
Whittaker maintains its principal executive and administrative offices at 10880
Wilshire Boulevard, Los Angeles, California 90024 (telephone number 310-475-
9411).
In its continuing operations, the Company has been active during fiscal 1994
almost solely in the aerospace business, including defense electronics, but is
now using its electronics technologies and expertise to expand into
telecommunications markets. During the past five years, the Company was also
active in the chemicals, specialty chemicals, and biotechnology businesses. Set
forth below is a description of the current business of the Company.
CONTINUING OPERATIONS
The Company develops specialized aerospace and electronic technologies to
create products for aircraft, defense, telecommunications and industrial
markets. The Company's products and services are developed and produced by
three divisions: Aerospace, which manufactures and markets proprietary fuel,
hydraulic and pneumatic flow control valves and fire detection system products
fitted on aircraft and ground-based gas turbines; Electronics Systems, which
designs, develops and sells a wide array of highly reliable defense electronics
products and systems; and Communications, which developed and is manufacturing
and marketing advanced Asynchronous Transfer Mode ("ATM") telecommunications
products and systems.
Principal applications and representative products of the Company's
continuing operations include:
Fluid and Pneumatic Controls. The Company designs and manufactures a
broad range of fluid control devices for both commercial and military
aircraft. The products are designed to control pneumatic, hydraulic and
fuel flows in aircraft systems. In commercial applications, they are used
on virtually all Boeing and Douglas commercial aircraft, virtually all
recent Airbus models, and virtually all other aircraft and jet engines
manufactured in the world, with the exception of those manufactured in the
former Communist countries. In addition, commercial and industrial
applications include ground refueling devices and controls for cogeneration
gas turbine power plants. In military applications, the products are used
on military transports, bombers, helicopters, fighters and landing craft.
Both commercial and military applications include aircraft jet engines
built by General Electric and Pratt & Whitney. Sales of fluid controls were
$52.9 million in fiscal 1994, $43.0 million in fiscal 1993, and $77.4
million in fiscal 1992.
Command, Control and Communications. The Company designs and manufactures
electronic systems for command, control and communications, including
display and analysis systems, digital data links, signal data converters,
tactical simulation systems, and wide-band encrypted secure voice and data
systems that permit secure communications. The Company also has developed
modular software that is designed to be portable to any real-time operating
system. A user-friendly, window-based display and a unique table-driven
architecture provide easy interface between various equipment and
facilitate the addition of new equipment. Sales of command, control and
communications systems were $24.5 million in fiscal 1994, $29.8 million in
fiscal 1993, and $24.8 million in fiscal 1992.
Radio Frequency/Survivability Systems. The Company designs radar
countermeasure systems and electronic combat systems that provide radar and
proximity fuse jamming using an internally developed radio frequency memory
unit. Experience in technique development was used to invent a proprietary
monopulse radar countermeasures generator that is applicable to most modern
jamming systems. A Company-designed radar system detects tactical ballistic
missiles, such as the SCUD, and allows early warning for the civilian
population and for deployment of weapons. Other ground-based radar
surveillance and tracking systems of the Company, including replicas of
enemy radar systems, are used in tactical training. Sales of radio
frequency/survivability systems were $8.9 million in fiscal 1994, $10.1
million in fiscal 1993, and $19.2 million in fiscal 1992.
1
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Other Electronics Products. The Company designs and manufactures high
reliability silicon dioxide insulated coaxial and multiple conductor cable
systems which permit broad-band data transmission and control function
operation in extreme environments. Atmospheric monitoring systems are
provided for timely warning of emergency conditions. Applications for these
technologies include signal transmission and control functions inside
nuclear power plants and reactors, power and control monitoring and
electronic valve control at oil refineries, extreme environmental condition
cable applications near jet engines, and critical connections in airborne
electronic countermeasure systems. The Company also designs and
manufactures expendable high-energy-density batteries utilized primarily
for missile and space applications. These applications require watt seconds
of energy and demand the highest availability and reliability due to their
critical functions. The Company supplies these batteries to meet the
extreme environmental requirement of airborne applications.
Data Managers. The Company provides a unique combination of hardware and
software that interfaces very high speed computers with lower speed
computers as well as storage disks, recorders and other peripherals. The
data manager allows simultaneous input and output of large amounts of data,
facilitating real time analysis and storage. Data managers provide this
capability in applications for jet engine data recording, transfer of video
data in simulators, and command and control applications. The Company is
developing a lower-priced version of the data manager with ATM capabilities
to provide services for telecommunications markets, including real-time
access to full-motion video on demand and to other applications requiring
access to large amounts of video data, such as medical imaging. The lower-
priced version is expected to be available in mid-1995.
ATM Enterprise Network Access Switch. Using high-speed switching hardware
and software technology developed for defense applications, the Company has
designed, developed, successfully tested, and started production of an ATM
Enterprise Network Access Switch ("ATM ENAS"). The ATM ENAS is designed for
use by business customers and by telephone companies to efficiently
transfer data files, video, still images, and multi-media files at
extremely high speeds among local area networks over telephone companies'
fiber optic-wide area networks. The Company expects to begin shipments of
the ATM ENAS during the second quarter of fiscal 1995.
Sales directly or indirectly to the United States Government, primarily under
military procurement contracts, represented approximately 49% of the sales from
continuing operations in fiscal 1994, compared to 68% in fiscal 1993 and 58% in
fiscal 1992. In addition to the normal risks found in any business, companies
engaged in supplying military equipment to the United States Government are
subject to certain industry specific risks, including dependence on
Congressional appropriations and administrative allotment of funds, time and
investment required for design and development, significant changes in contract
scheduling, complexity of designs and the rapidity with which they may become
obsolete, and change in Governmental procurement legislation and regulations
and other policies which may reflect military and political developments. All
contracts with the United States Government are subject to termination at any
time for the convenience of the Government if deemed in its best interest.
Contracts that are terminated for convenience generally provide for payments to
a contractor for its costs and for fees or profits related to work accomplished
through the date of termination.
Approximately 20% of sales from continuing operations arose from exports to
customers outside the United States.
At October 31, 1994, funded backlog totalled $69,300,000 (compared to
$75,200,000 at October 31, 1993), of which $14,300,000 is not expected to be
filled within fiscal 1995.
The markets in which the Company operates are generally highly competitive,
with competition centering on price, product performance and product support.
Competitors of the Company in such markets may have substantially greater
financial resources, research and design capabilities, and manufacturing
capacity.
The Company spent $2,700,000, $1,700,000, and $1,100,000 on research and
development activities in continuing operations in fiscal 1994, 1993, and 1992,
respectively.
2
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DISCONTINUED OPERATIONS
In October 1991, the Company spun off its biotechnology business. In
addition, since the beginning of the Company's divestiture program in 1989, the
Company has sold its Anjac/Doron, Duall/Wind, Chemical Coatings, Heico
Chemicals, Park Chemical, Ram Chemicals, Specialty Chemicals, Technibilt, Water
Management, Whittaker Metals, Winters Industries and Yardney Electric
Corporation units. The divestiture program has been substantially completed.
Remaining to be divested is a 996-acre parcel of land formerly used, until
1987, by the Company's former Bermite division, a discontinued technology unit.
See Notes 3 and 4 of Notes to Consolidated Financial Statements in Part II,
Item 8 of this Form 10-K for information about the spin off and discontinued
operations, respectively.
ACQUISITIONS
On March 27, 1994, the Company acquired the assets and business of Systron-
Donner Safety Systems for a total purchase price of $13.0 million in cash.
Safety Systems manufactures and sells fire, smoke and overheating detectors and
systems for commercial and military aircraft and jet engines. The Company
intends to continue its previously announced strategy of growth by selective
acquisitions that complement the Company's existing businesses and product
lines.
ENVIRONMENTAL
Compliance with Federal, state and local provisions which have been enacted
or adopted regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, has had no material
effect upon the capital expenditures, earnings or competitive position of the
Company, nor is the Company estimating any material capital expenditures for
environmental control facilities in fiscal 1995 and 1996.
EMPLOYEE RELATIONS
As of October 31, 1994, the Company employed approximately 800 persons in its
businesses, about 13% of whom were represented by labor organizations. The
Company believes that it has generally good relations with its employees.
ITEM 2. PROPERTIES.
The corporate headquarters of the Company is located in 23,000 square feet of
leased office space in Los Angeles, California. The table below provides
information with respect to the principal production facilities utilized by the
Company as of October 31, 1994.
<TABLE>
<CAPTION>
OWNED FACILITIES LEASED FACILITIES
----------------- -----------------
GENERAL NO. OF SQUARE NO. OF SQUARE
LOCATION CHARACTER LOCATIONS FOOTAGE LOCATIONS FOOTAGE
-------- ---------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
California................... Production 3 276,000 3 208,000
Colorado..................... Production 1 30,000 - -
Oregon....................... Production - - 1 19,000
--- ------- --- -------
4 306,000 4 227,000
=== ======= === =======
</TABLE>
The terms of the Company's leases range from one year to 20 years. The
termination of any of the short-term leases would not have a material adverse
effect on the Company's operations. See Note 9 of Notes to Consolidated
Financial Statements in Part II, Item 8 of this Form 10-K.
The Company believes that, in general, its plants and equipment are
adequately maintained, in good operating condition and adequate for the
Company's present needs. The Company regularly upgrades and modernizes its
facilities and equipment, and expands its facilities as necessary to meet
customer requirements. Capital additions by the Company were approximately $2.5
million for continuing operations in fiscal 1994.
3
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
ENVIRONMENTAL MATTERS
As a result primarily of the activities of its discontinued operations, the
Company is a potentially responsible party in a number of actions filed under
the Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA"). CERCLA, also known as "Superfund," is the main Federal law enacted
to address public health and environmental concerns arising with respect to
past treatment and disposal of hazardous substances. The Company also is a
potentially responsible party in a number of actions brought under state laws
patterned after CERCLA.
CERCLA and such other state laws provide for the imposition of clean-up
liability on anyone who arranges for the disposal or treatment of hazardous
substances at designated sites. Accordingly, anyone who generates hazardous
substances may be a potentially responsible party if the treatment, storage, or
disposal facility that handles the substances becomes the subject of an
environmental clean-up under such laws. This is true even if the treatment,
storage, or disposal facility has the proper licenses and permits issued by
appropriate governmental authorities and treats, stores, or disposes of the
hazardous substances in accordance with the terms of such licenses and permits.
The various state environmental agencies and the U.S. Environmental Protection
Agency take the position under these environmental laws that all responsible
parties are jointly and severally liable for the costs of cleaning up sites
subject to their jurisdiction and for any environmental damages caused by the
treatment or disposal of hazardous substances at such sites.
In nearly all of the environmental matters in which the Company is involved,
the Company contributed a very small amount (generally much less than 1%) of
the total wastes treated or disposed of at these various treatment or disposal
facilities and participates as a so-called "de minimis" party. De minimis
parties are generally allowed to settle their potential liability for clean-up
activities by agreeing with the state or Federal environmental authorities and
the other, larger responsible parties to bear a share of the past and estimated
future clean-up costs based on the volume of the waste each de minimis party
contributed, plus a "premium" or "multiplier." These premiums or multipliers
are designed to allow for the uncertainty of estimates of future costs and the
desirability of settling liability early to avoid so-called transaction costs,
i.e., the legal, consulting, and other expenses, which tend to consume a
significant amount of the funds actually spent on the resolution of
environmental matters.
Where the Company does not qualify for such treatment, where the Company's
potential liability on a particular environmental matter could be significant,
or where the Company believes that the premium or multiplier for a de minimis
settlement is unreasonable, the Company may elect to participate in the
settlement or remediation activities as, or on the same basis as, a major
party, generally paying its allocated share of remediation expenses and
transaction costs as they are incurred, often over several years.
In addition to the CERCLA and similar actions described above, the Company
also, from time to time, conducts or participates in remedial investigations
and clean-up activities at facilities currently or formerly occupied by its
operating units. In the most significant of these sites, the Company has "clean
closed" 13 of 14 facilities regulated under the Resource Conservation and
Recovery Act at its former Bermite division in Santa Clarita, California. The
Company is currently working to close the 14th of such facilities and to
complete an investigation of the entire property in anticipation of developing
the property for a planned mixed-use residential and commercial development.
The Company's Denver, Colorado-based Power Storage Systems unit has been
cited by the City of Denver for violations arising from its failure to have a
waste water discharge permit for a sink used in the brazing operations of a
satellite welding facility. The Company believes it has defenses to many of the
allegations cited in the notice of violation from the City of Denver and is in
discussions with the City to settle this matter.
In 1994, the Company made cash expenditures of approximately $1.8 million on
environmental matters.
4
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OTHER LEGAL MATTERS
There are also various other claims and suits pending against the Company.
Based on an evaluation, which included consultation with counsel concerning the
legal and factual issues involved, the Company is of the opinion that such
claims and suits pending against the Company, including the environmental
matters discussed above, will not have a material adverse effect, singly or in
the aggregate, on the financial position of the Company. See Note 10 of Notes
to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth the names, ages and positions of the current
executive officers of the Registrant.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Thomas A. Brancati....................... 59 President, Chief Executive
Officer and Chief Operating
Officer
Jack C. Cannady.......................... 62 Vice President
Richard Levin............................ 44 Vice President, Chief Financial
Officer and Secretary
Gordon J. Louttit........................ 47 Vice President
John K. Otto............................. 40 Treasurer
</TABLE>
Mr. Brancati was President of the Company's Electronics Systems unit from
1987 until 1993, when he was elected President and Chief Operating Officer of
the Company, as well as a Director. Effective January 1, 1995, Mr. Brancati
became Chief Executive Officer of the Company.
Mr. Cannady was Vice President of the Company's Electronics Systems unit from
1989 until his appointment as a Vice President of the Company in June 1994.
Mr. Levin joined Whittaker in May 1994, at which time he was appointed Vice
President, Chief Financial Officer and Secretary. From 1978 until joining
Whittaker, Mr. Levin was a practicing attorney with the law firm of Stutman,
Treister & Glatt.
Mr. Louttit, who joined Whittaker in 1978, served as Corporate Counsel until
his appointment as Assistant General Counsel in 1981. In 1985, he was elected a
Vice President of the Company. From November 1993 until May 1994, Mr. Louttit
served as Secretary of the Company.
Mr. Otto joined Whittaker in 1983 as Whittaker's Manager of Banking and Cash.
He was named Assistant Treasurer in 1986 and Treasurer in 1988.
The term of office of each executive officer will expire at the next annual
meeting of the Board of Directors, which is scheduled to be held March 24,
1995.
5
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS.
PRINCIPAL MARKETS
The Common Stock is listed on the New York Stock Exchange and the Pacific
Stock Exchange (Symbol: WKR). There is no established market for the $5.00
Cumulative Convertible Preferred Stock (the "$5.00 Preferred"). The Series A
Participating Cumulative Preferred Stock Purchase Rights are listed on the New
York Stock Exchange and the Pacific Stock Exchange, and, at the present time,
trade with the Common Stock and are not separately transferable. The Series D
Participating Convertible Preferred Stock (the "Series D Preferred Stock") is
not listed or traded on any exchange. See Note 6 of Notes to Consolidated
Financial Statements in Part II, Item 8 of this Form 10-K.
COMMON STOCKHOLDERS
As of December 30, 1994 there were 5,657 registered holders of the Common
Stock.
COMMON STOCK PRICES
The following table sets forth the high and low sales prices of the Common
Stock during Whittaker's two most recent fiscal years.
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------
JANUARY 31 APRIL 30 JULY 31 OCTOBER 31
------------- ------------- ------------- -------------
HIGH LOW HIGH LOW HIGH LOW HIGH LOW
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993.................... 15 7/8 11 1/8 16 14 15 12 1/2 15 3/4 13 1/8
1994.................... 16 5/8 12 17 7/8 13 1/2 15 5/8 13 5/8 20 15 5/8
</TABLE>
DIVIDENDS
Dividends of $1.25 were declared on each share of $5.00 Preferred, and
dividends of $.25 were declared on each share of Series D Preferred Stock, for
each quarter of Whittaker's two most recent fiscal years. No dividends have
been declared on the Common Stock during the two most recent fiscal years.
Under the Company's current credit facility with a group of banks, there are
restrictions that materially limit the amount of cash dividends that may be
paid on the Common Stock. The Company may pay cash dividends on the Common
Stock if the Company meets a cash flow test measured at the end of the fiscal
quarter immediately preceding the payment of the dividend, and the cumulative
amount of all cash dividends paid on the Common Stock does not exceed 20% of
the net income of the Company determined on a cumulative basis from January
30, 1995 through the end of the fiscal quarter immediately preceding the
payment of the dividend. In the foreseeable future, in light of the Company's
strategy of using earnings from operations to fund growth internally and by
selective acquisitions, the Company's present intention is to refrain from
paying cash dividends on the Common Stock even if the Company is able to do so
under its current credit facility. Although the Company expects to continue
paying dividends on the $5.00 Preferred, there can be no assurance that such
dividends will be continued. See Note 5 of Notes to Consolidated Financial
Statements in Part II, Item 8 of this Form 10-K for further description of the
Company's credit facility.
6
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TRANSFER AGENT AND REGISTRAR FOR COMMON STOCK AND $5.00 PREFERRED
MELLON SECURITIES TRUST COMPANY
Four Station Square
Third Floor
Pittsburgh, Pennsylvania 15219
RIGHTS AGENT FOR SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK PURCHASE
RIGHTS
MELLON BANK N.A.
Post Office Box 444
Pittsburgh, Pennsylvania 15230
7
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
WHITTAKER CORPORATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
---------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS*
Sales............................ $126,448 $115,386 $159,915 $158,510 $155,168
Income from continuing opera-
tions, before accounting change. $ 10,061 $ 7,698 $ 13,377 $ 11,374 $ 1,354
Cumulative effect of accounting
change.......................... -- $ 1,512 -- -- --
Income (loss) from discontinued
operations...................... -- (1,954) -- 4,733 102
Gain on disposal of discontinued
operations...................... -- -- 2,300 6,468 85,248
Net income....................... $ 10,061 $ 7,256 $ 15,677 $ 22,575 $ 86,704
Earnings (loss) per share
Continuing operations, before
accounting change............. $1.06 $ .81 $1.42 $1.27 $ .15
Accounting change.............. -- .16 -- -- --
Discontinued operations........ -- (.21) .24 1.26 10.15
Net income..................... $1.06 $ .76 $1.66 $2.53 $10.30
Average common and common equiva-
lent shares outstanding (in
thousands)...................... 9,502 9,491 9,407 8,884 8,405
Dividends per common share....... -- -- -- -- --
OTHER DATA*
Working capital.................. $ 81,534 $ 73,924 $ 85,926 $ 58,969 $ 65,599
Total assets..................... $209,307 $201,869 $218,279 $199,344 $237,392
Long-term debt................... $ 54,742 $ 56,782 $ 66,644 $ 54,920 $103,384
Stockholders' equity............. $ 93,950 $ 83,748 $ 75,200 $ 58,470 $ 40,001
Current ratio.................... 3.22:1 2.77:1 2.74:1 2.10:1 2.15:1
Capital additions................ $ 2,500 $ 1,300 $ 2,200 $ 2,000 $ 2,400
Stockholders of record........... 5,700 7,100 8,500 8,800 9,100
</TABLE>
- - --------
* Operating results and balance sheet items reflect the segregation of
continuing operations from discontinued operations. See Notes 3 and 4 of
Notes to Consolidated Financial Statements in Part II, Item 8 of this Form
10-K.
8
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
RESULTS OF OPERATIONS
Comparison of 1994 to 1993
Sales from continuing operations for fiscal 1994 increased 9.6% to $126.4
million from fiscal 1993 sales of $115.4 million. Sales increased in 1994 in
part as a result of the Company's acquisition of a telecommunications business
in July 1993, two aircraft fluid control product lines in the fourth quarter
of fiscal 1993, and an aerospace business during the second quarter of fiscal
1994. The acquisitions offset decreases in government sales. In the aggregate,
the acquired businesses and product lines accounted for $27.5 million of 1994
sales, compared to $1.7 million in 1993, reflecting the implementation of the
Company's previously announced strategy of growth by selective acquisitions to
complement the Company's existing businesses and product lines. The aerospace
business acquired in March 1994 contributed $10.5 million to 1994 sales.
Management expects that the acquired businesses and product lines will
continue to contribute to sales in fiscal 1995 at least at the annual rate at
which they contributed in fiscal 1994.
The increased sales in fiscal 1994 also included the recognition of $4.0
million of sales during the first quarter of 1994 related to the partial
settlement of a termination claim against a defense electronics products
customer. The Company expects that additional revenue may result in fiscal
1995 from final settlement of the claim. Sales of defense electronics products
were adversely affected during the first and second quarters of fiscal 1994 by
the January 17 Northridge earthquake and by delays in the receipt of new
contract bookings. Sales of high-energy-density batteries declined because of
decreasing demand and intense price competition, trends that are expected to
continue. The Company's pyrotechnic devices unit was sold in the third quarter
of fiscal 1993 after contributing $3.6 million to fiscal 1993 sales.
A shrinking U.S. defense budget has contributed to both the decline in sales
to the United States Government and in delays in the receipt of new contract
bookings. In addition, new aircraft production has not rebounded from the
reductions in the early 1990's, with the result that sales of aircraft fluid
control products have not rebounded to their early 1990's levels. Management
expects that this trend will continue at least for the near to medium term. In
fiscal 1994, the Company began marketing its aircraft fluid control and other
aerospace products to manufacturers of industrial, land-based gas turbines,
which are similar to jet engines. The Company intends to continue to do so.
Although management believes that there may be significant demand for the
Company's aerospace products in these and other industrial markets, management
does not currently expect that sales of aerospace products in industrial
markets will contribute a material amount of revenue to the Company in fiscal
1995, and there can be no assurance that such sales will contribute a material
amount of revenue to the Company in later years.
Gross margin increased in fiscal 1994 to $53.2 million, or 42.0% of sales,
from $44.2 million, or 38.3% of sales in fiscal 1993. The increase was due
primarily to a product mix that included a higher portion of after-market
aircraft fluid control products. Also contributing to the increase in gross
margin was $3.5 million resulting from the partial termination claim
settlement described above, under which the Company recorded as revenue and
will receive at least $4.0 million in cash, with an associated cost of sale of
$0.5 million. The increase in gross margin was offset partially by lower
margins in radio frequency/survivability products resulting primarily from a
higher mix of cost-plus contracts and, to some degree, from the effects of the
interruption of the business and damage caused by the January 17 Northridge
earthquake.
As a percentage of sales, engineering, selling and general and
administrative expenses increased from 24.7% in fiscal 1993 to 26.2% in fiscal
1994. The increase primarily was the result of additional expenses of the
acquired aerospace business, and executive bonus payments made for 1994
compared to limited payments made for 1993. The increase was offset partially
by income associated with the Company's defined benefit pension plan.
Net income in fiscal 1994 from continuing operations was $10.1 million, or
$1.06 per share, compared to $7.7 million, or $0.81 per share, in fiscal 1993,
not including net income in 1993 of $1.5 million, or $0.16 per share,
resulting from a change in the method of accounting for income taxes in
accordance with the
9
<PAGE>
Statement of Financial Accounting Standards SFAS No. 109, and a net after-tax
loss from discontinued operations of $2.0 million, or $0.21 per share. Income
before income taxes for fiscal 1994 was $16.5 million, compared to $12.5
million before income taxes and the accounting change for 1993.
Comparison of 1993 to 1992
Sales from continuing operations for fiscal 1993 decreased by $44.5 million
from fiscal 1992, reflecting decreased volume in aircraft fluid controls of
$34.4 million. This represents a decrease of 44.4% from fiscal 1992, primarily
due to a reduction of new aircraft production and reduced after market sales.
Also unfavorably affecting sales by $3.5 million was the sale of the
pyrotechnic devices unit in the third quarter of fiscal 1993. The remaining
decrease was attributable to reduced volume of defense electronics products,
high-energy-density batteries and cable products.
Cost of sales as a percentage of sales increased slightly in fiscal 1993
primarily due to unabsorbed overhead as a result of the sales volume decrease
in aircraft fluid controls, which was partially offset by improved margins
related to changes in product mix. The $6.5 million, or 18.6%, decrease in
operating expenses (engineering, selling and general and administrative
expenses) was due primarily to reduced employee incentive costs of $3.5
million and a reduction of headcount throughout the operations. Interest
expense was lower in fiscal 1993 as a result of a lower level of debt and
lower interest rates.
Income from continuing operations before taxes decreased by $9.4 million,
primarily due to the lower sales volume, slightly lower margins due to the
under-absorption of overhead, which was offset partially by reduced
engineering, selling and general and administrative expenses, and lower
interest costs.
The 1993 loss from discontinued operations represents the after-tax effect
of a non-recurring charge of $3.5 million before tax to settle a patent
infringement case involving the Company's former Technibilt shopping cart
division, and a $0.7 million additional loss provision for ongoing costs for
discontinued operations. Partially offsetting the discontinued operations
charges was $1.0 million of interest income related to the resolution of tax
issues associated with previously discontinued operations.
The accounting change reflects the adoption, retroactive to the first
quarter of fiscal 1993, of the Financial Accounting Standards Board Statement
No. 109, "Accounting for Income Taxes." This change in accounting increased
net income by $1.5 million.
General
In fiscal 1994, 1993 and 1992, approximately 49%, 68% and 58%, respectively,
of the Company's sales from continuing operations were directly or indirectly
attributable to the United States Government. In addition to the normal risks
found in any business, companies engaged in supplying military equipment to
the United States Government are subject to certain industry specific risks,
including dependence on Congressional appropriations and administrative
allotment of funds, time and investment required for design and development,
significant changes in contract scheduling, complexity of designs and the
rapidity with which they may become obsolete, and change in Governmental
procurement legislation and regulations and other policies which may reflect
military and political developments. A loss of Government business, although
not anticipated by the Company, could have a material adverse effect on the
Company's operations.
In August 1994, the Company was awarded a $10.9 million cost-reimbursement
contract from the United States Army to develop three new versions of the
Company's previously developed battlefield electronic countermeasures system,
capable of detonating incoming artillery and mortar rounds, designated the
Shortstop Electronic Protection System ("SEPS"). The contract did not
contribute a material amount of revenue to the Company in 1994, but successful
development of the new SEPS versions could, subject to all of the risks and
uncertainties that apply to military procurement generally, as discussed
above, result in subsequent SEPS production contracts, which could then have a
material effect on the Company's sales. There can be no assurance, however,
whether or when any such contracts would be awarded.
10
<PAGE>
The Company is discussing with a foreign government the potential sale and
installation of a Company-designed radar system that detects tactical ballistic
missiles and allows early warning for the civilian population and for
deployment of weapons. The discussion could result in an agreement during
fiscal 1995. If the discussions result in an agreement, annual sales of defense
electronics products could increase by up to $50 million for up to five years.
Because of the uncertainties of the military procurement processes of foreign
governments, the need for the foreign government to provide budget authority
for the potential procurement, and all the uncertainties that apply to military
procurement generally, as discussed above, there can be no assurance that an
agreement will be reached or, if reached, what the contract price would be.
The Company has developed and successfully tested an ATM Enterprise Network
Access Switch ("ATM ENAS"). Potential customers who have participated in the
testing of the ATM ENAS have expressed an interest in the purchase of
quantities of the ATM ENAS that could support profitable commercial production.
The Company is exploring price and other sales terms with these potential
customers. There can be no assurance, however, that agreements on sales will be
reached. In addition, the Company is developing a lower-priced version of the
data manager produced by the acquired telecommunications business which will
have ATM capabilities and which, if successfully developed, is expected to be
available to the market in mid-1995. These telecommunications products could
contribute increased amounts to sales of telecommunications products. There can
be no assurance, however, that development of the lower-priced version of the
data manager will be successful, that the market will accept the products, or
that sales of the products will be material or profitable.
Effective November 1, 1992 the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
Financial Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes." As permitted under the new rules, prior years' financial statements
have not been restated. In December 1990, the Board issued a new standard,
"Employers' Accounting for Post-retirement Benefits Other Than Pensions," which
the Company adopted in 1994. The adoption did not have a material effect on the
Company's consolidated financial statements.
The outlook for future sales is difficult to predict given the uncertainties
related to the declining U.S. defense budget and related reductions and
terminations of U.S. Government defense contracts. Any negative effect on sales
related to this uncertainty may be offset in the future by contracts for new,
technologically advanced electronic defense systems, new commercial products in
the expanding telecommunications markets, and sales of aerospace and electronic
products into industrial markets. Thus, past Company performance may not be a
reliable indicator of future performance.
FINANCIAL CONDITION
At October 31, 1994, the Company's debt totaled $60.3 million, which
consisted of $42.5 million of loans under a revolving bank credit facility,
$16.5 million under a bank term loan, and $1.3 million of other debt. In
addition, there were $12.5 million of letters of credit outstanding under the
revolving credit facility. On January 24, 1995, the Company and a new group of
banks entered into a new credit agreement which consists of a $65.0 million
revolving credit facility with a three-year term expiring in January 1998 and a
$35.0 million term loan that is to be repaid in quarterly installments over
five years. Interest on loans outstanding under the credit agreement are based,
at the Company's option, on LIBOR or the agent bank's prime rate. The annual
interest rate based on LIBOR may range between LIBOR plus 1% and LIBOR plus
1.875%, and the annual interest rate based on the prime rate may range between
prime and prime plus .50%. The agreement includes financial covenants with
respect to financial leverage, cash flow, and tangible net worth. Proceeds from
the new credit facility were used to pay off and cancel the old credit facility
and will be used going forward to fund working capital and acquisitions. At the
date of the new credit facility, the debt outstanding was $35.0 million under
the term loan, of which $3.75 million is due within fiscal year 1995, and
$20.5 million of loans and $12.7 million of letters of credit under the
revolving credit facility.
The Company's ratio of long-term debt, including the current portion, to
capitalization (stockholders' equity plus debt) was 39.1% at October 31, 1994,
compared to 43.0% at the end of 1993, reflecting a $10.1 million contribution
to stockholders' equity from fiscal 1994 net income and continued reduction of
11
<PAGE>
bank debt from cash flow generated by operations. It is expected that the
Company will continue to use cash generated from operations to reduce debt.
However, as discussed below, some cash and debt availability may be used to
finance additional acquisitions.
Cash flow provided by continuing operations in fiscal 1994 was $21.8 million,
compared to $16.1 million in fiscal 1993. The increase resulted primarily from
higher net income and an income tax recovery. There were offsetting reductions
in cash provided and used as a result of changes in accounts receivable and
accounts payable, respectively. Cash used in investing activities was $15.7
million in fiscal 1994, which included $13.0 million for the acquisition of an
aerospace business and capital expenditures of $2.5 million. During fiscal
1993, the Company also used cash of $13.0 million to make acquisitions, but
received cash of $3.5 million as a result of the sale of the pyrotechnic
devices unit. Cash flow used in financing activities was $2.8 million in fiscal
1994 and $7.2 million in fiscal 1993, primarily the result of, in each case,
the reduction of debt.
Included in accounts receivable are claims amounting to $5.6 million,
compared to $6.5 million at year-end 1993, related to certain United States
Government prime contracts and subcontracts. These claims have been recorded in
accordance with generally accepted accounting principles to the extent of
contract costs incurred. These costs were incurred in connection with customer
caused delays and disruptions, errors in technical data, a partial termination
for convenience and other unanticipated causes. These claims were filed for
amounts aggregating $31.8 million, compared to $22.2 million at year-end 1993,
substantially in excess of amounts recorded. While the outcome of these claims
presently cannot be determined, in the opinion of the Company and its counsel
the recorded amount is a reasonable estimate of the minimum amount expected to
be collected. These claims are subject to negotiation and audit by the U.S.
Government, the prime contractor customer, or both, and are presently at
various stages of settlement, litigation or appeal.
During the third quarter of fiscal 1994, the Company submitted a claim to its
insurance carriers to recover the costs of repair and replacement of assets and
for the costs of business interruption brought about by the January 17
Northridge earthquake. To date, the Company has been paid $5.4 million on
account and is negotiating with the carriers to reach a final settlement, which
is expected to occur during the first half of fiscal 1995. The Company provided
reserves of $1.0 million in January 1994 to cover insurance deductibles and
does not believe that additional reserves will be required. Current assets in
1994 included $1.0 million, net of insurance payments on account, as a result
of deferrals of building and property repair and replacement costs and other
expenses that are expected to be recovered under the earthquake insurance
claim.
Capital expenditures for fiscal 1994 were $2.5 million, compared to $1.3
million in fiscal 1993 and$2.2 million in fiscal 1992. At October 31, 1994,
there were approximately $2.4 million of approved capital expenditures
outstanding for the replacement and upgrade of existing plant and equipment at
the Company's various facilities. Funds for these and other capital
expenditures are expected to be provided from operations. Capital expenditures
are limited to specified annual amounts by covenants contained in the Company's
credit agreement. It is anticipated that the amounts under the covenants will
be sufficient to allow the Company to continue to maintain and upgrade existing
facilities.
During fiscal 1994, most of the Company's expenditures on research and
development were devoted to the development and successful testing of the ATM
ENAS. It is anticipated that the Company will require additional expenditures
for development of its telecommunications products to remain competitive, and
that sufficient funds will be generated by operations for research and
development of these and other Company products.
At October 31, 1994, the Company had recognized $1.4 million of net deferred
tax assets. The net deferred tax assets are expected to be realized from future
taxable income. In the absence of such future taxable income, the current level
of net deferred tax assets could be realized pursuant to the carryback
provisions of the Federal tax law. A valuation allowance of $0.8 million has
been established for the state tax effect of the temporary differences due to
certain limitations imposed by state tax law.
On March 27, 1994, the Company acquired the assets and business of Systron-
Donner Safety Systems for a total purchase price of $13.0 million in cash.
Safety Systems manufactures and sells fire, smoke and overheating detectors and
systems for commercial and military aircraft and jet engines.
12
<PAGE>
The Company intends to continue its previously announced strategy of growth
by selective acquisitions that complement the Company's core businesses,
financed by cash from operations and from borrowings under its revolving credit
facility and, where appropriate, by issuance of new debt or equity securities
of the Company. The Company intends to pursue its acquisition strategy with
careful regard for profitability and the Company's need for liquidity. There
can be no assurance, however, that any acquisitions will occur or that an
acquisition that does occur will not adversely affect the Company's net income
or liquidity.
The Company's program for divestiture of its discontinued operations was
substantially completed by the end of fiscal 1992. Remaining to be divested is
a 996-acre parcel of land, which was used until 1987 by the Company's former
Bermite division, a discontinued technology unit. The land is located in the
city of Santa Clarita, California, approximately 35 miles from downtown Los
Angeles. The Company has entered into a development agreement with a real
estate developer to seek entitlements (the right granted by political
authorities to develop real property) to develop this property as a mixed-use
residential, commercial, retail, and light industrial development. Following
receipt of these entitlements, the Company will pursue the most advantageous
means to realize the value of this asset.
As a result primarily of the activities of its discontinued operations, the
Company is a potentially responsible party in a number of actions filed under
the Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA"). CERCLA, also known as "Superfund," is the main Federal law enacted
to address public health and environmental concerns arising with respect to the
past treatment and disposal of hazardous substances. The Company is also a
potentially responsible party in a number of other actions brought under state
laws patterned after CERCLA. In nearly all of these matters, the Company
contributed a small amount (generally less than 1%) of the total treated or
disposed of waste. In addition to the CERCLA and similar actions described
above, the Company also, from time to time, conducts or participates in
remedial investigations and clean-up activities at facilities currently or
formerly occupied by its operating units. In fiscal 1994, the Company made cash
expenditures of approximately $1.8 million on environmental matters.
The Company has typically purchased insurance annually. In certain years,
after evaluating the availability and cost of insurance, the Company did not
purchase insurance for certain risks, including workers' compensation and
product liability. Moreover, the Company's insurance carriers have taken the
position that in certain cases the Company is uninsured for environmental
matters, a position that the Company disputes in certain instances.
Consequently, the Company is without insurance for various risks, including
product liability for certain products manufactured in the past. The Company
does, however, have product liability insurance for products it currently
manufactures.
At October 31, 1994, the Company had provided for its aggregate liability
related to various claims, including uninsured risks and potential claims in
connection with the environmental matters noted above. The amounts provided on
the Company's books for contingencies, including environmental matters, are
recorded at gross amounts. Because of the uncertainty with respect to the
amount of probable insurance recoveries, these potential insurance recoveries
are not taken into account as a reduction of those amounts provided unless an
insurance carrier has agreed to such coverage. The Company does not anticipate
that these matters will have a material adverse effect on the Company's
financial position or on its ability to meet its working capital and capital
expenditure needs. Although the Company has recorded estimated liabilities for
contingent losses, including uninsured risks and claims in connection with
environmental matters, in accordance with generally accepted accounting
principles, the absence of or denial of various insurance coverages represents
a potential exposure for the Company, and the net income of the Company in
future periods could be adversely affected if uninsured losses in excess of
amounts recorded were to be incurred.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.
13
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Board of Directors of Whittaker Corporation
We have audited the accompanying consolidated balance sheets of Whittaker
Corporation as ofOctober 31, 1994 and 1993, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the
three years in the period ended October 31, 1994. 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 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Whittaker Corporation at October 31, 1994 and 1993, and the consolidated
results of its operations and its cash flows for each of the three years in the
period endedOctober 31, 1994, in conformity with generally accepted accounting
principles.
As discussed in Note 7 to the consolidated financial statements, in 1993 the
Company changed its method of accounting for income taxes.
ERNST & YOUNG LLP
Los Angeles, California
December 16, 1994, except for
Note 5, as to which the date
is January 24, 1995
14
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
----------------------------
1994 1993 1992
---- ---- ----
(DOLLARS IN THOUSANDS
EXCEPT FOR PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Sales............................................ $126,448 $115,386 $159,915
-------- -------- --------
Costs and expenses
Cost of sales................................... 73,286 71,139 98,266
Engineering, selling and general and administra-
tive........................................... 33,149 28,535 34,991
Interest on long-term debt...................... 3,967 3,731 5,421
Other interest.................................. 82 181 164
Interest income................................. (568) (712) (874)
-------- -------- --------
109,916 102,874 137,968
-------- -------- --------
Income from continuing operations before provi-
sion for taxes
and cumulative effect of accounting change...... 16,532 12,512 21,947
Provision for taxes (Note 7)..................... 6,471 4,814 8,570
-------- -------- --------
Income from continuing operations before cumula-
tive effect of accounting change................ 10,061 7,698 13,377
Cumulative effect as of November 1, 1992 of
change in method
of accounting for income taxes (Note 7)......... -- 1,512 --
Discontinued operations (Notes 3 and 4)
Income (loss) from discontinued operations...... -- (1,954) --
Gain on disposal of discontinued operations..... -- -- 2,300
-------- -------- --------
Net income....................................... $ 10,061 $ 7,256 $ 15,677
======== ======== ========
Earnings per share (Note 2)
Continuing operations before cumulative effect
of ac-
counting change................................ $ 1.06 $ .81 $ 1.42
Cumulative effect of accounting change.......... -- .16 --
Discontinued operations
Income (loss) from discontinued operations..... -- (.21) --
Gain on disposal of discontinued operations.... -- -- .24
-------- -------- --------
Net income...................................... $ 1.06 $ .76 $ 1.66
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
15
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
AT OCTOBER 31,
------------------
1994 1993
---- ----
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
CURRENT ASSETS
Cash........................................................ $ 3,507 $ 170
Receivables:
Notes receivable.......................................... 1,419 2,660
Trade accounts receivable (Note 1)........................ 63,974 65,457
Other receivables......................................... 1,200 2,795
Allowance for doubtful accounts........................... (1,301) (1,457)
Inventories (Note 1)........................................ 32,013 28,147
Net assets held for sale.................................... 1,551 --
Prepaid expenses............................................ 2,475 498
Income taxes recoverable.................................... 66 3,482
Deferred income taxes....................................... 13,395 13,934
-------- --------
Total Current Assets...................................... 118,299 115,686
-------- --------
PROPERTY, PLANT AND EQUIPMENT (Note 9)
Land and land improvements.................................. 6,426 6,393
Buildings and improvements.................................. 27,742 27,765
Equipment................................................... 34,729 33,876
Construction in progress.................................... 1,376 382
-------- --------
70,273 68,416
Less accumulated depreciation and amortization.............. (33,506) (32,803)
-------- --------
36,767 35,613
-------- --------
OTHER ASSETS
Goodwill, net of amortization............................... 19,604 14,465
Other intangible assets, net of amortization................ 2,336 2,722
Notes and other noncurrent receivables...................... 3,682 4,994
Miscellaneous............................................... 4,681 3,751
Assets held for sale (Note 4)............................... 23,938 24,638
-------- --------
54,241 50,570
-------- --------
$209,307 $201,869
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
16
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
AT OCTOBER 31,
-----------------
1994 1993
---- ----
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt (Note 5)................. $ 5,540 $ 6,362
Accounts payable.............................................. 10,713 13,930
Accrued liabilities........................................... 20,512 21,470
-------- --------
Total Current Liabilities.................................... 36,765 41,762
-------- --------
LONG-TERM DEBT (Note 5)....................................... 54,742 56,782
-------- --------
OTHER NONCURRENT LIABILITIES (Notes 4 and 10)................. 11,880 9,943
-------- --------
DEFERRED INCOME TAXES......................................... 11,970 9,634
-------- --------
COMMITMENTS AND CONTINGENCIES (Notes 4, 9 and 10)
STOCKHOLDERS' EQUITY
Capital Stock (Note 6):
Preferred Stock, par value $1 per share, authorized 5,000,000
shares--
$5.00 Cumulative Convertible Preferred Stock, outstanding
2,185 shares at October 31, 1994 and October 31, 1993...... 2 2
Series D Participating Convertible Preferred Stock, out-
standing 895.18 shares at October 31, 1994 and October 31,
1993....................................................... 1 1
Common Stock, authorized 40,000,000 shares--
Par value, $.01 per share, outstanding 8,486,174 shares at
October 31, 1994 and 8,472,598 shares at October 31, 1993.. 85 85
Additional paid-in capital.................................... 17,787 17,634
Retained earnings............................................. 76,075 66,026
-------- --------
Total Stockholders' Equity................................... 93,950 83,748
-------- --------
$209,307 $201,869
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
17
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
----------------------------------
1994 1993 1992
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Continuing Operations--
Net income............................... $ 10,061 $ 7,698 $ 13,377
Adjustments to reconcile net income to
net cash provided (used)
by operating activities:
Depreciation and amortization.......... 5,912 5,749 6,151
Income taxes recoverable............... 3,416 (3,482) --
Deferred taxes......................... 2,913 (24) 4,814
Cumulative effect of accounting change. -- 1,512 --
Changes in operating assets and liabil-
ities:
Receivables.......................... 5,555 24,521 (13,493)
Inventories and prepaid expenses..... (2,372) 2,305 1,789
Accounts payable and other liabili-
ties................................ (3,671) (22,178) (14,851)
---------- ---------- ----------
Total from continuing operations......... 21,814 16,101 (2,213)
---------- ---------- ----------
Discontinued Operations--
Net income (loss)........................ -- (1,954) 2,300
Adjustments to reconcile net income to
net cash provided (used)
by operating activities:
Deferred taxes......................... -- -- (2,300)
---------- ---------- ----------
Total from discontinued operations....... -- (1,954) --
---------- ---------- ----------
Net cash provided (used) by operating ac-
tivities.................................. 21,814 14,147 (2,213)
---------- ---------- ----------
INVESTING ACTIVITIES
Continuing Operations--
Businesses acquired...................... (12,992) (12,969) (18,880)
Business sold............................ -- 3,519 --
Purchases of property, plant and equip-
ment.................................... (2,545) (1,297) (2,171)
Collections of notes receivable.......... 2,553 52 561
Other items, net......................... (2,734) 1,073 1,198
---------- ---------- ----------
Total from continuing operations......... (15,718) (9,622) (19,292)
Discontinued Operations--
Net proceeds relating to discontinued op-
erations................................ -- -- 10,402
---------- ---------- ----------
Net cash used by investing activities...... (15,718) (9,622) (8,890)
---------- ---------- ----------
FINANCING ACTIVITIES
Issuance of debt........................... -- -- 31,906
Reduction of debt.......................... (2,862) (6,855) (20,387)
Dividends paid............................. (12) (12) (13)
Proceeds from shares issued under stock
plans..................................... 115 (310) 486
---------- ---------- ----------
Net cash provided (used) in financing ac-
tivities.................................. (2,759) (7,177) 11,992
---------- ---------- ----------
Net increase (decrease) in cash............ 3,337 (2,652) 889
Cash at beginning of year.................. 170 2,822 1,933
---------- ---------- ----------
Cash at end of year........................ $ 3,507 $ 170 $ 2,822
========== ========== ==========
Supplemental disclosure of cash flow infor-
mation:
Cash paid (refunded) during the year for:
Interest................................. $ 3,780 $ 5,515 $ 4,296
========== ========== ==========
Income taxes............................. $ 3,918 $ 5,930 $ (411)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
18
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED OCTOBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------- ------------- PAID-IN RETAINED
$5.00 SERIES D SHARES AMOUNT CAPITAL EARNINGS TOTAL
------- --------- ------ ------ ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT NOVEMBER 1,
1991................... $ 14 $ 1 8,073 $81 $12,446 $45,928 $58,470
Net income.............. -- -- -- -- -- 15,677 15,677
Cash dividends--
Preferred stock........ -- -- -- -- -- (13) (13)
Conversion of preferred
stock.................. (12) -- 22 -- 12 -- --
Shares issued under
stock plans............ -- -- 72 1 485 -- 486
Tax benefits related to
employee stock option
plans.................. -- -- -- -- 700 -- 700
Biotechnology spin off.. -- -- -- -- -- (120) (120)
------- ------- ----- --- ------- ------- -------
BALANCE AT OCTOBER 31,
1992................... 2 1 8,167 82 13,643 61,472 75,200
Net income.............. -- -- -- -- -- 7,256 7,256
Cash dividends--
Preferred stock........ -- -- -- -- -- (12) (12)
Shares issued under
stock plans............ -- -- 305 3 2,377 (2,690) (310)
Tax benefits related to
employee stock option
plans.................. -- -- -- -- 1,614 -- 1,614
------- ------- ----- --- ------- ------- -------
BALANCE AT OCTOBER 31,
1993................... 2 1 8,472 85 17,634 66,026 83,748
Net income.............. -- -- -- -- -- 10,061 10,061
Cash dividends--
Preferred stock........ -- -- -- -- -- (12) (12)
Shares issued under
stock plans............ -- -- 14 -- 115 -- 115
Tax benefits related to
employee stock option
plans.................. -- -- -- -- 38 -- 38
------- ------- ----- --- ------- ------- -------
BALANCE AT OCTOBER 31,
1994................... $ 2 $ 1 8,486 $85 $17,787 $76,075 $93,950
======= ======= ===== === ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
19
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND COMPANY BUSINESS
(A) Principles of Consolidation: The consolidated financial statements
include the accounts of Whittaker Corporation and its subsidiaries.
(B) Inventories: Inventories are stated at the lower of cost or market. Cost
has been determined principally on the first-in, first-out (FIFO) method.
Inventories consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 31,
---------------
1994 1993
---- ----
(IN THOUSANDS)
<S> <C> <C>
Raw materials............................................ $18,391 $14,477
Work in process.......................................... 11,643 11,061
Finished goods........................................... 1,174 483
Costs relating to long-term contracts.................... 805 2,426
Unliquidated progress billings........................... -- (300)
------- -------
$32,013 $28,147
======= =======
</TABLE>
(C) Intangibles: Goodwill is amortized using the straight-line method over 40
years. Amortization of other intangible assets is being provided on a straight-
line basis over the following periods:
<TABLE>
<S> <C>
Purchased software... 7 years
Technology........... 5-15 years
Patents.............. Lesser of economic or legal life
</TABLE>
Accumulated amortization of goodwill and of other intangible assets at
October 31, 1994 amounted to $1,852,000 and $5,858,000, respectively, and at
October 31, 1993 amounted to $1,397,000 and $5,351,000, respectively.
(D) Property and Depreciation: Property, plant and equipment is recorded at
cost. Depreciation is computed principally by use of the straight-line method
based upon the estimated useful lives of such assets, ranging from four to 30
years. Depreciation of leasehold improvements is computed on a straight-line
basis over the shorter of the estimated useful lives of the improvements or the
terms of the leases.
(E) Long-Term Contracts: Whittaker generally accounts for long-term contracts
using the percentage-of-completion method. At October 31, 1994 and 1993,
unbilled receivables relating to long-term contracts of $33,867,000 and
$39,212,000, respectively, were included in trade accounts receivable. These
amounts represent recoverable costs and accrued profits, not billable to
customers at the balance sheet date, which are generally billable upon product
delivery and acceptance and/or completion of milestones. Amounts representing
retainages under contracts are not material. Claims subject to further
negotiations and which may not be collected within one year are approximately
$1.6 million at October 31, 1994.
(F) Company Business: The Company is engaged in the design, manufacture and
distribution of a wide variety of fluid control devices, defense electronic
systems, cable systems, high-energy-density batteries and a data manager
product for aerospace and other performance-critical applications.
In fiscal 1994, 1993, and 1992 approximately 49%, 68% and 58%, respectively,
of Whittaker's sales from continuing operations were directly or indirectly to
the United States Government. In fiscal 1994, 1993 and 1992 approximately 20%,
11% and 11%, respectively, of Whittaker's sales from continuing operations
arose from exports to customers outside the United States. Approximately 31% of
the Company's accounts receivable are from the U.S. Government, and the balance
is primarily from prime defense contractors with the U.S. Government, aircraft
manufacturers, and foreign and commercial customers.
(G) Research and Development Costs: Costs for research and development are
expensed as incurred. In fiscal 1994, 1993 and 1992 research and development
costs totaled $2.7 million, $1.7 million and $1.1 million, respectively.
20
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND COMPANY BUSINESS--
(CONTINUED)
The Company acquired businesses for $13.0 million in cash during each of
fiscal 1994 and 1993. The acquisitions were accounted for under the purchase
method, and in the year of acquisition the results of operations for 1994 and
1993 include sales of $10.5 million and $1.7 million, respectively, related to
these businesses. These acquisitions resulted in goodwill of $5.6 million and
$6.9 million in fiscal 1994 and 1993, respectively.
NOTE 2. EARNINGS PER SHARE
Earnings per share have been computed based on the weighted average number of
common and common equivalent shares outstanding during the periods, after
deducting from net income the dividend requirements on the outstanding $5.00
Cumulative Convertible Preferred Stock. Common stock equivalents include Series
D Participating Convertible Preferred Stock and dilutive employee stock
options, calculated using the treasury stock method.
Fully diluted earnings per share are not presented because the calculations
result in dilution of less than 3%.
NOTE 3. SPIN OFF OF BIOTECHNOLOGY BUSINESS SEGMENT
In October 1991, the following events relating to Whittaker's biotechnology
segment occurred:
(i) Whittaker's Board of Directors, to effect the spin off of Whittaker's
biotechnology business, declared a special distribution to Whittaker's
stockholders of record on November 14, 1991 of one share of BioWhittaker,
Inc. Common Stock for each Whittaker common share held on the record date
and for each Whittaker common share into which Whittaker's Series D
Participating Convertible Preferred Stock held on the record date was
convertible. Whittaker thereby distributed all of the shares of
BioWhittaker Common Stock owned by Whittaker, which represented 80.1% of
the shares outstanding after giving effect to the sale of BioWhittaker
Common Stock to the Boehringer Ingelheim group (see below).
(ii) BioWhittaker, Inc. sold to Anasco GmbH for $23 million in cash newly
issued BioWhittaker Common Stock, which represented 19.9% of its
outstanding Common Stock after such sale. Anasco GmbH is a member of the
Boehringer Ingelheim group headquartered in Germany.
(iii) BioWhittaker paid to Whittaker $23.3 million, the outstanding
balance of its intercompany payable to Whittaker.
NOTE 4. DISCONTINUED OPERATIONS
On February 27, 1989, the Board of Directors approved a divestiture and
restructuring program (the "Divestiture Program") pursuant to which a
substantial part of the Company's chemical operations and certain of its
technology operations were discontinued. During the first quarter of fiscal
1990, the Company discontinued its specialty chemicals segment. During the
fourth quarter of fiscal 1991, the Company spun off its biotechnology segment
(see Note 3).
21
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4. DISCONTINUED OPERATIONS--(CONTINUED)
Operating results of the discontinued operations were as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER
31,
-----------------------
1994 1993 1992
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Sales............................................... $ -- $ -- $ 6,111
Costs and expenses.................................. -- 3,182 7,611
------ ------- -------
Loss before taxes................................... -- (3,182) (1,500)
Tax benefit......................................... -- (1,228) (1,500)
------ ------- -------
Loss from discontinued operations................... $ -- $(1,954) $ --
====== ======= =======
</TABLE>
Assets held for sale at October 31, 1994 and October 31, 1993 include $23.7
million and $22.7 million, respectively, of land formerly used by a
discontinued technology unit. The Company is in the process of obtaining
entitlements--the right granted by political authorities to develop real
property--for the land.
The 1993 loss from discontinued operations consists of the $3.5 million
settlement of a patent infringement case and a $.7 million loss provision for
ongoing costs related to previously discontinued operations. These losses were
partially offset by the receipt of $1.0 million of interest related to the
resolution of tax issues associated with previously discontinued operations.
The 1992 Gain on disposal of discontinued operations of $2.3 million reflects
the tax benefit resulting from the resolution of certain tax issues relating to
previously discontinued operations on a more favorable basis than previously
anticipated. Proceeds realized in fiscal 1992 from the disposition of
discontinued businesses amounted to $7.8 million.
In connection with the discontinuance of various businesses, the Company
remains liable for certain retained obligations and for certain future claims,
principally environmental and product liability. The noncurrent portion of such
items is included in "Other Noncurrent Liabilities" in the balance sheet.
NOTE 5. LONG-TERM DEBT
At October 31, 1994, the Company's debt totaled $60.3 million, which
consisted of $42.5 million of loans under a revolving bank credit facility,
$16.5 million under a bank term loan, and $1.3 million of other debt. In
addition, there were $12.5 million of letters of credit outstanding under the
revolving credit facility. On January 24, 1995, the Company and a new group of
banks entered into a new credit agreement which consists of a $65.0 million
revolving credit facility with a three-year term expiring in January 1998 and a
$35.0 million term loan that is to be repaid in quarterly installments over
five years. Interest on loans outstanding under the credit agreement are based,
at the Company's option, on LIBOR or the agent bank's prime rate. The annual
interest rate based on LIBOR may range between LIBOR plus 1% and LIBOR plus
1.875%, and the annual interest rate based on the prime rate may range between
prime and prime plus .50%. The Company is obligated to pay letter of credit
fees which may range between LIBOR plus .625% per annum and LIBOR plus 2.0% per
annum on the aggregate amount of outstanding letters of credit, and commitment
fees which may range between .25% per annum and .375% per annum on the unused
amount of the revolving credit facility. The agreement includes financial
covenants with respect to financial leverage, cash flow, and tangible net
worth. Proceeds from the new credit facility were used to pay off and cancel
the old credit facility and will be used going forward to fund working capital
and acquisitions. At the date of the new credit facility, the debt outstanding
was $35.0 million under the term loan, of which $3.75 million is due within
fiscal year 1995, and $20.5 million of loans and $12.7 million of letters of
credit under the revolving credit facility. The Company's obligations under the
credit agreement are secured by shares of stock of subsidiaries of the Company,
accounts receivable, inventory, and other assets of the Company and its
subsidiaries.
22
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5. LONG-TERM DEBT--(CONTINUED)
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 31,
---------------------------------
1994 1993
---- ----
(IN THOUSANDS)
INTEREST INTEREST
AMOUNT RATE AMOUNT RATE
------ -------- ------ --------
<S> <C> <C> <C> <C>
COLLATERALIZED DEBT--
Borrowings under bank credit facility..... $59,000 6.2% $61,500 4.4%
Other notes collateralized primarily by
certain real property and equipment ma-
turing at various dates to 1999, with in-
terest at 65% of prime................... 859 5.0% 1,109 3.9%
CAPITALIZED LEASE OBLIGATIONS--
Obligations payable in varying monthly or
quarterly installments through 1999, with
interest rates ranging to 9.67% (Note 9). 423 8.8% 535 8.6%
------- -------
60,282 63,144
Less current maturities................... 5,540 6,362
------- -------
$54,742 $56,782
======= =======
</TABLE>
Maturities of long-term debt are as follows for the periods stated:
<TABLE>
<CAPTION>
YEAR ENDING
OCTOBER 31 (IN THOUSANDS)
----------- --------------
<S> <C>
1995.................................................. $ 5,540
1996.................................................. 6,048
1997.................................................. 7,057
1998.................................................. 30,567
1999.................................................. 8,819
</TABLE>
NOTE 6. CAPITAL STOCK
Each share of the $5.00 Cumulative Convertible Preferred Stock is voting,
cumulative and convertible into 1.854 shares of Common Stock plus $74.16 in
cash, is redeemable, at the Company's option, at $100 per share and is
entitled to preference of $100 per share upon voluntary liquidation and $50
per share upon involuntary liquidation (aggregate of $.1 million at October
31, 1994). Each share of Series D Participating Convertible Preferred Stock is
nonvoting, cumulative and, in connection with a qualifying transfer,
convertible into 326.531 shares of Common Stock. Holders of the Series D
Participating Convertible Preferred Stock, of which there is presently only
one, are entitled to a $1.00 per share liquidation preference and to the
greater of $.25 per share per quarter or any dividends paid in respect of the
number of shares of Common Stock underlying each share of Series D
Participating Convertible Preferred Stock. The Board of Directors is
authorized to issue preferred stock in series, to fix dividend rates,
conversion rights, voting rights, rights and terms of redemption and
liquidation preferences, and to increase or decrease the number of shares of
any series.
23
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. CAPITAL STOCK--(CONTINUED)
Common Stock reserved for issuance at October 31, 1994 was as follows:
<TABLE>
<CAPTION>
SHARES IN
THOUSANDS
---------
<S> <C>
For conversion of $5.00 Cumulative Convertible Preferred Stock. 4
For conversion of Series D Participating Convertible Preferred
Stock......................................................... 292
For stock options.............................................. 1,611
-----
1,907
=====
</TABLE>
Whittaker had reserved 1,611,211 shares of Common Stock at October 31, 1994
for future issuances under its employee and non-employee director stock option
plans. Options to purchase Common Stock generally are conditioned upon
continued employment, expire from five to ten years after the grant date, and
become exercisable in whole or in part either commencing with the second year
or upon the attainment of certain predetermined goals. The following
information for the three years ended October 31, 1994 relates to options
granted from 1981 through 1994 under the plans.
<TABLE>
<CAPTION>
OPTIONS
OUTSTANDING
IN THOUSANDS PRICE RANGE
------------ -----------
<S> <C> <C>
Balance, November 1, 1991................... 833 4.45 to 12.63
Options exercised prior to spin off of Bio-
technology segment........................ (23) 7.58 to 9.69
-----
Balance at date of spin off................. 810 4.45 to 12.63
Spin off transactions--
Options cancelled pursuant to spin off.... (810) 4.45 to 12.63
Options granted pursuant to spin off...... 1,497 2.41 to 6.83
Options granted subsequent to spin off..... 31 10.63 to 12.94
Options cancelled subsequent to spin off... (12) 6.32
Options exercised subsequent to spin off... (49) 4.10 to 6.83
-----
Balance, October 31, 1992................... 1,467 2.41 to 12.94
Options granted............................ 325 12.00 to 15.06
Options cancelled or expired............... (69) 5.24 to 14.50
Options exercised.......................... (472) 2.41 to 12.00
-----
Balance, October 31, 1993................... 1,251 2.41 to 15.06
Options granted............................ 191 14.19 to 16.37
Options cancelled or expired............... (61) 6.32 to 16.37
Options exercised.......................... (14) 4.10 to 15.06
-----
Balance, October 31, 1994................... 1,367 2.41 to 16.37
=====
</TABLE>
At October 31, 1994, options for 1,137,586 shares were exercisable.
The Company's Stockholder Rights Plan gives each holder of the Company's
Common Stock one right for each share of Common Stock held. Each right entitles
the holder to purchase from the Company 1/100 of a share of a new series of the
Company's preferred stock (Series A Participating Cumulative Preferred Stock)
at an exercise price of $125 per 1/100 of a share. The rights will become
exercisable and will detach from the Common Stock 10 days after any person or
group acquires 25% or more of the Company's Common Stock, or 10 business days
after any person or group commences a tender or exchange offer which, if
consummated, would result in that person or group owning at least 25% of the
Company's Common Stock.
24
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. CAPITAL STOCK--(CONTINUED)
If any person acquires 25% or more of the Company's Common Stock, each right
will entitle the holder, other than the acquiring person, to purchase for the
exercise price Common Stock of the Company with a value of twice the exercise
price. In addition, if following an acquisition by any person or group of 25%
or more of the Company's Common Stock, the Company is involved in a merger or
other business combination transaction, or sells more than 50% of its assets or
earning power to any person, each right will entitle the holder, other than the
acquiring person, to purchase for the exercise price Common Stock of the
acquiring person with a value of twice the exercise price.
The Company may redeem the rights at $.01 per right at any time until the
tenth day after any person or group has acquired 25% or more of its Common
Stock. The rights will expire November 29, 1998, unless earlier redeemed. The
Stockholder Rights Plan may be supplemented or amended at the direction of the
Company without the approval of the holders of rights, except as otherwise set
forth in the Stockholder Rights Plan. At October 31, 1994, 150,000 preferred
shares were reserved for these rights.
NOTE 7. INCOME TAXES
Effective November 1, 1992 the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
Financial Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes." As permitted under the new rules, prior year's financial statements
have not been restated. The cumulative effect of adopting Statement 109 as of
November 1, 1992 was to increase net income by $1,512,000.
Income tax expense is included in the consolidated statements of income as
follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
------------------------
1994 1993 1992
---- ---- ----
(IN THOUSANDS)
LIABILITY DEFERRED
METHOD METHOD
-------------- --------
<S> <C> <C> <C>
Total provision--
Continuing operations......................... $6,471 $ 4,814 $ 8,570
Discontinued operations....................... -- (1,228) (3,800)
------ ------- -------
$6,471 $ 3,586 $ 4,770
====== ======= =======
Components of the provision--
Federal....................................... $5,371 $ 2,917 $ 4,690
State......................................... 1,100 669 80
------ ------- -------
$6,471 $ 3,586 $ 4,770
====== ======= =======
Classification of the provision--
Current....................................... $2,347 $ 191 $ 7,651
Deferred...................................... 4,124 3,395 (2,881)
------ ------- -------
$6,471 $ 3,586 $ 4,770
====== ======= =======
</TABLE>
The 1992 Federal income tax provision related to discontinued operations
includes a $2.3 million Federal and $1.5 million State tax benefit resulting
from the resolution of certain tax issues relating to previously discontinued
operations on a more favorable basis than previously anticipated.
25
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7. INCOME TAXES--(CONTINUED)
The provision for deferred income taxes results from differences in the
timing of the recognition of expense and income items for tax and financial
statement purposes and for the period prior to the adoption of Statement 109 is
comprised of the following:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1992
----------------
(IN THOUSANDS)
DEFERRED METHOD
----------------
<S> <C>
Depreciation................................................ $ (178)
Warranty and other accrued liabilities...................... 4
Inventory and other assets.................................. (2,719)
Unremitted earnings of subsidiaries......................... 38
Other items................................................. (26)
-------
$(2,881)
=======
</TABLE>
The tax provisions are different from amounts computed by applying the U.S.
statutory rate to income before provision for taxes. The reasons for these
differences are as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
---------------------------
1994 1993 1992
---- ---- ----
(IN THOUSANDS)
DEFERRED
LIABILITY METHOD METHOD
----------------- --------
<S> <C> <C> <C>
Expected tax provision.......................... $5,688 $ 3,172 $ 6,952
State taxes, net of Federal income tax benefit.. 715 442 53
Resolution of Internal Revenue Service tax is-
sues........................................... -- -- (2,300)
Other items..................................... 68 (28) 65
-------- -------- -------
Actual tax provision............................ $6,471 $3,586 $ 4,770
======== ======== =======
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets and liabilities at October 31, 1994 and at
October 31, 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
ASSETS LIABILITIES ASSETS LIABILITIES
------- ----------- ------- -----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Receivables Valuation................... $ 1,395 $ 152 $ 1,501 $ 160
Inventory Valuation..................... 4,030 -- 3,019 --
Self-Insurance Reserves................. 2,142 -- 3,105 --
Other Valuation Reserves................ 10,792 14,570 9,362 11,459
Discontinued Reserves................... 1,348 -- 2,891 --
Excess of Tax over Book Depreciation.... 267 3,070 206 2,972
------- ------- ------- -------
Total before valuation allowance.... $19,974 $17,792 $20,084 $14,591
Valuation allowance..................... 757 -- 1,193 --
------- ------- ------- -------
Total............................... $19,217 $17,792 $18,891 $14,591
======= ======= ======= =======
</TABLE>
The change in the valuation allowance from 1993 to 1994 is the result of
changes in temporary differences which affect the deferred state income tax
provision.
26
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8. PENSION AND RETIREMENT PLANS
Most of Whittaker's domestic employees are covered by its noncontributory
defined benefit pension plan. The benefits are based on years of service and
the employee's highest compensation for five consecutive years during the last
ten years of credited service. Contributions are intended to provide for
benefits attributable to service both to date and expected to be provided in
the future. The Company funds the plan in accordance with the Employee
Retirement Income Security Act of 1974, as amended (ERISA).
The following table sets forth the plan's funded status and amounts
recognized in the Company's consolidated balance sheet:
<TABLE>
<CAPTION>
OCTOBER 31,
--------------------
1994 1993
---- ----
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $112,821 in 1994 and $113,581 in 1993.. $(114,149) $(116,350)
========= =========
Projected benefit obligation for service rendered to
date............................................... $(114,149) $(123,868)
Plan assets at fair value, primarily publicly traded
stocks and fixed income securities................... 115,488 129,294
--------- ---------
Plan assets in excess of projected benefit obligation. 1,339 5,426
Items not yet recognized in earnings:
Unrecognized net (gain)/loss........................ 1,688 (2,291)
Unrecognized net transition asset at November 1,
1985 net of
amortization....................................... (1,139) (2,028)
--------- ---------
Net prepaid pension cost recorded in the consolidated
balance sheet........................................ $ 1,888 $ 1,107
========= =========
</TABLE>
During the fourth quarter of fiscal 1994, the Company's Board of Directors
approved an amendment to the defined benefit pension plan which suspends the
benefits related to future service of plan participants. The effect of the
amendment was to reduce the plan's projected benefit obligation at October 31,
1994 by $3,887,000. The amount was fully absorbed by unrecognized net losses at
October 31, 1994 related to the plan and, accordingly, no curtailment gain was
recognized.
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 8.0% and 0.0% (as a result of the curtailment
noted above), respectively, at October 31, 1994, and 7.5% and 5.0%,
respectively, at October 31, 1993. The expected long-term rate of return on
plan assets was 8.75% for the years ended October 31, 1994 and 1993, and 9% for
the year ended October 31, 1992.
27
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8. PENSION AND RETIREMENT PLANS--(CONTINUED)
The Company also sponsors unfunded supplemental nonqualified executive and
director plans. At October 31, 1994, the projected benefit obligation for those
plans totaled $5,257,000, of which $1,022,000 is subject to later amortization.
The remaining $4,235,000 is accrued as a liability in the consolidated balance
sheet. In addition, the Company sponsors a defined contribution 401(k) plan
covering a majority of its domestic employees under which contributions by
employees are partially matched by the Company.
Total pension and retirement expense was as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
---------------------------
1994 1993 1992
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Cost components of funded defined benefit plan:
Service cost--benefits earned during the pe-
riod........................................ $ 2,253 $ 2,674 $ 2,403
Interest cost on projected benefit obliga-
tion........................................ 8,723 9,108 8,761
Actual return on plan assets................. 5,086 (24,989) (7,968)
Net amortization and deferral................ (16,844) 14,570 (2,073)
-------- -------- -------
Total net periodic pension cost (income)....... (782) 1,363 1,123
Less amount included in discontinued opera-
tions......................................... -- -- 39
-------- -------- -------
Net periodic pension cost (income) for funded
defined benefit plan included in continuing
operations.................................... (782) 1,363 1,084
Cost for unfunded defined benefit plans........ 644 529 592
Cost for defined contribution plan............. 708 849 981
-------- -------- -------
Total pension and retirement plan expense
included in continuing operations............. $ 570 $ 2,741 $ 2,657
======== ======== =======
</TABLE>
NOTE 9. LEASED ASSETS AND LEASE COMMITMENTS
Whittaker has various leases covering real property and equipment.
Property, Plant and Equipment includes $242,000 at October 31, 1994 and
$301,000 at October 31, 1993 for leases that have been capitalized. The
amortization of these assets is included in depreciation expense.
Future minimum payments under capital leases and under noncancellable
operating leases, net of rentals to be received from existing noncancellable
operating subleases, as of October 31, 1994, were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
YEARS ENDED OCTOBER 31, LEASES LEASES
----------------------- ------- ---------
(IN THOUSANDS)
<S> <C> <C>
1995.................................................. $123 $ 887
1996.................................................. 123 281
1997.................................................. 123 281
1998.................................................. 123 256
1999.................................................. 12 20
2000 and subsequent................................... -- --
---- ------
Total commitments....................................... 504 $1,725
======
Amounts representing interest........................... 81
----
Present value of net minimum lease payments............. $423
====
</TABLE>
28
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9. LEASED ASSETS AND LEASE COMMITMENTS--(CONTINUED)
Rental expense of continuing operations for operating leases, net of rental
income from subleases, was as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31, (IN THOUSANDS)
----------------------- --------------
<S> <C>
1994..................................................... $1,710
1993..................................................... 1,627
1992..................................................... 1,629
</TABLE>
NOTE 10. COMMITMENTS AND CONTINGENCIES
The Company has typically purchased insurance annually. In certain years,
after evaluating the availability and cost of insurance, the Company did not
purchase insurance for certain risks, including workers' compensation and
product liability. Moreover, the Company's insurance carriers have taken the
position that in certain cases the Company is uninsured for environmental
matters, a position that the Company disputes in certain instances.
Consequently, the Company is without insurance for various risks, including
product liability for certain products manufactured in the past. The Company
does, however, have product liability insurance for products it currently
manufactures.
As a result primarily of the activities of its discontinued operations, the
Company is a potentially responsible party in a number of actions filed under
the Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA"). CERCLA, also known as "Superfund," is the main Federal law enacted
to address public health and environmental concerns arising with respect to the
past treatment and disposal of hazardous substances. The Company is also a
potentially responsible party in a number of other actions brought under state
laws patterned after CERCLA. In nearly all of these matters, the Company
contributed a small amount (generally less than 1%) of the total treated or
disposed of waste.
At October 31, 1994, the Company had provided for its aggregate liability
related to various claims, including uninsured risks and potential claims in
connection with the environmental matters noted above. The amounts provided on
the Company's books for contingencies, including environmental matters, are
recorded at gross amounts. Because of the uncertainty with respect to the
amount of probable insurance recoveries, these potential insurance recoveries
are not taken into account as a reduction of those amounts provided unless an
insurance carrier has agreed to such coverage. The Company does not anticipate
that these matters will have a material adverse effect on the Company's
financial position or on its ability to meet its working capital and capital
expenditure needs. Although the Company has recorded estimated liabilities for
contingent losses, including uninsured risks and claims in connection with
environmental matters, in accordance with generally accepted accounting
principles, the absence of or denial of various insurance coverages represents
a potential exposure for the Company, and the net income of the Company in
future periods could be adversely affected if uninsured losses in excess of
amounts recorded were to be incurred.
29
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for 1994 and 1993 follow (in millions of
dollars except for per share amounts):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- ----
<S> <C> <C> <C> <C> <C>
1994
Sales.................................. $25.8 $28.8 $33.1 $38.7 $126.4
Cost of sales.......................... 14.2 17.5 19.4 22.2 73.3
Net income............................. 1.7 1.9 2.9 3.6 10.1
Earnings per share..................... $ .18 $ .20 $ .31 $ .37 $ 1.06
1993
Sales.................................. $29.3 $29.3 $26.7 $30.1 $115.4
Cost of sales.......................... 19.7 17.6 17.0 16.8 71.1
Income--continuing operations, before
accounting change..................... 1.6 2.1 .8 3.2 7.7
Cumulative effect of accounting change. 1.5 -- -- -- 1.5
Income (loss)--discontinued operations. -- -- .2 (2.1) (1.9)
Net income............................. 3.1 2.1 1.0 1.1 7.3
Earnings per share
Continuing operations................. $ .17 $ .22 $ .08 $ .34 $ .81
Cumulative effect of accounting
change............................... .16 -- -- -- .16
Discontinued operations............... -- -- .02 (.23) (.21)
Net income............................ .33 .22 .10 .11 .76
</TABLE>
NOTE 12. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Long term debt: The carrying amounts of the Company's borrowings approximate
their fair value. The Company's bank credit facility is a variable rate
facility that reprices frequently.
Note receivable: The carrying amounts of the Company's note receivable
approximate their fair value.
30
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information called for by Item 10 is incorporated by reference to the
information under the following captions in the Proxy Statement:
CAPTION
-------
Election of Directors--Directors
Compliance with Section 16(a) of the Securities Exchange Act
Certain of the information called for by Item 10 with respect to executive
officers of the Registrant appears as Item 4A in Part I of this Report.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by Item 11 is incorporated by reference to the
information under the following caption in the Proxy Statement:
CAPTION
-------
Election of Directors--Executive Compensation and Other Information
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information called for by Item 12 is incorporated by reference to the
information under the following caption in the Proxy Statement:
CAPTIONS
--------
Equity Securities and Principal Holders Thereof
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for by Item 13 is incorporated by reference to the
information under the following caption in the Proxy Statement:
CAPTION
-------
Election of Directors--Directors
31
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
The following documents are filed as part of this report:
<TABLE>
<CAPTION>
PAGE REFERENCE
FORM 10-K
--------------
<S> <C>
(A-1) FINANCIAL STATEMENTS:
Report of Independent Auditors.............................. 14
Consolidated Statements of Income for the three years ended
October 31, 1994....................................... 15
Consolidated Balance Sheets as of October 31, 1994 and 1993. 16
Consolidated Statements of Cash Flows for the three years
ended October 31, 1994................................. 18
Consolidated Statements of Stockholders' Equity for the
three years ended October 31, 1994..................... 19
Notes to Consolidated Financial Statements.................. 20
(A-2) FINANCIAL STATEMENT SCHEDULES:
All supplemental schedules are omitted as inapplicable or
because the required information is included in the
Consolidated Financial Statements or the Notes to Con-
solidated Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
(A-3) EXHIBITS:*
<C> <S>
3.1 Restated Certificate of Incorporation (Exhibit 3.1 to Form 10-K for fiscal
year ended October 31, 1989).
3.2 Restated Bylaws (Exhibit 3.2 to Form 10-K for fiscal year ended October
31, 1989), as amended on September 30, 1994.
4.1 Reference is made to Exhibit 3.1.
4.2 Reference is made to Exhibit 3.2.
4.3 Certificate of Designations of $5.00 Cumulative Convertible Preferred
Stock (Exhibit 4.1 to Form S-4, No. 33-04320).
4.4 Rights Agreement dated as of November 18, 1988 between Registrant and
Manufacturers Hanover Trust Company (currently being performed by Mellon
Bank N.A. as rights agent) concerning Series A Participating Cumulative
Preferred Stock Purchase Rights (Exhibit 1 and 2 to Form 8-A filed on
November 23, 1988), as amended as of June 28, 1989 (Exhibit 4.4 to Form
10-K for fiscal year ended October 31, 1989).
4.5 Certificate of Designations of Series D Participating Convertible
Preferred Stock (Exhibit 4.2 to Form S-4, No. 33-29028).
(Other instruments defining the rights of holders of long-term debt are
not filed because the total amount of securities authorized under any such
instrument does not exceed 10% of the consolidated total assets of
Registrant. Registrant hereby agrees to furnish a copy of any such
instrument to the Commission upon request.)
10.1 Amended and Restated 1977 Nonqualified Stock Option Plan (Exhibit 10.5 to
Form 10-K for fiscal year ended October 31, 1982).**
</TABLE>
32
<PAGE>
<TABLE>
<S> <C>
10.2 Restated 1980 Nonqualified Stock Option Plan (Exhibit 10.7 to Form 10-K
for fiscal year ended October 31, 1982).**
10.3 Whittaker Corporation 1992 Stock Option Plan for Non-Employee Directors
(Exhibit 10.4 to Form 10-K for fiscal year ended October 31, 1991).**
10.4 1981 Incentive and Nonqualified Stock Option Plan, as amended January 22,
1982 (Exhibit 10.7 to Form 10-K for fiscal year ended October 31, 1981),
and as amended June 26, 1987 (Exhibit 10.6 to Form 10-K for fiscal year
ended October 31, 1987).**
10.5 Directors' Deferred Compensation Plan dated February 1983 (Exhibit 10.9 to
Form 10-K for fiscal year ended October 31, 1984), as amended on May 18,
1990 (Exhibit 10.7 to Form 10-K for fiscal year ended October 31, 1990).**
10.6 Restated Directors' Retirement Plan effective as of August 2, 1985
(Exhibit 10.10 to Form 10-K for fiscal year ended October 31, 1990).**
10.7 Whittaker Corporation Supplemental Retirement and Disability Trust
Agreement dated November 23, 1988 (Exhibit 10.13 to Form 10-K for fiscal
year ended October 31, 1988).**
10.8 Credit Agreement dated as of January 23, 1995 among the Company,
NationsBank of Texas, N.A., as Agent, and certain other financial
institutions signatories thereto.
10.9 Whittaker Corporation Long-Term Stock Incentive Plan (1989) (Annex 1 to
Form S-8, No. 33-35762), as amended and restated as of December 16,
1994.**
11. Calculation of earnings per share for the three years ended October 31,
1994.
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
27. Financial Data Schedule.
</TABLE>
- - --------
*Exhibits followed by a parenthetical reference are incorporated by reference
to the document described therein. Upon written request to the Secretary of
the Company, a copy of any exhibit referred to above will be furnished
without charge.
**Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this Form 10-K.
(B) REPORTS ON FORM 8-K:
During the quarter ended October 31, 1994, the Company did not file any
reports on Form 8-K.
33
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
WHITTAKER CORPORATION
By Richard Levin
-----------------------------------
(Richard Levin,
Vice President)
Date January 24, 1995
---------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of Registrant
and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
Thomas A. Brancati Director and ++
- - ------------------------------ Principal +
(Thomas A. Brancati) Executive +
Officer +
+
Richard Levin Principal +
- - ------------------------------ Financial +
(Richard Levin) Officer +
+
Joseph F. Alibrandi Director +
- - ------------------------------ +
(Joseph F. Alibrandi) +
+
George H. Benter, Jr. Director +
- - ------------------------------ +
(George H. Benter, Jr.) +
++ January 24, 1995
+
+
Jack L. Hancock Director +
- - ------------------------------ +
(Jack L. Hancock) +
+
Edward R. Muller Director +
- - ------------------------------ +
(Edward R. Muller) +
+
Gregory T. Parkos Director +
- - ------------------------------ +
(Gregory T. Parkos) +
+
Malcolm T. Stamper Director +
- - ------------------------------ +
(Malcolm T. Stamper) ++
34
<PAGE>
EXHIBIT 3.2
WHITTAKER CORPORATION
AMENDMENTS TO BYLAWS
SEPTEMBER 30, 1994
RESOLVED, that Article IV, Section 1 of the Bylaws of this corporation,
designating the principal officers of the corporation, be amended by striking
out "a chairman of the board of directors,";
RESOLVED FURTHER, that Article III of the Bylaws of this corporation is
amended by adding at the end thereof the following:
Section 16. Chairman of the Board of Directors. The board of
directors shall elect one of the directors as chairman of the board of
directors, who shall preside at all meetings of the board of directors at
which he is present and shall have such authority and shall perform such
duties as may be specified in the bylaws of this corporation. The board of
directors may specify other powers and duties for the chairman of the board
of directors, which are not inconsistent with the Bylaws of the
corporation.
<PAGE>
EXHIBIT 10.8
===============================================================================
$100,000,000
CREDIT AGREEMENT
Dated as of January 23, 1995
Among
WHITTAKER CORPORATION
as Borrower
-- --------
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as Initial Lenders
-- ---------------
and
NATIONSBANK OF TEXAS, N.A.
as Agent
-- -----
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS .................... 1
SECTION 1.01. Certain Defined Terms ....................................... 1
SECTION 1.02. Computation of Time Periods ................................ 18
SECTION 1.03. Accounting Terms ........................................... 18
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES ................... 18
SECTION 2.01. The Advances ............................................... 18
(a) The Term Advances ..................................... 18
(b) Revolving Advances .................................... 18
SECTION 2.02. Making the Advances ........................................ 18
(a) Initial Borrowings .................................... 18
(b) Subsequent Revolving Borrowings ....................... 18
(c) Advances by Lenders ................................... 19
(d) Disbursement of Advances .............................. 19
(g) Nature of Lenders' Obligations ........................ 19
SECTION 2.03. Repayment .................................................. 19
(a) Term Advances ......................................... 19
(b) Revolving Advances .................................... 20
(c) L/C Advances .......................................... 20
SECTION 2.04. Voluntary Reduction of the Revolving Commitments ........... 20
SECTION 2.05. Prepayments ................................................ 20
(a) Optional Prepayments .................................. 20
(b) Mandatory Prepayments ................................. 20
(i) Excess Advances .................................. 20
(ii) Mandatory Prepayment: Permitted Refinancings ..... 21
SECTION 2.06. Interest ................................................... 21
(a) Interest on Base Rate Advances ........................ 21
(b) Interest Periods for Eurodollar Rate Advances ......... 21
(c) Interest on Eurodollar Rate Advances .................. 22
(d) Default Interest ...................................... 22
(e) Suspension of Eurodollar Rate Advances ................ 23
(i) Illegality ...................................... 23
(ii) Other Circumstances ............................. 23
(iii) Lenders' Obligation to Notify Agent ............. 23
(iv) Suspension on Event of Default .................. 23
SECTION 2.07. Fees ....................................................... 24
(a) Agent's Fees .......................................... 24
(b) Commitment Fees........................................ 24
(c) Absolute Obligation ................................... 24
SECTION 2.08. Increased Costs, Etc ....................................... 24
(a) Increased Costs ....................................... 24
(b) Capital Requirements .................................. 24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
(c) Limitations on Borrower's Compensation Obligations .... 25
SECTION 2.09. Payments and Computations .................................. 25
(a) Payments by Borrower .................................. 25
(b) Computations .......................................... 25
(c) Payments Assumed ...................................... 26
(d) Application of Payments Specified by the Borrower ..... 26
(e) Application of Payments Not Otherwise Specified ....... 26
(f) Payments on Business Days ............................. 26
(g) Certain Terms ......................................... 26
SECTION 2.10. Taxes ...................................................... 27
(a) Withholding Taxes ..................................... 27
(b) Other Taxes ........................................... 27
(c) Indemnification ....................................... 27
(d) Evidence of Payment ................................... 27
(e) Foreign Lenders and Issuing Banks ..................... 28
(f) Failure to Provide Forms .............................. 28
(g) Change of Applicable Lending Office ................... 28
(h) Cooperation by Lenders ................................ 29
(i) Survival .............................................. 29
SECTION 2.11. Sharing of Payments, Etc ................................... 29
SECTION 2.12. Use of Proceeds ............................................ 30
SECTION 2.13. Evidence of Debt ........................................... 30
(a) Maintenance of Accounts by Lenders .................... 30
(b) Maintenance of Accounts by Agent ...................... 30
(c) Execution of Promissory Notes by Borrower ............. 30
ARTICLE III
AMOUNTS AND TERMS OF LETTERS OF CREDIT ................ 30
SECTION 3.01. The Letter of Credit Subfacility ........................... 30
SECTION 3.02. Issuance of Letters of Credit .............................. 31
(a) Notice of Issuance .................................... 31
(b) Conditions to Issuance ................................ 31
(c) Reports by Issuing Banks .............................. 31
SECTION 3.03. Drawing and Reimbursement .................................. 31
SECTION 3.04. Obligations Absolute ....................................... 32
SECTION 3.05. Letter of Credit Compensation .............................. 33
SECTION 3.06. Use of Letters of Credit ................................... 33
<CAPTION>
ARTICLE IV
CONDITIONS OF LENDING ........................ 34
SECTION 4.01. Conditions Precedent to Initial Borrowing .................. 34
(a) Surviving Debt; Existing Credit Agreement ............. 34
(b) Material Adverse Change; Accuracy of Information ...... 34
(c) Litigation ............................................ 34
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
(d) Payment of Fees ....................................... 34
(e) Delivery of Documents ................................. 34
SECTION 4.02. Conditions Precedent to Each Borrowing and Issuance ........ 36
SECTION 4.03. Determinations Under Article IV ............................ 37
ARTICLE V
REPRESENTATIONS AND WARRANTIES ...................... 37
SECTION 5.01. Representations and Warranties of the Borrower ............. 37
(a) Organization; Corporate Powers ........................ 37
(b) Authority; Enforceability ............................. 37
(c) Subsidiaries and Ownership of Capital Stock ........... 37
(d) No Conflict ........................................... 38
(e) Governmental Consents ................................. 38
(f) Governmental Regulation ............................... 38
(g) Financial Statements and Condition .................... 38
(h) Debt .................................................. 39
(i) Solvency .............................................. 39
(j) Litigation; Adverse Effect ............................ 39
(k) No Material Adverse Effect; Adverse Agreements ........ 39
(l) Tax Examinations ...................................... 39
(m) Payment of Taxes ...................................... 39
(n) Performance of Contractual Obligations ................ 40
(o) Margin Stock .......................................... 40
(p) Disclosure ............................................ 40
(q) Requirements of Law ................................... 40
(r) Intellectual Property ................................. 40
(s) Environmental Matters ................................. 41
(t) ERISA Matters ......................................... 41
(u) Noncontravention ...................................... 42
(v) Collateral ............................................ 42
(w) Investments ........................................... 42
ARTICLE VI
COVENANTS OF THE BORROWER ........................ 42
SECTION 6.01. Affirmative Covenants ...................................... 42
(a) Compliance with Laws, Etc ............................. 42
(b) Payment of Taxes, Etc ................................. 42
(c) Maintenance of Properties, Insurance .................. 43
(d) Preservation of Corporate Existence, Etc .............. 43
(e) Visitation Rights; Books and Records .................. 43
(f) Collateral Documents .................................. 43
(g) Additional Guarantors ................................. 43
SECTION 6.02. Negative Covenants ......................................... 44
(a) Liens, Etc ............................................ 44
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
(b) Debt .................................................. 45
(c) Negative Pledge ....................................... 46
(d) Mergers, Etc .......................................... 46
(e) Sales, Etc. of Assets ................................. 46
(f) Investments in Other Persons .......................... 47
(g) Dividends, Etc ........................................ 48
(h) Change in Nature of Business .......................... 49
(i) Charter Amendments .................................... 49
(j) Accounting Changes .................................... 49
(k) Prepayments, Etc. of Subordinated Debt ................ 49
(l) Partnerships .......................................... 50
(m) Margin Regulations .................................... 50
(n) Transactions with Affiliates .......................... 50
SECTION 6.03. Reporting Requirements ..................................... 50
(a) Default Notice ........................................ 50
(b) Monthly Reports ....................................... 51
(c) Quarterly Financials .................................. 51
(d) Annual Financials ..................................... 51
(e) Compliance Certificates ............................... 51
(f) Annual Forecasts ...................................... 52
(g) ERISA Events .......................................... 52
(h) Plan Terminations ..................................... 52
(i) Multiemployer Plan Notices ............................ 52
(j) Litigation ............................................ 52
(k) Securities Reports .................................... 53
(l) Creditor Reports ...................................... 53
(m) Environmental Conditions .............................. 53
(n) Other Information ..................................... 53
(o) Extension of Certain Delivery Periods ................. 53
SECTION 6.04. Financial Covenants ........................................ 53
(a) Fixed Charge Coverage Ratio ........................... 53
(b) Leverage Ratio ........................................ 53
(c) Cash Flow Ratio ....................................... 54
(d) Consolidated Tangible Net Worth ....................... 54
ARTICLE VII
EVENTS OF DEFAULT ........................... 54
SECTION 7.01. Events of Default .......................................... 54
SECTION 7.02. Actions in Respect of the Letters of Credit Upon Default ... 57
ARTICLE VIII
THE AGENT ................................ 58
SECTION 8.01. Authorization and Action ................................... 58
SECTION 8.02. Agent's Reliance, Etc ...................................... 58
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 8.03. NationsBank and Affiliates ................................. 58
SECTION 8.04. Lender Credit Decision ..................................... 59
SECTION 8.05. Indemnification ............................................ 59
SECTION 8.06. Successor Agents ........................................... 59
ARTICLE IX
MISCELLANEOUS .............................. 60
SECTION 9.01. Amendments, Etc.; Release of Collateral .................... 60
(a) Amendments, Etc ....................................... 60
(b) Release of Collateral ................................. 60
SECTION 9.02. Notices, Etc ............................................... 60
SECTION 9.03. No Waiver; Remedies ........................................ 61
SECTION 9.04. Costs, Expenses ............................................ 61
SECTION 9.05. Right of Set-off ........................................... 62
SECTION 9.06. Binding Effect ............................................. 62
SECTION 9.07. Assignments and Participations ............................. 62
SECTION 9.08. Governing Law .............................................. 65
SECTION 9.09. Execution in Counterparts .................................. 65
SECTION 9.10. No Liability of the Issuing Banks .......................... 65
SECTION 9.11. Change in Accounting Principles ............................ 66
SECTION 9.12. Limitation of Liability .................................... 66
SECTION 9.13. Consent to Jurisdiction and Service of Process ............. 66
SECTION 9.14. Performance of Obligations ................................. 67
SECTION 9.15. Lenders' Action for Their Own Protection Only .............. 67
SECTION 9.16. Confidentiality; Disclosure ................................ 67
SECTION 9.17. Entire Agreement ........................................... 67
SECTION 9.18. WAIVER OF JURY TRIAL ....................................... 67
</TABLE>
v
<PAGE>
TABLES AND EXHIBITS
-------------------
<TABLE>
SCHEDULES
<S> <C>
Schedule I - Commitments and Applicable Lending Offices
Schedule 1.01(a) - Existing Letters of Credit
Schedule 5.01(c) - Subsidiaries and Ownership of Capital Stock
Schedule 5.01(h) - Surviving Debt
Schedule 5.01(w) - Existing Investments
Schedule 6.02(a) - Existing Liens
Schedule 6.02(e)(v) - Assets Identified for Sale
Schedule 6.02(g) - Outstanding Claims
EXHIBITS
Exhibit A-1 - Form of Term Note
Exhibit A-2 - Form of Revolving Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Issuance
Exhibit D - Form of Assignment and Acceptance
Exhibit E - Form of Security Agreement
Exhibit F - Form of Guaranty
Exhibit G - Form of Opinion of Davis Polk & Wardwell
Exhibit H - Form of Opinion of Vice President-General Counsel of the Borrower
Exhibit I - Form of Opinion of Sidley & Austin
Exhibit J - Form of Amendment to Guaranty
Exhibit K - Form of Amendment to Security Agreement
Exhibit L - Form of Compliance Certificate
</TABLE>
vi
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT (as it may be amended, supplemented or otherwise
modified from time to time, this "AGREEMENT") dated as of January 23, 1995 among
---------
WHITTAKER CORPORATION, a Delaware corporation (the "BORROWER"), the financial
--------
institutions (the "INITIAL LENDERS") listed on the signature pages hereof, and
---------------
NATIONSBANK OF TEXAS, N.A. ("NATIONSBANK"), as agent (in such capacity, together
-----------
with any successor appointed pursuant to Article VIII, the "AGENT") for the
-----
Lenders hereunder and as L/C Bank (as hereinafter defined).
PRELIMINARY STATEMENTS:
(1) The Borrower has requested, on the terms and conditions set forth
herein, (a) that the Lenders make Revolving Advances (as hereinafter defined) to
the Borrower from time to time in an aggregate principal amount not to exceed at
any time outstanding $65,000,000 (less the aggregate amount of Letter of Credit
Obligations outstanding at such time), (b) that the Lenders make Term Advances
(as hereinafter defined) to the Borrower on the Closing Date (as hereinafter
defined) in an aggregate principal amount not to exceed $35,000,000, and (c)
that the L/C Bank and the other Issuing Banks issue Letters of Credit (as
hereinafter defined) for the account of the Borrower from time to time in an
aggregate Available Amount (as hereinafter defined) not to exceed at any time
outstanding $40,000,000.
(2) Subject to the terms and conditions set forth in this Agreement,
(a) the Lenders have agreed severally to make such Revolving Advances and Term
Advances to the Borrower, and (b) the L/C Bank has agreed to issue such Letters
of Credit for the account of the Borrower.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. 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):
"ADVANCE" means a Term Advance, a Revolving Advance or an L/C Advance.
-------
"AFFILIATE" means, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
contract or otherwise.
"AGENT" has the meaning specified in the recital of parties to this
-----
Agreement.
"AGENT'S ACCOUNT" means the account of the Agent maintained by the
---------------
Agent with NationsBank at its office at 901 Main Street, Dallas, Texas 75202,
Account No. 1292000883, Corporate Loans, Attention: Agency Services, Reference:
Whittaker.
<PAGE>
"APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
-------------------------
Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"APPLICABLE MARGIN" means, with respect to any Base Rate Advances or
-----------------
Eurodollar Rate Advances, a percentage per annum determined by reference to the
applicable Cash Flow Ratio as set forth below:
<TABLE>
<CAPTION>
Applicable Margin for Applicable Margin for
Cash Flow Ratio Base Rate Advances Eurodollar Rate Advances
--------------- --------------------- ------------------------
<S> <C> <C>
less than 1.75:1.0 0.0% 1.00%
1.75:1.0 or greater, but 0.0% 1.375%
less than 2.50:1.0
2.50:1.0 or greater, but 0.25% 1.625%
less than 3.25:1.0
3.25:1.0 or greater 0.50% 1.875%
</TABLE>
The Applicable Margin for each Base Rate Advance and Eurodollar Rate Advance
shall be determined by reference to the Cash Flow Ratio in effect from time to
time; provided, however, that (i) until receipt by the Agent of the Borrower's
-------- -------
audited financial statements for the fiscal year ended October 30, 1994, the
Cash Flow Ratio shall be deemed to be 2.50:1.0 or greater, but less than
3.25:1.0, (ii) no change (except as provided in clause (iii) below) in the
Applicable Margin shall be effective until three Business Days after the date on
which the Agent receives financial statements pursuant to Section 6.03(c) or (d)
and a Compliance Certificate delivered pursuant to Section 6.03(e),
demonstrating such Cash Flow Ratio, (iii) if at any time, and for so long as, a
Default has occurred and is continuing based on the Borrower's failure to
deliver the financial statements and Compliance Certificate referred to in the
foregoing clause (ii), the Cash Flow Ratio shall be deemed to be 3.25:1.0 or
greater and any change in the Applicable Margin resulting from such deemed Cash
Flow Ratio shall be effective, (iv) except as provided in the following clause
(v), upon the effectiveness of any change in the Applicable Margin, the new
Applicable Margin shall be given retroactive effect as to each outstanding
Advance to the then most recent of (a) the first day of the then current fiscal
quarter of the Borrower, and (b) the last date on which interest was due and
payable in respect of such Advance, and (v) upon the effectiveness of any change
in the Applicable Margin pursuant to the foregoing clause (ii) at any time when
the Applicable Margin is determined pursuant to the foregoing clause (iii), the
new Applicable Margin shall be given effect only as of the effectiveness thereof
(and shall not be given retroactive effect).
"ARRANGER" means NationsBanc Capital Markets, Inc.
--------
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
-------------------------
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
accordance with Section 9.07 and in substantially the form of Exhibit D hereto.
"AVAILABLE AMOUNT" of any Letter of Credit means, at any time, the
----------------
maximum amount available to be drawn under such Letter of Credit at such time
(assuming compliance at such time with all conditions to drawing).
"BOFA" means Bank of America National Trust and Savings Association.
----
2
<PAGE>
"BASE RATE" means a fluctuating interest rate per annum in effect from
---------
time to time, which rate per annum shall at all times be equal to the highest
of: (a) the rate of interest announced publicly by NationsBank from time to time
as NationsBank's prime rate; and (b) 1/2 of one percent per annum above the
Federal Funds Rate.
"BASE RATE ADVANCE" means an Advance that bears interest as provided
-----------------
in Section 2.06(a).
"BERMITE DEVELOPMENT AGREEMENT" means the Development Agreement by and
-----------------------------
among the Borrower, Whittaker Porta Bella Development, Inc. (as successor in
interest to Whittaker Bermite Corporation) and Northholme Partners (as successor
in interest to The Anden Group) dated as of August 1, 1991, relating to the
development of the Bermite Land, as amended to date and as such agreement may
hereafter be amended, supplemented or otherwise modified from time to time.
"BERMITE LAND" means certain real property located in the city of
------------
Santa Clarita consisting of approximately 996 acres and owned by Whittaker Porta
Bella Development, Inc.
"BORROWER" has the meaning set forth in the recital of parties to this
--------
Agreement.
"BORROWER'S ACCOUNT" means the account of the Borrower maintained by
------------------
the Borrower with BofA at its office at 555 South Flower Street, Los Angeles, CA
90071, Account No. 1257300191.
"BORROWING" means a Term Borrowing or a Revolving Borrowing.
---------
"BUSINESS DAY" means a day of the year on which banks are not required
------------
or authorized by law to close in New York City, Los Angeles, California or
Dallas, Texas and, if the applicable Business Day relates to any Eurodollar Rate
Advances, on which dealings are carried on in the London interbank market.
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
--------------------
expenditures (whether paid in cash or accrued as a liability (but without
duplication) during that period and including that portion of Capitalized Leases
which is capitalized on the Consolidated balance sheet of the Borrower and its
Subsidiaries) made or incurred during such period which, in conformity with
GAAP, are required to be included in or reflected by the Borrower's or any of
its Subsidiaries' fixed asset accounts as reflected in any of their balance
sheets (including expenditures for equipment purchased simultaneously with the
trade-in of existing equipment owned by the Borrower or any of its Subsidiaries
to the extent the gross amount of such purchase price exceeds the book value of
the equipment being traded in, minus expenditures made in connection with the
-----
replacement or restoration of assets, to the extent reimbursed or financed from
insurance proceeds or condemnation awards) but, in any event, excluding any such
expenditures which, when made, are designated by the Borrower as Operating
Investments permitted under Section 6.02(f)(vi).
"CAPITALIZED LEASES" has the meaning specified in clause (e) of the
------------------
definition of Debt.
"CASH EQUIVALENTS" means: (a) readily marketable direct obligations
----------------
issued or unconditionally guaranteed by the United States government or issued
by an agency thereof and backed by the full faith and credit of the United
States in each case maturing within 90 days after the date of acquisition
thereof; (b) readily marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing
3
<PAGE>
within 90 days after the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Corporation or Moody's Investors Service, Inc. (or, if at any
time neither Standard & Poor's Corporation nor Moody's Investors Service, Inc.
shall be rating such obligations, then one of the two highest ratings from any
other nationally recognized rating service acceptable to the Required Lenders);
(c) commercial paper, other than commercial paper issued by the Borrower or any
of its Affiliates, maturing no later than 90 days after the date of the
acquisition thereof and, at the time of acquisition, having a rating of at least
either A-1 from Standard & Poor's Corporation or P-1 from Moody's Investors
Service, Inc. (or, if at any time neither Standard & Poor's Corporation nor
Moody's Investors Service, Inc. shall be rating such obligations, then the
highest rating from any other nationally recognized rating service acceptable to
the Required Lenders); (d) money market accounts, domestic and Eurodollar
certificates of deposit or time deposits or bankers' acceptances maturing within
90 days after the date of acquisition thereof issued by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any country which is a member of the OECD and having
combined capital and surplus of not less than $500,000,000 or by any Lender; (e)
repurchase or reverse repurchase agreements issued with any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia having combined capital and surplus of not less than
$500,000,000 or with any Lender, provided that such agreements comply with the
--------
guidelines set forth in the Federal Financial Institutions Examination Council
Supervisory Policy-Repurchase Agreements of Depository Institutions With
Securities Dealers and Others as adopted by the Comptroller of the Currency on
October 31, 1985; and (f) investments in money market funds.
"CASH FLOW RATIO" means, at any time of determination, the ratio of
---------------
(i) Consolidated Total Debt as of the end of the most recently ended fiscal
quarter of the Borrower to (ii) EBITDA for the Borrower and its Subsidiaries on
a Consolidated basis for the four fiscal quarter period ending as of the then
most recently ended fiscal quarter of the Borrower (it being understood and
agreed that the EBITDA attributable to any Operating Investment shall only be
included in such calculation for that period during which such Operating
Investment was owned by the Borrower or any of its Subsidiaries).
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980.
"CLOSING DATE" means the date on which the first Advances are made
------------
hereunder, which shall occur on or before January 24, 1995, or such later date
as the Borrower and the Required Lenders may mutually agree.
"COLLATERAL" means all "Collateral" referred to in the Collateral
----------
Documents and all other property that is subject to any Lien in favor of the
Agent, the Lenders or any Issuing Bank.
"COLLATERAL DOCUMENTS" means the Security Agreement and any other
--------------------
instrument or agreement granting to the Agent a security interest to secure the
Obligations of the Loan Parties under the Loan Documents.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit that is
---------------------------
issued under the Letter of Credit Subfacility for the benefit of a supplier of
goods to the Borrower or any of its Subsidiaries in the ordinary course of
business to effect payment for such goods, the conditions to drawing under which
include the presentation to the Issuing Bank of negotiable bills of lading,
invoices and related documents.
"COMMITMENT" means a Term Commitment or a Revolving Commitment.
----------
4
<PAGE>
"COMMITMENT FEE PERCENTAGE" means a percentage per annum determined by
-------------------------
reference to the Cash Flow Ratio as set forth below:
<TABLE>
<CAPTION>
Cash Flow Ratio Commitment Fee Percentage
--------------- -------------------------
<S> <C>
less than 1.75:1.0 0.25%
1.75:1.0 or greater, but less than 2.50:1.0 0.25%
2.50:1.0 or greater, but less than 3.25:1.0 0.3125%
3.25:1.0 or greater 0.375%
</TABLE>
Except as set forth in the immediately following proviso, the Commitment Fee
Percentage shall be determined by reference to the Cash Flow Ratio in effect
from time to time; provided, however, that (i) until receipt by the Agent of the
-------- -------
Borrower's audited financial statements for the fiscal year ended October 30,
1994, the Cash Flow Ratio shall be deemed to be 2.50:1.0 or greater, but less
than 3.25:1.0, (ii) no change (except as provided in clause (iii) below) in the
Commitment Fee Percentage shall be effective until three Business Days after the
date on which the Agent receives financial statements pursuant to Section
6.03(c) or (d) and a Compliance Certificate delivered pursuant to Section
6.03(e) demonstrating such Cash Flow Ratio, (iii) if at any time, and for so
long as, a Default has occurred and is continuing based on the Borrower's
failure to deliver the financial statements and Compliance Certificate referred
to in the foregoing clause (ii), the Cash Flow Ratio shall be deemed to be
3.25:1.0 or greater and any change in the Commitment Fee Percentage resulting
from such deemed Cash Flow Ratio shall be effective, (iv) except as provided in
the following clause (v), upon the effectiveness of any change in the Commitment
Fee Percentage, the new Commitment Fee Percentage shall be given retroactive
effect to the first day of the then current fiscal quarter of the Borrower, and
(v) upon the effectiveness of any change in the Commitment Fee Percentage
pursuant to the foregoing clause (ii) at any time when the Commitment Fee
Percentage is determined pursuant to the foregoing clause (iii), the new
Commitment Fee Percentage shall be given effect only as of the effectiveness
thereof (and shall not be given retroactive effect).
"CONFIDENTIAL INFORMATION" means information that the Borrower
------------------------
furnishes to the Agent or any Lender on a confidential basis, but does not
include any such information that is or becomes generally available to the
public other than as a result of a breach by the Agent or any Lender of its
obligations hereunder or that is or becomes available to the Agent or such
Lender from a source other than the Borrower that is not, to the best of the
Agent's or such Lender's knowledge, acting in violation of a confidentiality
agreement with the Borrower.
"CONSOLIDATED" refers to the consolidation of accounts in accordance
------------
with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
-----------------------------
expense (including the interest component of Capitalized Leases), of the
Borrower and its Subsidiaries on a Consolidated basis determined for such period
in conformity with GAAP, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to any financings or
letters of credit and net costs under Hedge Agreements, excluding charges in
such period for the amortization or write-off of capitalized (i) fees and
expenses incurred in connection with the Existing Credit Agreement, (ii) amounts
payable under the letter referred to in Section 2.07(a), and (iii) other
expenses relating to the negotiation and preparation of, and initial Borrowing
under, this Agreement.
5
<PAGE>
"CONSOLIDATED NET INCOME" means, for any period, the net earnings (or
-----------------------
loss) after taxes of the Borrower and its Subsidiaries on a Consolidated basis
determined for such period in conformity with GAAP.
"CONSOLIDATED NET WORTH" means the total assets of the Borrower and
----------------------
its Subsidiaries determined on a Consolidated basis in accordance with GAAP
minus all liabilities of the Borrower and its Subsidiaries determined on a
- - -----
Consolidated basis in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (i) the total
-------------------------------
assets of the Borrower and its Subsidiaries determined on a Consolidated basis
in accordance with GAAP minus goodwill and any other items that are classified
-----
as "other intangibles" in accordance with GAAP, over (ii) all liabilities of the
Borrower and its Subsidiaries determined on a Consolidated basis in accordance
with GAAP.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any time of
---------------------------------
determination, the sum of (i) Consolidated Total Debt, and (ii) Consolidated Net
Worth, in each case, as of such time.
"CONSOLIDATED TOTAL DEBT" means, as of any time of determination, all
-----------------------
funded debt and all other indebtedness for borrowed money (including Capitalized
Leases), in each case of the Borrower and its Subsidiaries at such time
determined on a Consolidated basis.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
----------------------
provision of any indenture, mortgage, deed of trust, contract, undertaking,
document or other agreement, instrument or Securities to which that Person is a
party or by which it or any of its properties is bound, or to which it or any of
its properties is subject.
"CONVERSION," "CONVERT" and "CONVERTED" each refer to a conversion of
---------- ------- ---------
Advances of one Interest Type into Advances of the other Interest Type pursuant
to Section 2.08 or 2.09.
"CURRENCY HEDGING AGREEMENTS" means currency swap agreements, currency
---------------------------
future or option contracts and other similar agreements.
"DEBT" of any Person means, without duplication, (a) all indebtedness
----
of such Person for borrowed money, (b) all Obligations of such Person for the
deferred purchase price of property or services (except accounts payable and
accrued expenses arising in the ordinary course of business but only if and so
long as the same are payable on conventional terms and in any event no later
than one year after the incurrence thereof), (c) all Obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (d) all
Obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Obligations of such Person as lessee under leases that have
been or should be, in accordance with GAAP, recorded as capital leases
("CAPITALIZED LEASES"), (f) all Obligations, contingent or otherwise, of such
--------------------
Person under acceptance, letter of credit or similar facilities, (g) all
Obligations of such Person to purchase or redeem Redeemable Preferred Stock
valued at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends, (h) all Obligations of such Person in respect
of Hedge Agreements, (i) all Debt of others referred to in clauses (a) through
(h) above guaranteed directly or indirectly in any manner by such Person, or in
effect guaranteed directly or indirectly by such Person through an agreement (i)
to pay or purchase such Debt or to advance or supply funds for the payment or
purchase of such Debt, (ii) to purchase, sell or lease
6
<PAGE>
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such Debt or to assure the
holder of such Debt against loss, (iii) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay for property or
services irrespective of whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss, and (j) all Debt
referred to in clauses (a) through (h) above secured by (or for which the holder
of such Debt has an existing right, contingent or otherwise, to be secured by)
any Lien on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Debt.
"DEFAULT" means any Event of Default or any event that would
-------
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
"DEFAULT RATE" has the meaning specified in Section 2.06(d).
------------
"DOMESTIC GUARANTOR" means a Guarantor (a) all of whose capital stock
------------------
is owned, directly or through one or more other Domestic Guarantors, by the
Borrower; and (b) which is organized under the laws of the United States or any
state thereof.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
-----------------------
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Agent.
"EBITDA" means, for any period, net income (or net loss) plus the sum
------ ----
of (a) interest expense, (b) income tax expense, (c) depreciation expense and
(d) amortization expense, in each case determined in accordance with GAAP for
such period.
"ELIGIBLE ASSIGNEE" means (a) any Lender and any Affiliate of any
-----------------
Lender so long as such Affiliate directly or through one or more of its
Subsidiaries engages in commercial financing transactions in the ordinary course
of its business, and (b) any commercial bank, savings and loan association,
savings bank, finance company, insurance company, mutual fund or other financial
institution, fund or investor which has been approved in writing (or, in the
case of the Borrower, deemed approved as provided below) by the Borrower and the
Agent as an Eligible Assignee for purposes of this Agreement, provided that in
--------
each such case such approval shall not be unreasonably withheld, and provided,
--------
further, that if the Borrower is requested at any time to approve any Person as
- - -------
an Eligible Assignee hereunder and the Agent has not received notice from the
Borrower, within seven Business Days after receipt by the Borrower of such
request, that the Borrower does not approve such Person as an Eligible Assignee,
the Borrower shall be deemed to have approved such Person as an Eligible
Assignee.
"ENVIRONMENTAL ACTION" means any administrative, regulatory or
--------------------
judicial action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law or any Environmental Permit
including, without limitation, (a) any claim by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any Environmental Law and (b) any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
7
<PAGE>
"ENVIRONMENTAL LAW" means any foreign, federal, state or local law,
-----------------
rule, regulation, order, writ, judgment, injunction, decree, determination or
award relating to the environment, health, safety or Hazardous Materials,
including, without limitation, CERCLA, the Resource Conservation and Recovery
Act, the Hazardous Materials Transportation Act, the Clean Water Act, the Toxic
Substances Control Act, the Clean Air Act, the Safe Drinking Water Act, the
Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide Act and
the Occupational Safety and Health Act.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification
--------------------
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" of any Person means any other Person that for
---------------
purposes of Title IV of ERISA is a member of such Person's controlled group, or
under common control with such Person, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA EVENT" with respect to any Person means (a) the occurrence of a
-----------
reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Plan of such Person or any of its ERISA Affiliates unless the 30-day notice
requirement with respect to such event has been waived by the PBGC; (b) the
provision by the administrator of any Plan of such Person or any of its ERISA
Affiliates of a notice of intent to terminate such Plan, pursuant to Section
4041(c) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (c) the cessation of operations at a
facility of such Person or any of its ERISA Affiliates in the circumstances
described in Section 4062(e) of ERISA; (d) the withdrawal by such Person or any
of its ERISA Affiliates from a Multiple Employer Plan during a plan year for
which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(e) the failure by such Person or any of its ERISA Affiliates to make a payment
to a Plan if the conditions for the imposition of a lien under Section 302(f)(1)
of ERISA are satisfied; (f) the adoption of an amendment to a Plan of such
Person or any of its ERISA Affiliates requiring the provision of security to
such Plan, pursuant to Section 307 of ERISA; or (g) the institution by the PBGC
of proceedings to terminate a Plan of such Person or any of its ERISA
Affiliates, pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that could constitute grounds for
the termination of, or the appointment of a trustee to administer, such Plan.
"EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D
------------------------
of the Board of Governors of the Federal Reserve System, as in effect from time
to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the
-------------------------
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
"EURODOLLAR RATE" means, for any Interest Period for any Eurodollar
---------------
Rate Advance, an interest rate per annum (rounded upward to the nearest whole
multiple of 0.01% per annum) equal to the rate per annum obtained by dividing
(a) the rate per annum at which deposits in U.S. dollars are offered by the
principal office of NationsBank in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the first
day of such Interest Period in
8
<PAGE>
an amount substantially equal to NationsBank's Eurodollar Rate Advance to be
outstanding during such Interest Period and for a period equal to such Interest
Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Interest Period.
"EURODOLLAR RATE ADVANCE" has the meaning specified in Section
-----------------------
2.06(b).
"EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period for any
----------------------------------
Eurodollar Rate Advance means the reserve percentage applicable two Business
Days before the first day of such Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities (or
with respect to any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Rate Advances is determined)
having a term equal to such Interest Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 7.01.
-----------------
"EXISTING CREDIT AGREEMENT" means the Credit Agreement dated as of
-------------------------
May 31, 1990 and amended and restated as of April 21, 1992 among the Borrower,
the institutions party thereto as lenders and Bank of America National Trust and
Savings Association (as successor by merger to Security Pacific National Bank),
as agent, as amended to the date of this Agreement.
"EXISTING DEBT" means Debt of the Company and its Subsidiaries
-------------
outstanding on the date hereof.
"EXISTING LETTERS OF CREDIT" means the letters of credit described on
--------------------------
Schedule 1.01(a) issued by BofA under the Existing Credit Agreement.
"EXISTING LIENS" means the Liens on assets of the Borrower and its
--------------
Subsidiaries identified as such on Schedule 6.02(a).
"FACILITY" means the Term Facility, the Revolving Facility or the
--------
Letter of Credit Subfacility.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"FINANCIAL STANDBY LETTER OF CREDIT" means any letter of credit that
----------------------------------
is issued under the Letter of Credit Subfacility for purposes of providing
credit support for financial obligations.
"FIXED CHARGE COVERAGE RATIO" means, for any period, the quotient
---------------------------
obtained by dividing (a) Consolidated EBITDA of the Borrower and its
Subsidiaries for such period minus Consolidated Capital Expenditures of the
-----
Borrower and its Subsidiaries in such period by (b) the sum of Consolidated
9
<PAGE>
Interest Expense for such period plus scheduled payments of the principal amount
----
of (i) the Term Advances required to be made during such period in accordance
with the provisions of Section 2.03(a) (as such scheduled payments may be
reduced by any prepayments of the Term Advances) and (ii) any other funded debt
or other indebtedness for borrowed money (including Capitalized Leases) of the
Borrower and its Subsidiaries (determined in accordance with GAAP but excluding
any Revolving Advances and L/C Advances) required to be made during such period.
"FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower identified
------------------
as such on Schedule 5.01(c) and, in addition, any Subsidiary of the Borrower
acquired, incorporated or otherwise established by the Borrower after the
Closing Date which is organized under the laws of a jurisdiction other than the
United States of America or any State thereof and more than 80% of the sales,
earnings or assets (determined on a Consolidated basis for such Subsidiary) of
which are located or derived from operations in territories of the United States
of America and jurisdictions outside the United States of America.
"GAAP" has the meaning specified in Section 1.03.
----
"GOVERNMENTAL AUTHORITY" means any nation, state, sovereign or any
----------------------
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"GUARANTOR" means each Subsidiary of the Borrower that has executed
---------
the Guaranty.
"GUARANTY" has the meaning specified in Section 4.01(e)(viii).
--------
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
-------------------
natural or synthetic gas, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and radon gas, (b) any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar import, under any Environmental Law and (c) any other
substance exposure to which is regulated under any Environmental Law.
"HEDGE AGREEMENTS" means Interest Rate Contracts and Currency Hedging
----------------
Agreements.
"INDEMNIFIED PARTY" has the meaning specified in Section 9.04(b).
-----------------
"INFORMATION MEMORANDUM" means the information memorandum dated
----------------------
December 1994 used by the Agent in connection with the syndication of the
Commitments.
"INITIAL LENDERS" has the meaning specified in the recital of parties
---------------
to this Agreement.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any,
-------------
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INTEREST PERIOD" has the meaning specified in Section 2.06(b).
---------------
"INTEREST RATE CONTRACTS" means interest rate swap, cap or collar
-----------------------
agreements, interest rate future or option contracts and other similar
agreements.
10
<PAGE>
"INTEREST TYPE" refers to the distinction between Advances bearing
-------------
interest with reference to the Base Rate and Advances bearing interest with
reference to the Eurodollar Rate.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
---------------------
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"INVESTMENT" in any Person means any loan or advance to such Person,
----------
any purchase or other acquisition of any capital stock, warrants, rights,
options, obligations or other securities of such Person, any capital
contribution to such Person or any other investment in such Person, including,
without limitation, any arrangement pursuant to which the investor incurs Debt
of the types referred to in clauses (i) and (j) of the definition of "DEBT" in
----
respect of such Person.
"ISSUE" means, with respect to any Letter of Credit, either issue such
-----
Letter of Credit, extend the expiry of such Letter of Credit (other than any
such extension occurring pursuant to the terms of such Letter of Credit), renew
such Letter of Credit (other than any such renewal occurring pursuant to the
terms of such Letter of Credit), or increase the amount of such Letter of
Credit, and the terms "Issued", "Issuing", and "Issuance" shall have
------ ------- --------
corresponding meanings.
"ISSUING BANK" means the L/C Bank or any Lender that is a commercial
------------
bank, acting through a domestic branch, in each case in its capacity as issuer
of a Letter of Credit.
"LENDERS" means the Initial Lenders listed on the signature pages
-------
hereof and each Eligible Assignee that shall become a party hereto pursuant to
Section 9.07, including any of the foregoing in its capacity as an Issuing Bank.
"L/C ADVANCE" means a payment made by an Issuing Bank under a Letter
-----------
of Credit.
"L/C BANK" means NationsBank in its capacity as an Issuing Bank.
--------
"L/C CASH COLLATERAL ACCOUNT" has the meaning specified in the
---------------------------
Security Agreement.
"L/C RELATED DOCUMENTS" has the meaning specified in Section 3.04(a).
---------------------
"LETTER OF CREDIT" means a Commercial Letter of Credit, a Financial
----------------
Standby Letter of Credit, a Performance Standby Letter of Credit or an Existing
Letter of Credit.
"LETTER OF CREDIT AGREEMENT" has the meaning specified in Section
--------------------------
3.02(a).
"LETTER OF CREDIT OBLIGATIONS" as of any date of determination with
----------------------------
respect to any Letter of Credit, shall consist of the sum of (a) the then
outstanding Available Amount of such Letter of Credit, and (b) the aggregate
amount of the Unreimbursed Letter of Credit Liability thereunder.
"LETTER OF CREDIT SUBFACILITY" has the meaning specified in Section
----------------------------
3.01.
"LIEN" means any lien, security interest or other charge or
----
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
11
<PAGE>
"LOAN DOCUMENTS" means this Agreement, the Notes, if any, the
--------------
Guaranty, the Collateral Documents and each Letter of Credit Agreement executed
in connection therewith, in each case as amended, supplemented or otherwise
modified from time to time.
"LOAN PARTIES" means the Borrower and each Guarantor.
------------
"MARGIN STOCK" has the meaning specified in Regulation U.
------------
"MATERIAL ADVERSE CHANGE" means any material adverse change in the
-----------------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
-----------------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and its Subsidiaries taken as a whole,
or (b) the ability of the Loan Parties, taken as a whole, to perform under the
Loan Documents.
"MULTIEMPLOYER PLAN" of any Person means a multiemployer plan, as
------------------
defined in Section 4001(a)(3) of ERISA, to which such Person or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.
"MULTIPLE EMPLOYER PLAN" of any Person means a single employer plan,
----------------------
as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees
of such Person or any of its ERISA Affiliates and at least one Person other than
such Person and its ERISA Affiliates or (b) was so maintained and in respect of
which such Person or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"NORTHHOLME PARTNERS" means Northholme Partners, a California limited
-------------------
partnership.
"NOTE" means a Term Note or a Revolving Note.
----
"NOTICE OF BORROWING" means (a) in the case of the initial Borrowings
-------------------
hereunder, a notice substantially in the form of Exhibit B, and (b) in the case
of any other Borrowings, either (i) a notice substantially in the form of
Exhibit B, or (ii) notice by teletransmission or telephonic notice of the
information required by Exhibit B. Any Notice of Borrowing given in accordance
with clause (ii) above shall be promptly confirmed by the Borrower in writing by
a notice substantially in the form of Exhibit B.
"NOTICE OF ISSUANCE" means a notice substantially in the form of
------------------
Exhibit C.
"OBLIGATION" means, with respect to any Person, any obligation of such
----------
Person of any kind, including, without limitation, any liability of such Person
on any claim, whether or not the right of any creditor to payment in respect of
such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 7.01(f). Without limiting the generality of
the foregoing, the Obligations of the Loan Parties under the Loan Documents
include (a) the obligation to pay principal, interest, Letter of Credit
commissions, charges, expenses, fees, attorneys' fees and disbursements,
indemnities and other amounts payable by any
12
<PAGE>
Loan Party under any Loan Document and (b) the obligation to reimburse any
amount in respect of any of the foregoing that any Lender, in its sole
discretion, may elect in accordance with the Loan Documents to pay or advance on
behalf of such Loan Party.
"OECD" means the Organization for Economic Cooperation and
----
Development.
"OFFICERS' CERTIFICATE" means, as to any corporation, a certificate
---------------------
executed on behalf of such corporation by (a) its chairman or vice-chairman of
the board (if an officer) or its president or any vice-president, and (b) by its
chief financial officer, its controller, its treasurer or any assistant
treasurer.
"OPERATING INVESTMENT" means (a) the acquisition by the Borrower or
--------------------
any Domestic Guarantor of a business or a line of business, whether through the
purchase of all of the outstanding equity Securities of the owner thereof or
directly through the purchase of the assets thereof, or (b) the Investment by
the Borrower or any Domestic Guarantor in Securities constituting at least 30%
of the combined voting power of all outstanding Voting Stock of the issuer
thereof if the purpose and result of such Investment is to be actively engaged
in the business of such issuer.
"OPERATING LEASE" means any lease of any property (whether real,
---------------
personal or mixed) which is not a Capitalized Lease.
"OTHER TAXES" has the meaning specified in Section 2.10(b).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"PERFORMANCE STANDBY LETTER OF CREDIT" means any letter of credit
------------------------------------
(other than a Financial Standby Letter of Credit or a Commercial Letter of
Credit) that is issued under the Letter of Credit Subfacility for purposes of
assuring performance of Contractual Obligations, including the return by the
Borrower of advance payments received by it.
"PERMITTED LIENS" means such of the following as to which no
---------------
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for taxes, assessments and governmental charges or
levies (other than Liens arising under ERISA or any Environmental Law) to the
extent not required to be paid under Section 6.01(b) hereof; (b) Liens imposed
by law (other than Liens arising under ERISA or any Environmental Law), such as
materialmen's, mechanics', carriers', workmen's and repairmen's Liens and other
similar Liens arising in the ordinary course of business securing obligations
that are not overdue for a period of more than 30 days; (c) pledges or deposits
to secure obligations under workers' compensation laws or similar legislation or
to secure public or statutory obligations; (d) easements, rights of way and
other encumbrances on title to real property that do not render title to the
property encumbered thereby unmarketable or materially adversely affect the use
of such property for its present purposes; (e) pledges or deposits required by
law to secure the performance of tenders, bids, leases, contracts (other than
for the repayment of Debt) and other similar obligations arising in the ordinary
course of business (including, without limitation, obligations arising as a
result of progress payments under government contracts); and (f) Liens on
property of the Borrower or any of its Subsidiaries arising in the ordinary
course of its business which (i) do not secure Debt, (ii) do not secure
obligations in an aggregate amount, as to all such obligations, exceeding
$1,000,000 and (iii) do not in the aggregate materially detract from the value
of such Person's assets or materially impair the use thereof in the operation of
its business.
13
<PAGE>
"PERMITTED REFINANCING" means Debt of the Borrower (and not of any
---------------------
Subsidiary of the Borrower):
(a) which does not impose at issuance or at any time thereafter (as a
result of any amendments or otherwise) upon the Borrower or any of its
Subsidiaries any restrictions upon the ability of any of them to grant
security interests in their property, to pay dividends, to incur additional
indebtedness or to sell or transfer assets (except restrictions no less
favorable to the Borrower than those contained in this Agreement), or to
take any action permitted under this Agreement;
(b) which does not impose upon the Borrower or any of its
Subsidiaries any financial tests or defaults based on financial condition
or results of operations which are less favorable to the Borrower than
those set forth in Section 6.04 (as a result of any amendments or
otherwise);
(c) with respect to which no principal repayments are due prior to
six months after the last date on which any Advances are required to be
paid (as a result of any amendments or otherwise);
(d) which is either unsecured or, with the prior written consent of,
and on terms and conditions approved in writing by, the Required Lenders,
secured together with the Obligations under the Loan Documents by the
Collateral (but not by any other property of the Borrower or any of its
Subsidiaries); and
(e) 100% of the proceeds of which will be used to repay the Term
Advances and the Revolving Advances and reduce the Revolving Commitments in
accordance with Section 2.05.
"PERSON" means an individual, partnership, corporation (including a
------
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
----
"PRO RATA SHARE" of any amount means, with respect to any Lender at
--------------
any time, the product of (a) a fraction the numerator of which is such Lender's
Total Commitment (without giving effect to any termination thereof pursuant to
Section 7.01) at such time and the denominator of which is the sum of the
Revolving Facility and the Term Facility (in each case without giving effect to
any termination of Commitments pursuant to Section 7.01) at such time times (b)
-----
such amount.
"PREFERRED STOCK" means, with respect to any corporation, capital
---------------
stock issued by such corporation that is entitled to a preference or priority
over any other capital stock issued by such corporation upon any distribution of
such corporation's assets, whether by dividend or upon liquidation.
"REDEEMABLE" means, with respect to any capital stock, Debt or other
----------
right or Obligation, any such capital stock, Debt or other right or Obligation
that (a) the issuer has undertaken to redeem at a fixed or determinable date or
dates, whether by operation of a sinking fund or otherwise, or upon the
occurrence of a condition not solely within the control of the issuer, or (b) is
redeemable at the option of the holder.
"REGISTER" has the meaning specified in Section 9.07(c).
--------
14
<PAGE>
"REGULATION U" means Regulation U of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
"RELEASE" shall mean release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Hazardous Materials through or in the air, soil, surface water,
groundwater or property.
"REQUIRED LENDERS" means at any time Lenders owed or holding at least
----------------
60% of the aggregate principal amount of the Advances outstanding at such time
or, if no such principal amount is outstanding at such time, Lenders holding at
least 60% of the aggregate Commitments under all the Facilities at such time.
For purposes of this definition, the aggregate amount of outstanding L/C
Advances shall be considered to be owed to the Revolving Lenders ratably in
accordance with their respective Revolving Commitments.
"REQUIREMENTS OF LAW" shall mean, as to any Person, the charter and
-------------------
bylaws or other organizational or governing documents of such Person, and any
law, rule or regulation, permit (including, without limitation, any
Environmental Law or Environmental Permit), or order, writ, judgment,
injunction, decree or other 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.
"REVOLVING ADVANCE" has the meaning specified in Section 2.01(b).
-----------------
"REVOLVING BORROWING" means a borrowing consisting of simultaneous
-------------------
Revolving Advances of the same Interest Type made by the Lenders.
"REVOLVING COMMITMENT" means, with respect to any Lender at any time,
--------------------
the amount set forth opposite such Lender's name on Schedule I hereto under the
caption "Revolving Commitment" or, if such Lender has entered into one or more
Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Agent pursuant to Section 9.07(c) as such Lender's "Revolving
Commitment", as such amount may be reduced at or prior to such time pursuant to
Section 2.04.
"REVOLVING COMMITMENT TERMINATION DATE" means the earlier of (i)
-------------------------------------
January 24, 1998 (provided, however, that with the consent of all Lenders such
-------- -------
date may be extended for a period of one year upon the written request of the
Borrower at any time after the first anniversary of the Closing Date), and (ii)
the date of termination in whole of the Revolving Commitments pursuant to
Section 2.04 or 7.01.
"REVOLVING FACILITY" means, at any time, the aggregate amount of the
------------------
Lenders' Revolving Commitments at such time.
"REVOLVING NOTE" means a promissory note of the Borrower payable to
--------------
the order of any Lender, in substantially the form of Exhibit A-2 hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting
from the Revolving Advances made by such Lender.
"SECURITIES" means any stock, shares, voting trust certificates,
----------
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as "SECURITIES", or any certificates of interest, shares, or
----------
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to
15
<PAGE>
subscribe to, purchase or acquire any of the foregoing, but shall not include
any evidence of the Obligations hereunder.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended to
--------------
the date hereof and from time to time hereafter, and any successor statute.
"SECURITIES EXCHANGE ACT" shall mean the Securities Exchange Act of
-----------------------
1934, as amended to the date hereof and from time to time hereafter, and any
successor statute.
"SECURITY AGREEMENT" has the meaning specified in Section
------------------
4.01(e)(vii).
"SINGLE EMPLOYER PLAN" of any Person means a single employer plan, as
--------------------
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA Affiliates and no Person other than such Person
and its ERISA Affiliates or (b) was so maintained and in respect of which such
Person or any of its ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
------- --------
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"SUBORDINATED DEBT" means Debt of the Borrower (and not of any
-----------------
Subsidiary of the Borrower) incurred after the date hereof (i) with respect to
which no principal payments are due prior to the date which is one year after
the then scheduled Termination Date, and (ii) which is subordinated in right of
payment to the Borrower's Obligations under the Loan Documents on, and is
otherwise subject to, terms and conditions (including, without limitation, terms
in respect of maturities, covenants, defaults and remedies and interest rates)
approved in writing by the Agent and the Required Lenders; provided that the
--------
term "Subordinated Debt" shall not include Debt permitted by Section 6.02(b)(v)
which is subordinated pursuant to the Guaranty.
"SUBSIDIARY" of any Person means any corporation, partnership, limited
----------
liability company, joint venture, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
limited liability company or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"SURVIVING DEBT" has the meaning specified in Section 4.01(a).
--------------
16
<PAGE>
"SURVIVING DEBT AGREEMENT" means any agreement or instrument setting
------------------------
forth the terms and conditions of any Surviving Debt.
"TAXES" has the meaning specified in Section 2.10(a).
-----
"TERM ADVANCE" has the meaning specified in Section 2.01(a).
------------
"TERM BORROWING" means a borrowing consisting of simultaneous Term
--------------
Advances of the same Interest Type made by the Lenders.
"TERM COMMITMENT" means, with respect to any Lender at any time, the
---------------
amount set forth opposite such Lender's name on Schedule I hereto under the
caption "Term Commitment" or, if such Lender has entered into one or more
Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Agent pursuant to Section 9.07(c) as such Lender's "Term
Commitment", as such amount may be reduced at or prior to such time pursuant to
Section 2.04.
"TERM FACILITY" means, at any time, the aggregate amount of the
-------------
Lenders' Term Commitments at such time.
"TERM NOTE" means a promissory note of the Borrower payable to the
---------
order of any Lender, in substantially the form of Exhibit A-1 hereto, evidencing
the indebtedness of the Borrower to such Lender resulting from the Term Advance
made by such Lender.
"TERMINATION DATE" means the earlier of January 31, 2000 and the date
----------------
of termination in whole of the Total Commitments pursuant to Section 7.01.
"TOTAL COMMITMENT" means, with respect to each Lender at any time, the
----------------
aggregate of such Lender's Term Commitment and Revolving Commitment at such
time.
"TYPE" refers to the distinction between Revolving Advances and Term
----
Advances.
"UNREIMBURSED LETTER OF CREDIT LIABILITY" means, as of any date of
---------------------------------------
determination with respect to any Letter of Credit, the aggregate amount of all
L/C Advances which have been made by, and not reimbursed to, the Issuing Bank
under such Letter of Credit.
"UNUSED REVOLVING COMMITMENT" means, with respect to any Lender at any
---------------------------
time, (a) such Lender's Revolving Commitment at such time, minus (b) the sum of
-----
(i) the aggregate principal amount of all Revolving Advances of such Lender
outstanding at such time, plus (ii) such Lender's Pro Rata Share of the
----
aggregate Letter of Credit Obligations outstanding at such time.
"VOTING STOCK" means capital stock issued by a corporation, or
------------
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
"WELFARE PLAN" means a welfare plan, as defined in Section 3(1) of
------------
ERISA.
"WITHDRAWAL LIABILITY" has the meaning specified in Part I of Subtitle
--------------------
E of Title IV of ERISA.
17
<PAGE>
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not
----------------
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 5.01(g) ("GAAP").
----
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. THE ADVANCES.
------------
(A) THE TERM ADVANCES. Each Lender severally agrees, on the terms and
-----------------
conditions hereinafter set forth, to make a single advance (a "TERM ADVANCE") to
------------
the Borrower on the Closing Date in an amount not to exceed such Lender's Term
Commitment on such Business Day. Amounts borrowed under this Section 2.01(a)
and repaid or prepaid may not be reborrowed.
(B) REVOLVING ADVANCES. Each Lender severally agrees, on the terms
------------------
and conditions hereinafter set forth, to make advances (each a "REVOLVING
---------
ADVANCE") to the Borrower from time to time on any Business Day during the
- - -------
period from the Closing Date until the Revolving Commitment Termination Date in
an amount for each such Advance not to exceed such Lender's Unused Revolving
Commitment on such Business Day. Each Revolving Borrowing shall be in an
aggregate amount of $2,000,000 or an integral multiple of $500,000 in excess
thereof and shall consist of Revolving Advances made by the Lenders ratably
according to their respective Revolving Commitments. Within the limits of each
Lender's Unused Revolving Commitment in effect from time to time, the Borrower
may borrow under this Section 2.01(b), prepay pursuant to Section 2.05 and
reborrow under this Section 2.01(b).
SECTION 2.02. MAKING THE ADVANCES.
-------------------
(A) INITIAL BORROWINGS. The initial Borrowings hereunder shall be
------------------
made on the Closing Date and shall be made on notice received by the Agent from
the Borrower (pursuant to a Notice of Borrowing) not later than 12:00 noon
(Dallas, Texas time) (or such later time as the Agent may agree) on the Business
Day immediately preceding the Closing Date. Such Notice of Borrowing shall be
irrevocable upon receipt by the Agent. Each Lender shall, before 2:00 p.m.
(Dallas, Texas time) on the Closing Date, make available for the account of its
Applicable Lending Office to the Agent such Lender's ratable share of such
Borrowings by depositing same day funds in the Agent's Account.
(B) SUBSEQUENT REVOLVING BORROWINGS. Each Revolving Borrowing
-------------------------------
occurring after the Closing Date shall be made on notice received by the Agent
from the Borrower (pursuant to a Notice of Borrowing) not later than 12:00 noon
(Dallas, Texas time) (a) on the Business Day prior to the date of such Borrowing
if such Borrowing consists of Base Rate Advances, and (b) on the third Business
Day prior to the date of such Borrowing if such Borrowing consists of Eurodollar
Rate Advances. Each such Notice of Borrowing shall be irrevocable upon receipt
by the Agent and, in the case of any Notice of Borrowing for Eurodollar Rate
Advances, the Borrower shall indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill on or
before the date specified by such Notice of Borrowing the applicable conditions
set forth in this Section 2.02 or Article IV, including, without limitation, any
loss (including loss of anticipated profits), cost or expense incurred by
18
<PAGE>
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund the Advance to be made by such Lender as a part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.
(C) ADVANCES BY LENDERS. If the Agent receives a Notice of Borrowing,
-------------------
the Agent shall promptly (and, in any event not later than 4:00 p.m. (Dallas,
Texas time) on the Business Day prior to the date of such Borrowing or, if such
Borrowing consists of Eurodollar Rate Advances, the third Business Day prior to
the date of such Borrowing) give each Lender notice of such Notice of Borrowing.
Each Lender shall before 2:00 p.m. (Dallas, Texas time) on the date of such
Borrowing, make available for the account of its Applicable Lending Office to
the Agent such Lender's ratable portion of such Borrowing by depositing same day
funds in the Agent's Account. Unless the Agent shall have received written
notice from a Lender prior to the date of any Borrowing hereunder that such
Lender will not make available to the Agent such Lender's ratable portion of
such Borrowing, the Agent may assume that such Lender has made such ratable
portion available to the Agent on the date of such Borrowing in accordance with
the terms hereof and the Agent may, in reliance upon such assumption, but shall
not be required to, make available to or for the account of the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such ratable portion available to the Agent and the Agent makes
such ratable portion available to the Borrower, such Lender and the Borrower,
without prejudice to any rights or remedies that the Borrower may have against
such Lender, severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to or for the account of the Borrower until the
date such amount is repaid to the Agent, at (A) in the case of the Borrower, the
interest rate applicable at the time to the Advances comprising such Borrowing,
and (B) in the case of such Lender, the Federal Funds Rate. If such Lender
shall pay to the Agent such amount, such amount so paid shall constitute such
Lender's Advance as part of the relevant Borrowing for purposes of this
Agreement and, to the extent that the Borrower previously paid such amount to
the Agent, the Agent will refund to the Borrower such amount so paid, but
without interest.
(D) DISBURSEMENT OF ADVANCES. Upon fulfillment of the applicable
------------------------
conditions set forth in Article IV, the Agent will make funds for any Borrowing
available to the Borrower by crediting the Borrower's Account, subject to the
-------
Agent's receipt of funds from the Lenders, and provided that the Agent shall
--------
first make a portion of such funds equal to any outstanding L/C Advance under
any Letter of Credit, and any interest accrued and unpaid thereon to and as of
such date, available to the applicable Issuing Bank for reimbursement of such
L/C Advance and payment of such interest.
(G) NATURE OF LENDERS' OBLIGATIONS. The failure of any Lender to make
------------------------------
the Advance to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Advance on the
date of such Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender on the date
of any Borrowing.
SECTION 2.03. REPAYMENT.
---------
(A) TERM ADVANCES. The Borrower shall repay to each Lender (in
-------------
accordance with the provisions of Section 2.09(a)) the aggregate principal
amount of all Term Advances owing to such Lender in 20 consecutive quarterly
installments until such principal amount has been paid in full. Such
installments shall be due and payable on the 21st day of each April, July,
October and January (each a "TERM ADVANCE PAYMENT DATE"), commencing April 21,
-------------------------
1995 and each such installment payable to each
19
<PAGE>
Lender shall be in an amount equal to such Lender's Pro Rata Share of the amount
set forth below opposite the period in which such Term Advance Payment Date is
stated to occur:
<TABLE>
<CAPTION>
PERIOD QUARTERLY INSTALLMENT
------ ---------------------
<S> <C>
Closing Date to January 31, 1996 $1,250,000
February 1, 1996 to January 31, 1997 $1,500,000
February 1, 1997 to January 31, 1998 $1,750,000
February 1, 1998 to January 31, 1999 $2,000,000
February 1, 1999 to January 31, 2000 $2,250,000
</TABLE>
(B) REVOLVING ADVANCES. The Borrower shall repay to each Lender (in
------------------
accordance with the provisions of Section 2.09(a)) on the Revolving Commitment
Termination Date the aggregate principal amount of all Revolving Advances owing
to such Lender outstanding on the Revolving Commitment Termination Date.
(C) L/C ADVANCES. The Borrower shall repay each L/C Advance as
------------
provided in Section 3.03.
SECTION 2.04. VOLUNTARY REDUCTION OF THE REVOLVING COMMITMENTS. The
------------------------------------------------
Borrower shall have the right, upon at least three Business Days' notice to the
Agent, to terminate in whole or reduce ratably in part the unused portions of
the respective Revolving Commitments of the Lenders; provided, however, that (i)
-------- -------
each partial reduction shall be in an amount of $5,000,000 or any multiple of
$1,000,000 in excess thereof, and (ii) the aggregate amount of the Revolving
Commitments shall not be reduced pursuant to this Section 2.04 to an amount less
than the sum of (A) the aggregate principal amount of all Revolving Advances
then outstanding, and (B) the aggregate amount of all Letter of Credit
Obligations then outstanding.
SECTION 2.05. PREPAYMENTS.
-----------
(A) OPTIONAL PREPAYMENTS. The Borrower may, upon prior notice to the
--------------------
Agent (which shall be given at least one Business Day in advance in the case of
prepayment of Revolving Advances which consist of Base Rate Advances and three
Business Days in advance in the case of prepayment of Revolving Advances which
are Eurodollar Rate Advances or Term Advances), stating the proposed date and
aggregate principal amount of the prepayment and the Type and Interest Type of
Advances to be prepaid (and if such notice is given the Borrower shall), prepay
in whole or in part the outstanding principal of Advances of such Type and
Interest Type, together with interest thereon to the date of such prepayment on
the principal amounts prepaid (plus, in the case of prepayment of Eurodollar
Rate Advances prior to the end of the applicable Interest Period, any additional
amount for which the Borrower shall be obligated pursuant to Section 9.04(c));
provided, however, that each partial prepayment shall be in an aggregate
- - -------- -------
principal amount of $500,000 or any multiple of $100,000 in excess thereof.
Each such optional prepayment of the Term Advances shall be applied to the
installments thereof in the inverse order of maturity.
(B) MANDATORY PREPAYMENTS.
---------------------
(I) EXCESS ADVANCES. If, at any time, the then outstanding
---------------
aggregate principal amount of all Revolving Advances shall exceed the
aggregate amount of the Revolving Commitments of the Lenders at such time
minus the aggregate amount of the Letter of Credit
-----
20
<PAGE>
Obligations then outstanding, the Borrower shall immediately prepay, for
the ratable account of the Lenders, the outstanding principal amount of
Revolving Advances in an aggregate amount equal to such excess.
(II) MANDATORY PREPAYMENT: PERMITTED REFINANCINGS. When the
--------------------------------------------
Borrower issues, creates, or otherwise incurs Debt which is a Permitted
Refinancing, the Borrower shall, on the date of receipt of the proceeds
thereof, pay to each Lender (in accordance with the provisions of Section
2.09(a)) such Lender's Pro Rata Share of an amount equal to the principal
amount of Debt incurred in such Permitted Refinancing (or, if greater in
the case of any revolving credit or working capital facility, the maximum
amount available to be borrowed (assuming compliance with all conditions
for borrowing) under such Permitted Refinancing), to be applied, first, to
the prepayment of scheduled principal installments of the Term Advances in
inverse order of maturity, until the Term Advances are repaid in full, and
then to the prepayment of the Revolving Advances then outstanding, with a
corresponding permanent reduction in each Lender's Revolving Commitment.
SECTION 2.06. INTEREST. The Borrower shall pay interest on the
--------
unpaid principal amount of each Advance from the date of such Advance until such
principal is paid in full at the applicable rate set forth below.
(A) INTEREST ON BASE RATE ADVANCES. Except to the extent that the
------------------------------
Borrower shall elect to pay interest on all or any part of any Advance made or
to be made to the Borrower under Section 2.01 for any Interest Period pursuant
to subsections (b) and (c) of this Section 2.06, the Borrower shall pay interest
on the unpaid principal amount of each Advance, from the date of such Advance
until such principal amount is paid in full, payable quarterly in arrears on the
21st day of each April, July, October and January, commencing April 21, 1995,
and, with respect to Revolving Advances, on the Revolving Commitment Termination
Date and, with respect to Term Advances, on the Termination Date, in each case
at a fluctuating interest rate per annum equal, subject to Section 2.06(d), to
the sum of the Base Rate in effect from time to time plus the Applicable Margin
----
for Base Rate Advances in effect from time to time.
(B) INTEREST PERIODS FOR EURODOLLAR RATE ADVANCES. The Borrower may,
---------------------------------------------
pursuant to Section 2.06(c), elect to have the interest on the principal amount
of all or any portion of any Advances made or to be made to the Borrower under
Section 2.01, in each case ratably according to the respective outstanding
principal amounts of Advances of the same Type owing to each Lender (each such
principal amount owing to a Lender as to which such election has been made being
a "EURODOLLAR RATE ADVANCE" owing to such Lender) determined and payable for a
-----------------------
specified period (an "INTEREST PERIOD" for such Eurodollar Rate Advance) in
---------------
accordance with subsection (c) below, provided, however, that the Borrower may
-------- -------
not have more than ten Eurodollar Rate Advances owing to any Lender outstanding
at any one time. Each Interest Period shall be one, two, three, or six months,
at the Borrower's selection pursuant to subsection (c) below, provided, however,
-------- -------
that:
(i) The first day of an Interest Period for any Eurodollar Rate
Advance shall be either the last day of any then current Interest Period
for such Advance or, if there shall be no then current Interest Period for
such Advance, any Business Day.
(ii) The Borrower may not select any Interest Period that ends
after any principal repayment installment date unless, after giving effect
to such selection, the aggregate principal amount of Base Rate Advances and
of Eurodollar Rate Advances having Interest Periods
21
<PAGE>
that end on or prior to such principal repayment installment date shall be
at least equal to the aggregate principal amount of Advances due and
payable on or prior to such date.
(iii) Whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding Business
Day; provided, however, that if such extension would cause the last day of
-------- -------
such Interest Period to occur in the next following month, the last day of
such Interest Period shall occur on the next preceding Business Day.
(iv) Whenever the first day of any Interest Period occurs on a
day of the month for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by the number of
months equal to the number of months of such Interest Period, such Interest
Period shall end on the last Business Day of such succeeding calendar
month.
(C) INTEREST ON EURODOLLAR RATE ADVANCES. The Borrower may from time
------------------------------------
to time, on the condition that no Event of Default has occurred and is
continuing, and subject to the provisions of Sections 2.06(b) and 2.06(e), elect
to pay interest on all or any portion of any Advances of the same Type during
any Interest Period therefor at a rate per annum equal to the sum of the
Eurodollar Rate for such Interest Period for such Advances plus the Applicable
Margin for Eurodollar Rate Advances in effect from time to time, by notice,
specifying the Type and amount of the Advances as to which such election is made
(which amount shall aggregate at least $2,000,000 or any multiple of $500,000 in
excess thereof) and the first day and duration of such Interest Period, received
by the Agent before 12:00 noon (Dallas, Texas time) three Business Days prior to
the first day of such Interest Period. If the Borrower has made such election
for Eurodollar Rate Advances for any Interest Period, the Borrower shall pay
interest on the unpaid principal amount of such Eurodollar Rate Advances during
such Interest Period, payable in arrears on the last day of such Interest Period
and, in the case of any Interest Period of six months, on the date which is
three months after the first day of such Interest Period, in each case at a rate
equal, subject to Section 2.06(d), to the sum of the Eurodollar Rate for such
Interest Period for such Eurodollar Rate Advances plus the Applicable Margin for
Eurodollar Rate Advances in effect from time to time during such Interest
Period. On the last day of each Interest Period for any Eurodollar Rate
Advance, the unpaid principal balance thereof shall automatically become and
bear interest as a Base Rate Advance, except to the extent that the Borrower has
elected to pay interest on all or any portion of such amount for a new Interest
Period commencing on such day in accordance with this Section 2.06(c). Each
notice by the Borrower under this Section 2.06(c) shall be irrevocable upon
receipt by the Agent, and the Borrower shall indemnify each Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified by such notice the applicable conditions
set forth in this Section 2.06(c) or Article IV, including, without limitation,
any loss (including loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund any such Eurodollar Rate Advance when such Eurodollar Rate
Advance, as a result of such failure, is not made or does not become effective.
(D) DEFAULT INTEREST. If either (i) any Event of Default occurs and
----------------
is continuing as a result of the failure by the Borrower to pay when due any
amount of principal, interest or fees payable by the Borrower under the Loan
Documents, or (ii) upon the occurrence and during the continuance of any other
Event of Default the Agent shall give written notice to the Borrower (which
notice shall only be given, and may thereafter only be withdrawn, at the
direction of the Required Lenders) declaring default interest to be applicable,
then, so long as any such Event of Default is continuing, the Borrower shall, at
the dates set forth herein for the payment of interest and upon demand, (A) pay
interest on all
22
<PAGE>
Base Rate Advances and any other amounts owing hereunder not paid when due
(other than then outstanding Eurodollar Rate Advances) at a rate per annum (the
"DEFAULT RATE") equal at all times to the rate otherwise applicable to Base Rate
------------
Advances plus 2.00% per annum, and (B) pay interest on each then outstanding
----
Eurodollar Rate Advance at a rate per annum equal at all times to the rate
otherwise applicable to such Eurodollar Rate Advance plus 2.00% per annum.
----
(E) SUSPENSION OF EURODOLLAR RATE ADVANCES.
--------------------------------------
(I) ILLEGALITY. Notwithstanding any other provision of this
----------
Agreement, if the introduction of or any change in or in the interpretation
of any law or regulation shall make it unlawful, or any central bank or
other governmental authority shall assert that it is unlawful, for any
Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to continue to fund or
maintain Eurodollar Rate Advances hereunder, then, on notice thereof and
demand therefor by such Lender to the Borrower through the Agent, (A) each
Eurodollar Rate Advance will automatically, upon such demand (or, if
permitted by applicable law, at the end of the then applicable Interest
Period), be converted into a Base Rate Advance and (B) the obligation of
the Lenders to make or maintain, or to convert Advances into, Eurodollar
Rate Advances shall be suspended until the Agent shall notify the Borrower
that such Lender has determined that the circumstances causing such
suspension no longer exist; provided, however, that, before making any such
-------- -------
demand, each Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a
different Eurodollar Lending Office if the making of such a designation
would allow such Lender or its Eurodollar Lending Office to continue to
perform its obligations to make Eurodollar Rate Advances or to continue to
fund or maintain Eurodollar Rate Advances and would not, in the judgment of
such Lender, be otherwise disadvantageous to such Lender.
(II) OTHER CIRCUMSTANCES. If, with respect to any Eurodollar
-------------------
Rate Advances, the Required Lenders notify the Agent that the Eurodollar
Rate for any Interest Period for such Advances will not adequately reflect
the cost to such Lenders of making, funding or maintaining their Eurodollar
Rate Advances for such Interest Period, the Agent shall forthwith so notify
the Borrower and the Lenders, whereupon (i) each such Eurodollar Rate
Advance will automatically, on the last day of the then existing Interest
Period therefor, convert into a Base Rate Advance and (ii) the obligation
of the Lenders to make, or to convert Advances into, Eurodollar Rate
Advances shall be suspended until the Agent shall notify the Borrower that
such Lenders have determined that the circumstances causing such suspension
no longer exist.
(III) LENDERS' OBLIGATION TO NOTIFY AGENT. If any Lender shall
-----------------------------------
give notice to the Agent under Section 2.06(e)(i) or (ii) and such Lender
shall thereafter determine that the circumstances causing such notice no
longer exist, such Lender shall promptly give written notice thereof to the
Borrower and the Agent, and the Agent shall thereafter give notice thereof
to the Borrower and the other Lenders.
(IV) SUSPENSION ON EVENT OF DEFAULT. Upon the occurrence and
------------------------------
during the continuance of any Event of Default, (i) each Eurodollar Rate
Advance will automatically, on the last day of the then existing Interest
Period therefor, convert into a Base Rate Advance and (ii) the obligation
of the Lenders to make, or to convert Advances into, Eurodollar Rate
Advances shall be suspended.
23
<PAGE>
SECTION 2.07. FEES.
----
(A) AGENT'S FEES. The Borrower agrees to pay to the Agent, for its
------------
own account, the fees in the amounts and at the times set forth in the letter
dated December 5, 1994 from NationsBank and NationsBanc Capital Markets, Inc.,
to the Borrower, and agreed to and accepted by the Borrower on December 7, 1994.
(B) COMMITMENT FEES. The Borrower agrees to pay to the Agent a
---------------
commitment fee on the average daily Unused Revolving Commitment of each Lender,
for the account of such Lender, from the Closing Date in the case of each
Initial Lender and from the effective date specified in the Assignment and
Acceptance pursuant to which it became a Lender in the case of each other Lender
until the Revolving Commitment Termination Date, at the rate per annum equal to
the Commitment Fee Percentage in effect from time to time, payable in arrears on
the 21st day of each April, July, October and January, commencing April 21,
1995, and on the Revolving Commitment Termination Date.
(C) ABSOLUTE OBLIGATION. The Borrower's obligation hereunder to pay
-------------------
the fees referred to in this Section 2.07 shall be absolute and unconditional
and shall survive the making and repayment of Advances, the termination of all
Letter of Credit Obligations and the termination of this Agreement. All fees
which are due or become due pursuant to this Section 2.07 are nonrefundable.
SECTION 2.08. INCREASED COSTS, ETC.
--------------------
(A) INCREASED COSTS. If, due to either (i) the introduction of or any
---------------
change after the date hereof in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law)
issued or made after the date hereof, there shall be any increase in the cost to
any Lender of agreeing to make or of making, funding or maintaining Eurodollar
Rate Advances or of agreeing to issue or of issuing or maintaining or purchasing
participations in Letters of Credit, then the Borrower shall from time to time,
within five Business Days of written demand by such Lender (with a copy of such
demand to the Agent), pay to the Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost; provided,
--------
however, that, before making any such demand, each Lender agrees to use
- - -------
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the making
of such a designation would avoid the need for, or reduce the amount of, such
increased cost and would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender. A certificate as to the amount of
such increased cost, submitted to the Borrower by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.
(B) CAPITAL REQUIREMENTS. If any Lender determines that compliance
--------------------
with any law or regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) which is
issued or made after the date hereof affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender's commitment to lend or to issue or
purchase participations in Letters of Credit hereunder and other commitments of
such type or the issuance or maintenance of or purchase of participations in the
Letters of Credit (or similar contingent obligations), then, within five
Business Days of written demand by such Lender (with a copy of such demand to
the Agent), the Borrower shall pay to the Agent for the account of such Lender,
from time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender in the light of such circumstances, to the extent that
such Lender reasonably
24
<PAGE>
determines such increase in capital to be allocable to the existence of such
Lender's commitment to lend or to issue or purchase participations in Letters of
Credit hereunder or to the issuance or maintenance of or purchase of
participations in any Letters of Credit. A certificate as to such amounts
submitted to the Borrower by such Lender, shall be conclusive and binding for
all purposes, absent manifest error.
(C) LIMITATIONS ON BORROWER'S COMPENSATION OBLIGATIONS.
--------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, the
Borrower shall not be obligated to make any payment to any Lender pursuant to
this Section 2.08 in respect of any amounts or costs (i) accruing in or
allocable to any period prior to the 180th day preceding written demand by such
Lender for payment therefor (unless such amounts or costs prior to such 180 day
period result from the retroactive effect of any of the events described in the
foregoing Sections 2.08(a) or 2.08(b) giving rise to such written demand and
which occurred during such 180 day period) or (ii) resulting from a change in
the Lender's Applicable Lending Office.
SECTION 2.09. PAYMENTS AND COMPUTATIONS.
-------------------------
(A) PAYMENTS BY BORROWER. The Borrower shall make each payment
--------------------
hereunder and under any other Loan Document to which it is a party, irrespective
of and without condition or deduction for any counterclaim, defense, recoupment
or setoff, in lawful money of the United States and in same day funds delivered
to the Agent not later than 1:00 p.m. (Dallas, Texas time) on the day when due
by deposit of such funds to the Agent's Account. Any payment so delivered to
the Agent after 1:00 p.m. (Dallas, Texas time) on any Business Day, or on any
day which is not a Business Day, shall be deemed received by the Agent on the
next succeeding Business Day. Subject to Section 2.14, the Agent will promptly
after receipt of each payment cause to be distributed like funds relating to the
payment of principal, interest, commitment fees or letter of credit fees ratably
to the Lenders for the account of their respective Applicable Lending Offices,
and like funds relating to the payment of any other amount payable to any Lender
or any Issuing Bank (including payments with respect to Letters of Credit and
payments for the account of any Lender under Sections 2.08, 2.10 or 9.04(c)) to
such Lender for the account of its Applicable Lending Office or to such Issuing
Bank, in each case to be applied in accordance with, and subject to, the terms
of this Agreement, including Section 2.09(e) below. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 9.07(c), from and after the effective date
specified in such Assignment and Acceptance, the Agent shall make all payments
hereunder and under any other Loan Document in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(B) COMPUTATIONS. All computations of interest in respect of Base
------------
Rate Advances (and in respect of any other amount payable hereunder other than
Eurodollar Rate Advances and Letter of Credit fees) and all computations in
respect of commitment fees shall be made by the Agent on the basis of a year of
365 days and all computations of interest in respect of Eurodollar Rate Advances
and all computations in respect of Letter of Credit fees shall be made by the
Agent on the basis of a year of 360 days, in each case for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest or fees are payable; provided that if any Advance
--------
is repaid on the same day on which it is made, one day's interest shall be paid
on such Advance. Each determination by the Agent of an interest rate, fee,
commission or discount rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
25
<PAGE>
(C) PAYMENTS ASSUMED. Unless the Agent shall have received notice
----------------
from the Borrower prior to the date on which any payment is due to the Lenders
or any Issuing Bank hereunder that the Borrower will not make such payment in
full, the Agent may assume that the Borrower has made such payment in full to
the Agent on such date and the Agent may, in reliance upon such assumption, but
shall not be required to, cause to be distributed to each Lender or such Issuing
Bank on such due date an amount equal to the amount then due to such Lender or
such Issuing Bank. If and to the extent that the Borrower shall not have so
made such payment in full to the Agent, each Lender and Issuing Bank shall repay
to the Agent forthwith on demand such amount distributed to such Lender or
Issuing Bank together with interest thereon, for each day from the date such
amount is distributed to such Lender or Issuing Bank until the date such Lender
or Issuing Bank repays such amount to the Agent, at the Federal Funds Rate.
(D) APPLICATION OF PAYMENTS SPECIFIED BY THE BORROWER. Except as
-------------------------------------------------
otherwise specified herein, so long as no Event of Default has occurred and is
continuing, all payments shall be applied as instructed by the Borrower if such
instructions are received by the Agent prior to or contemporaneously with
receipt of funds therefor.
(E) APPLICATION OF PAYMENTS NOT OTHERWISE SPECIFIED. If the Agent
-----------------------------------------------
receives funds for application to the Advances or any Letter of Credit
Obligations or other Obligations of the Borrower under the Loan Documents under
circumstances for which the Loan Documents do not specify the Advances or the
Facility or the Obligations to which, or the manner in which, such funds are to
be applied, the Agent may elect to distribute such funds first, to the Issuing
-----
Banks ratably in payment of the principal of and interest on any outstanding L/C
Advances, second, to each Lender ratably in accordance with such Lender's
------
proportionate share of all Advances then outstanding, in repayment or prepayment
of such of the outstanding Advances, and for application to such principal
installments, as the Agent may direct, and thereafter ratably to the Lenders in
repayment or prepayment of any other Obligations of the Borrower then
outstanding under the Loan Documents as the Agent shall direct, provided that if
--------
an Event of Default has occurred and is continuing and the Term Advances have
been declared, or have become, due and payable in full and the Revolving
Commitments of the Lenders have been terminated in full, the Agent shall
distribute any payments and any proceeds of any collection, sale or other
realization or liquidation of any Collateral first, to the payment of all costs
-----
and expenses of the Agent under the Loan Documents, second, to the Issuing Banks
------
ratably in payment of the principal of and interest on any outstanding L/C
Advances, and third, to each Lender ratably in accordance with such Lender's
-----
proportionate share of the principal amount of all Advances and Letter of Credit
Obligations then outstanding, in payment or prepayment of such Obligations owed
to such Lender under the Loan Documents, and for application to such principal
installments (if applicable) as the Agent shall direct.
(F) PAYMENTS ON BUSINESS DAYS. Whenever any payment hereunder shall
-------------------------
be stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest and commitment
and other fees; provided, however, if such extension would cause payment of
-------- -------
interest on or principal of any Eurodollar Rate Advance to be made in the next
following month, such payment shall be made on the next preceding Business Day.
(G) CERTAIN TERMS. The terms "pay", "paid" or "payment" under this
-------------
Agreement shall include prepay, prepaid or prepayment, respectively, under this
Agreement, and the term "due" under this Agreement shall include due by reason
of a mandatory prepayment (including upon an actual or deemed entry of an order
for relief with respect to the Borrower or any Guarantor under the Federal
Bankruptcy Code or upon acceleration).
26
<PAGE>
SECTION 2.10. TAXES.
-----
(A) WITHHOLDING TAXES. Any and all payments by the Borrower hereunder
-----------------
shall be made, in accordance with Section 2.09, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto imposed by the
United States, any other jurisdiction resulting from a prior or present
connection between such jurisdiction and the Borrower, or any political
subdivision of any of the foregoing, excluding, in the case of each Lender, net
---------
income taxes that are imposed by the United States and franchise taxes and
income taxes that are imposed on such Lender by the state or foreign
jurisdiction under the laws of which such Lender is organized or any political
subdivision thereof or therein, and franchise taxes based on income and income
taxes that are imposed on such Lender by any jurisdiction or any political
subdivision thereof or therein in which is located such Lender's Applicable
Lending Office or principal office (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES"). If the Borrower shall be required by law to deduct any
-----
Taxes from or in respect of any sum payable hereunder or under any other Loan
Document to any Lender or the Agent, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.10) such
Lender or the Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions, and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(B) OTHER TAXES. In addition, the Borrower shall pay any present or
-----------
future stamp, recording, documentary, excise or similar taxes, charges or levies
that arise from any payment made hereunder or from the execution, delivery or
registration of any Loan Document (hereinafter referred to as "OTHER TAXES").
-----------
(C) INDEMNIFICATION. The Borrower shall indemnify each Lender for the
---------------
full amount of Taxes and Other Taxes, and for the full amount of taxes imposed
by any jurisdiction on amounts payable under this Section 2.10, paid by such
Lender and any liability (including penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto. Payments pursuant to this
indemnification shall be made within 30 days from the date such Lender makes
written demand therefor setting forth in reasonable detail the basis of the
Borrower's obligation to indemnify such Lender pursuant to this Section 2.10;
provided, however, that (i) in the case of any Taxes or Other Taxes not required
- - -------- -------
by law to be deducted by the Borrower from or in respect of any sum payable
hereunder to any Lender, the Borrower shall be obligated to make payment to the
Lender pursuant to this Section 2.10 (A) in respect of such Taxes or Other Taxes
------------
only if written demand therefor has been made by the Lender within 180 days from
the date on which the Lender or the Agent, as the case may be, actually makes
payment of the Taxes or Other Taxes to the relevant taxing authority, and (B) in
respect of penalties and additions to tax attributable to late payment only to
the extent that such penalties or additions to tax are accrued after the written
demand therefor has been made by the Lender and (ii) the Borrower shall not be
obligated to pay any Taxes or Other Taxes to the extent the Taxes or Other Taxes
result from a change in the Lender's Applicable Lending Office.
(D) EVIDENCE OF PAYMENT. Within 30 days after the date of any payment
-------------------
of Taxes pursuant to Section 2.10(a) or (b), the Borrower shall furnish to the
Agent, at its address referred to in Section 9.02, evidence reasonably
satisfactory to the Agent of payment thereof. In the case of any payment
hereunder for the account of any Lender which is made by the Borrower through an
account or branch outside the United States or on behalf of the Borrower by a
payor that is not a United States
27
<PAGE>
person, if the Borrower determines that no Taxes are payable in respect thereof,
the Borrower shall, except where such mode of payment is at the request of such
Lender, furnish, or cause such payor to furnish, to the Agent, at such address,
a certificate from the appropriate taxing authority or authorities or an opinion
of counsel acceptable to the Agent, in either case stating that such payment is
exempt from Taxes. For purposes of this subsection (d) and of subsection (e),
the terms "UNITED STATES" and "UNITED STATES PERSON" shall have the meanings
------------- --------------------
specified in Section 7701 of the Internal Revenue Code.
(E) FOREIGN LENDERS AND ISSUING BANKS. Each Initial Lender organized
---------------------------------
under the laws of a jurisdiction outside the United States shall, on or prior to
the date of its execution and delivery of this Agreement, and on the date of the
Assignment and Acceptance pursuant to which it became a Lender in the case of
each other Lender organized under the laws of a jurisdiction outside the United
States, and from time to time thereafter if any applicable form previously
provided by such Lender is no longer valid because such Lender has changed its
Applicable Lending Office or its principal office, place of incorporation or
fiscal residence or if otherwise requested in writing by the Borrower or the
Agent (but only so long thereafter as such Lender remains lawfully able to do
so), provide the Agent and the Borrower with (i) an accurate, complete and duly
executed Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Lender is entitled to benefits under an income tax treaty to which the United
States is a party that reduces the rate of withholding tax on payments under
this Agreement or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business in
the United States, and (ii) in the event that, by virtue of a change in law or
regulations, such forms are no longer valid evidence of a person's exemption
from withholding which is reasonably satisfactory to the Borrower, other
appropriate evidence supporting such person's exemption from withholding as the
Borrower may reasonably request. If the form provided by a Lender at the time
such Lender first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes; provided, however, that, if at the date
-------- -------
of the Assignment and Acceptance pursuant to which a Lender assignee becomes a
party to this Agreement, the Lender assignor was entitled to payments under
subsection (a) in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender assignee on such date. If any form or
document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224, that the Lender reasonably considers to be confidential, the Lender shall
give notice thereof to the Borrower and shall not be obligated to include in
such form or document such confidential information.
(F) FAILURE TO PROVIDE FORMS. For any period with respect to which a
------------------------
Lender has failed to provide the Borrower with the appropriate form described in
subsection (e) at the times specified in subsection (e) whether or not such
Lender is lawfully able to do so (other than if such failure is due to a change
----- ----
in law occurring after the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under subsection
(a) or (c) with respect to Taxes imposed by the United States to the extent that
the imposition of such Taxes is attributable to the failure to deliver such
form; provided, however, that should a Lender become subject to Taxes because of
-------- -------
its failure to deliver a form required hereunder, the Borrower shall take such
reasonable steps as such Lender shall reasonably request to assist such Lender
to recover such Taxes.
(G) CHANGE OF APPLICABLE LENDING OFFICE. In the event that the
-----------------------------------
Borrower becomes obligated to make an indemnification payment pursuant to
Section 2.10 to any Lender, the Borrower may
28
<PAGE>
request that such Lender change the jurisdiction of its Applicable Lending
Office in order to avoid the need for or reduce the amount of any such
indemnification payment which may thereafter accrue. The Borrower shall make
such request by delivering to such Lender a notice in writing (with a copy to
the Agent), in form and substance reasonably satisfactory to such Lender, in
which the Borrower identifies the jurisdiction to which the Borrower requests
such Lender change its Applicable Lending Office (which must be a jurisdiction
in which such Lender has a lending office) and promises to indemnify such Lender
against all reasonable out-of-pocket costs such Lender incurs in connection with
such change, and to which is attached an opinion of nationally recognized tax
counsel, in form and substance reasonably satisfactory to such Lender, to the
effect that such change will avoid the need for or reduce the amount of any such
indemnification payment which may thereafter accrue. Upon receipt of such
notice, such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Applicable Lending
Office if such change would not, in the reasonable judgment of such Lender, be
disadvantageous to such Lender.
(H) COOPERATION BY LENDERS. Each Lender agrees that it will (i) take
----------------------
all reasonable actions reasonably requested by the Borrower that are without
risk or material cost to such Lender to maintain all exemptions, if any,
available to it from withholding taxes (whether available by treaty or existing
administrative waiver), and (ii) to the extent reasonable and without risk or
material cost to it, otherwise cooperate with the Borrower to minimize any
amounts payable by the Borrower under this Section 2.10.
(I) SURVIVAL. Without prejudice to the survival of any other
--------
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 2.10 shall survive the payment in full of
principal and interest hereunder.
SECTION 2.11. SHARING OF PAYMENTS, ETC. If any Lender shall obtain
------------------------
at any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) (a) on account of Obligations due and
payable to such Lender hereunder at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations due and
payable to such Lender at such time to (ii) the aggregate amount of the
Obligations due and payable to all Lenders hereunder at such time) of payments
on account of the Obligations due and payable to all Lenders hereunder at such
time obtained by all the Lenders at such time or (b) on account of Obligations
owing (but not due and payable) to such Lender hereunder at such time in excess
of its ratable share (according to the proportion of (i) the amount of such
Obligations owing (but not due and payable) to such Lender at such time to (ii)
the aggregate amount of the Obligations owing (but not due and payable) to all
Lenders hereunder at such time) of payments on account of the Obligations owing
(but not due and payable) to all Lenders hereunder at such time obtained by all
the Lenders at such time, such Lender shall forthwith purchase from the other
Lenders such participations in the Obligations due and payable or owing to them,
as the case may be, as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
-------- -------
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each other Lender shall be rescinded and
such other Lender shall repay to the purchasing Lender the purchase price to the
extent of such other Lender's ratable share (according to the proportion of (i)
the purchase price paid to such Lender to (ii) the aggregate purchase price paid
to all Lenders) of such recovery together with an amount equal to such Lender's
ratable share (according to the proportion of (i) the amount of such other
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.11 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the
29
<PAGE>
right of set-off) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.
SECTION 2.12. USE OF PROCEEDS. The proceeds of the Advances shall be
---------------
available (and the Borrower agrees that it shall use such proceeds) to repay in
full all amounts outstanding under the Existing Credit Agreement, to pay
transaction fees and expenses, to provide working capital for the Borrower and
its Subsidiaries and for other general corporate purposes of the Borrower and
its Subsidiaries, including financing Operating Investments permitted hereunder.
SECTION 2.13. EVIDENCE OF DEBT.
----------------
(A) MAINTENANCE OF ACCOUNTS BY LENDERS. Each Lender shall maintain in
----------------------------------
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.
(B) MAINTENANCE OF ACCOUNTS BY AGENT. The Register maintained by the
--------------------------------
Agent pursuant to Section 9.07(c) shall include a control account, and a
subsidiary account for each Lender, in which accounts (taken together) shall be
recorded (i) the date and amount of each Borrowing made hereunder, the Type and
Interest Type of the Advances comprising such Borrowing and any Interest Period
applicable thereto, (ii) the terms of each Assignment and Acceptance delivered
to and accepted by it, (iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder,
and (iv) the amount of any sum received by the Agent from the Borrower hereunder
and each Lender's share thereof. The entries made in the Register shall be
conclusive and binding for all purposes, absent manifest error.
(C) EXECUTION OF PROMISSORY NOTES BY BORROWER. The Borrower hereby
-----------------------------------------
agrees that if, in the opinion of any Lender, a promissory note or other
evidence of debt is required, appropriate or desirable to reflect or enforce the
indebtedness of the Borrower resulting from the Term Advances or Revolving
Advances made, or to be made, by such Lender, then upon request of such Lender,
the Borrower shall promptly execute and deliver to such Lender, for each of the
Advances made or to be made by such Lender, a promissory note substantially in
the form of Exhibit A-1 for Term Advances and Exhibit A-2 for Revolving
Advances, each payable to the order of such Lender in an amount equal to the
Term Advances or Revolving Commitment (as the case may be) of such Lender.
ARTICLE III
AMOUNTS AND TERMS OF LETTERS OF CREDIT
SECTION 3.01. THE LETTER OF CREDIT SUBFACILITY. The Borrower may
--------------------------------
request any Lender, on the terms and conditions hereinafter set forth, to Issue,
and any such Lender may, if in its sole discretion it elects to do so, and the
L/C Bank shall, if no other Lender elects to do so, Issue Letters of Credit for
the account of the Borrower from time to time on any Business Day during the
period after the Closing Date until the Revolving Commitment Termination Date
(a) in an aggregate Available Amount for all Letters of Credit (including the
Existing Letters of Credit) not to exceed at any time $40,000,000 (the "LETTER
------
OF CREDIT SUBFACILITY"), and (b) in an Available Amount for each such Letter of
- - ---------------------
Credit not to exceed the Unused Revolving Commitments of the Lenders on such
Business Day. No Letter of Credit shall have an expiration date (including all
rights of the Borrower or the beneficiary to require renewal) later than the
Revolving Commitment Termination Date. As of the Closing Date, each
30
<PAGE>
Existing Letter of Credit shall constitute, for all purposes of this Agreement
and the other Loan Documents, a Letter of Credit issued and outstanding
hereunder and shall, for purposes of Section 3.05, be deemed to be Issued
hereunder on the Closing Date. Within the limits of the Letter of Credit
Subfacility, and subject to the limits referred to above, the Borrower may
request the Issuance of one or more Letters of Credit under this Section 3.01,
repay amounts due resulting from L/C Advances thereunder pursuant to Section
3.03, and request the Issuance of one or more additional Letters of Credit under
this Section 3.01.
SECTION 3.02. ISSUANCE OF LETTERS OF CREDIT.
-----------------------------
(A) NOTICE OF ISSUANCE. Each Letter of Credit shall be Issued
------------------
pursuant to a Notice of Issuance, which must be received by the Agent and the
Issuing Bank not later than 12:00 noon (Dallas, Texas time) on the third
Business Day prior to the date of the proposed Issuance of such Letter of Credit
(or such shorter period as may be acceptable to the applicable Issuing Bank).
Each such Notice of Issuance shall specify whether such Letter of Credit is to
be a Commercial Letter of Credit, a Financial Standby Letter of Credit or a
Performance Standby Letter of Credit and shall further specify therein the
requested (i) date of such Issuance (which shall be a Business Day), (ii)
Available Amount of such Letter of Credit, (iii) expiration date of such Letter
of Credit, (iv) name and address of the beneficiary of such Letter of Credit,
and (v) form of such Letter of Credit, and shall be accompanied by such
customary application and agreement for letter of credit of the Issuing Bank (a
"LETTER OF CREDIT AGREEMENT") as the Issuing Bank may specify to the Borrower
--------------------------
for use in connection with such requested Letter of Credit.
(B) CONDITIONS TO ISSUANCE. If (i) the requested form of such Letter
----------------------
of Credit is acceptable to the Agent and the Issuing Bank in the reasonable
discretion of each, (ii) in the case of any Issuing Bank other than the L/C
Bank, such Issuing Bank elects in its sole discretion to Issue the requested
Letter of Credit, and (iii) such Issuing Bank has not received notice from the
Agent or Lenders holding at least 60% of the Revolving Commitments that the
Issuance of such Letter of Credit is not authorized because such Issuance would
not comply with the requirements of clause (a) or (b) of Section 3.01 or one or
more of the conditions set forth in Section 4.02 has not been satisfied, then
such Issuing Bank will, upon fulfillment of the applicable conditions set forth
in Section 4.02 and subject to the provisions of this Article III, make such
Letter of Credit available to the Borrower at its office referred to in Section
9.02 or as otherwise agreed upon with the Borrower in connection with such
Issuance. In the event and to the extent that the provisions of any Letter of
Credit Agreement shall conflict with this Agreement, the provisions of this
Agreement shall govern.
(C) REPORTS BY ISSUING BANKS. Each Issuing Bank shall furnish to the
------------------------
Agent (i) on the fifth Business Day of each month a written report summarizing
Issuance and expiration dates of Letters of Credit Issued by such Issuing Bank
during the preceding month and L/C Advances during such month under all Letters
of Credit Issued by such Issuing Bank, and (ii) two Business Days prior to the
last Business Day of each January, April, July and October, a written report
setting forth the average daily aggregate Available Amount during the preceding
calendar quarter of all Letters of Credit Issued by such Issuing Bank.
SECTION 3.03. DRAWING AND REIMBURSEMENT. The Borrower agrees to
-------------------------
reimburse the Issuing Bank under each Letter of Credit, within one Business Day
after it has notice of any L/C Advance by such Issuing Bank thereunder (which
notice such Issuing Bank agrees promptly to give but the failure to give such
notice shall not reduce the Borrower's obligations hereunder), for the principal
amount of such L/C Advance, and shall pay to such Issuing Bank, on demand,
interest on the unreimbursed principal of such L/C Advance at a rate per annum
equal to (a) from the date of such L/C
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<PAGE>
Advance to the first Business Day after notice thereof has been given to the
Borrower, the rate applicable to Base Rate Advances in effect from time to time,
and (b) from and after such first Business Day, the Default Rate. If the
Borrower shall fail to so reimburse the Issuing Bank within one Business Day
after the Borrower receives notice that any such L/C Advance has been made, then
upon demand by the Issuing Bank, and whether or not a Default has occurred and
is continuing or any conditions set forth in Section 4.02 are satisfied, each
Lender shall purchase from such Issuing Bank, and such Issuing Bank shall sell
and assign to each Lender, such Lender's Pro Rata Share of such outstanding L/C
Advance as of the date of such purchase, by making available for the account of
such Issuing Bank, by deposit to the Agent's Account, in same day funds, an
amount equal to the sum of (i) the portion of the outstanding principal amount
of such L/C Advance to be purchased by such Lender, plus (ii) interest on such
amount, for each day from the date on which such L/C Advance is made until the
date such amount is paid to the Agent, at the Federal Funds Rate. Each Lender
agrees to purchase its Pro Rata Share of an outstanding L/C Advance on (A) the
Business Day on which demand therefor is made by the Issuing Bank which made
such L/C Advance, provided notice of such demand is given not later than 12:00
noon (Dallas, Texas time) on such Business Day, or (B) the first Business Day
next succeeding such demand if notice of such demand is given after such time.
Upon any such assignment by an Issuing Bank to any Lender of a portion of an L/C
Advance, such Issuing Bank represents and warrants to such Lender that such
Issuing Bank is the legal and beneficial owner of such interest being assigned
by it, but makes no other representation or warranty and assumes no
responsibility with respect to such L/C Advance, the Loan Documents or any Loan
Party.
SECTION 3.04. OBLIGATIONS ABSOLUTE. The Obligations of the Borrower
--------------------
under this Agreement, any Letter of Credit Agreement and any other agreement or
instrument relating to any Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including, without limitation, the following
circumstances:
(a) any lack of validity or enforceability of this Agreement, any
Letter of Credit Agreement, any Letter of Credit or any other agreement or
instrument relating thereto (this Agreement and all of the other foregoing
being collectively referred to herein as the "L/C RELATED DOCUMENTS");
---------------------
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Borrower in respect of any
L/C Related Document or any other amendment or waiver of or any consent to
departure from all or any of the L/C Related Documents;
(c) the existence of any claim, set-off, defense or other right that
the Borrower or any of its Subsidiaries may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), any Issuing Bank or any
other Person, whether in connection with the transactions contemplated by the
L/C Related Documents or any unrelated transaction;
(d) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
(e) payment by any Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit;
32
<PAGE>
(f) any exchange, release or non-perfection of any Collateral or other
collateral, or any release or amendment or waiver of or consent to departure
from any guarantee, for all or any of the Obligations of the Borrower in respect
of the L/C Related Documents; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor.
SECTION 3.05. LETTER OF CREDIT COMPENSATION.
-----------------------------
(a) The Borrower shall pay to the Agent:
(i) for the account of the Issuing Bank which Issues a Letter of
Credit, an issuance fee in an amount equal to 1/8 of 1% per annum of the
average daily Available Amount of such Letter of Credit outstanding from
time to time: and
(ii) for the account of each Lender, a letter of credit fee with
respect to each Letter of Credit, in each case in an amount equal to
(A) with respect to each Financial Standby Letter of Credit,
a rate per annum equal to the Applicable Margin for Eurodollar Rate
Advances in effect from time to time on such Lender's Pro Rata Share
of the average daily Available Amount of such Letter of Credit
outstanding from time to time;
(B) with respect to each Performance Standby Letter of
Credit, a rate per annum equal to the Applicable Margin for Eurodollar
Rate Advances in effect from time to time minus 0.50% on such Lender's
-----
Pro Rata Share of the average daily Available Amount of such Letter of
Credit outstanding from time to time; and
(C) with respect to each Commercial Letter of Credit, 0.25%
of the amount of such Lender's Pro Rata Share of the Available Amount
of such Letter of Credit as of the date of Issuance thereof.
The letter of credit and issuance fees payable under this Section 3.05(a) shall
be payable quarterly in arrears on the 21st day of each April, July, October and
January, commencing April 21, 1995, and on the Revolving Commitment Termination
Date except that the letter of credit fee payable under Section 3.05(a)(ii)(C)
shall be payable upon issuance of the applicable Letter of Credit. For purposes
of computing any fees under this Section 3.05(a), the determination of the
maximum amount available to be drawn under a Letter of Credit at any time shall
assume strict compliance with all conditions for drawing. Any fees paid
pursuant to this Section 3.05(a) are nonrefundable.
(b) The Borrower shall pay to each Issuing Bank, for its own account
and on demand, such other commissions, issuance fees, transfer fees and other
fees, charges and expenses in connection with the Issuance, amendment, transfer,
cancellation or administration of each Letter of Credit as the Borrower and such
Issuing Bank shall agree; provided that in no event shall any Issuing Bank
--------
require, after giving effect to the amounts payable to it pursuant to Section
3.05(a) above (in the case of the Issuance of any Letter of Credit), more than
the standard fees, charges and expenses which it normally charges in connection
with such matters.
33
<PAGE>
SECTION 3.06. USE OF LETTERS OF CREDIT. Any Letters of Credit Issued
------------------------
hereunder shall be used solely (a) to support Obligations of the Borrower and
its Subsidiaries not prohibited hereunder, and (b) for the purposes described in
the definition of "Commercial Letter of Credit".
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL BORROWING. The
-----------------------------------------
obligation of each Lender to make an Advance on the occasion of the initial
Borrowing is subject to the following conditions precedent:
(A) SURVIVING DEBT; EXISTING CREDIT AGREEMENT. All Existing Debt,
-----------------------------------------
other than the Debt identified on Schedule 5.01(h) (the "SURVIVING DEBT"), shall
--------------
have been prepaid, redeemed or defeased in full or otherwise satisfied and
extinguished; all commitments and other obligations of the "Lenders" (as defined
in the Existing Credit Agreement) under the Existing Credit Agreement shall have
been terminated; all accrued interest, fees and other amounts payable by the
Borrower under the Existing Credit Agreement shall have been paid in full
(except amounts in respect of certain letters of credit issued by The Chase
Manhattan Bank, N.A. under the Existing Credit Agreement, which letters of
credit are identified on Schedule 5.01(h) and shall be backstopped by Letters of
Credit Issued hereunder); and the Agent shall have received such UCC termination
statements and other instruments and agreements as the Agent may reasonably
require to terminate the Liens securing the Obligations under the Existing
Credit Agreement.
(B) MATERIAL ADVERSE CHANGE; ACCURACY OF INFORMATION. There shall not
------------------------------------------------
have occurred since October 31, 1993 a Material Adverse Change, and all written
information provided by or on behalf of the Borrower or any of its Subsidiaries
to the Agent or the Lenders on or prior to the date hereof shall be true and
correct in all material respects and not incomplete by omitting any information
necessary to make the information provided not misleading in any material
respect.
(C) LITIGATION. There shall exist no action, suit, investigation,
----------
litigation or proceeding affecting the Borrower or any of its Subsidiaries
pending or threatened before any court, governmental agency or arbitrator that
(i) could reasonably be expected to have a Material Adverse Effect, or (ii)
purports to affect the legality, validity or enforceability of this Agreement or
any other Loan Document or the consummation of the transactions contemplated
hereby or thereby.
(D) PAYMENT OF FEES. The Borrower shall have paid all accrued fees
---------------
and expenses of the Agent and the Lenders (including any fees payable to the
Agent on the Closing Date pursuant to Section 2.07 and, to the extent set forth
in a written billing statement delivered to the Borrower prior to the Closing
Date, the accrued fees and expenses of counsel to the Agent).
(E) DELIVERY OF DOCUMENTS. The Agent shall have received on or before
---------------------
the day of the initial Borrowing the following, each dated such day (unless
otherwise specified) and (except for the Notes, if any) in sufficient copies for
each Lender:
(i) Notes to the order of each Lender that shall have submitted
a written request therefor to the Agent not fewer than 2 Business Days
prior to the Closing Date.
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<PAGE>
(ii) Certified copies of the resolutions of the Board of
Directors of the Borrower and each other Loan Party approving the
execution, delivery and performance of this Agreement, any Notes issued
hereunder and each other Loan Document to which it is or is to be a party,
and of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement, the Notes,
if any, and each other Loan Document.
(iii) A copy of the certificate or articles of incorporation of
the Borrower and each other Loan Party and each amendment thereto,
certified (as of a date reasonably near the date of the initial Borrowing)
by the Secretary of State of the state of such Loan Party's incorporation
as being a true and correct copy thereof.
(iv) With respect to each Loan Party, a copy of a certificate of
the Secretary of State of the state of such Loan Party's incorporation,
dated reasonably near the date of the initial Borrowing, listing the
certificate or articles of incorporation of such Loan Party and each
amendment thereto on file in such Secretary of State's office and
certifying that (A) such amendments are the only amendments to such Loan
Party's certificate or articles of incorporation on file in such Secretary
of State's office, (B) (to the extent such certification is available) such
Loan Party has paid all franchise taxes to the date of such certificate,
and (C) such Loan Party is duly incorporated and in good standing under the
laws of such state.
(v) A certificate of each Loan Party, signed on behalf of such
Loan Party by its President or a Vice President and its Secretary or any
Assistant Secretary, dated the date of the initial Borrowing (the
statements made in which certificate shall be true on and as of the date of
the initial Borrowing), certifying as to (A) the absence of any amendments
to the charter of such Loan Party since the date of the Secretary of
State's certificate with respect to such Loan Party referred to in Section
4.01(e)(iv), (B) a true and correct copy of the bylaws of such Loan Party
as in effect on the date of the initial Borrowing, (C) the due
incorporation and good standing of such Loan Party as a corporation
organized under the laws of the state of such Loan Party's incorporation,
and the absence of any proceeding for the dissolution or liquidation of
such Loan Party, (D) the truth of the representations and warranties of
such Loan Party contained in the Loan Documents as though made on and as of
the date of the initial Borrowing and (E) the absence of any event
occurring and continuing, or resulting from the initial Borrowing, that
constitutes a Default.
(vi) A certificate of the Secretary or an Assistant Secretary of
each Loan Party certifying the names and true signatures of the officers of
such Loan Party authorized to sign the Loan Documents to which such Loan
Party is or is to be a party and the other documents to be delivered
hereunder and thereunder.
(vii) A security agreement in substantially the form of Exhibit
E (as amended from time to time in accordance with its terms, the "SECURITY
--------
AGREEMENT"), duly executed by each Loan Party, together with:
---------
(A) certificates representing the Pledged Shares referred to
therein, accompanied by undated stock powers executed in blank and
instruments evidencing the Pledged Debt, if any, referred to therein
indorsed in blank;
35
<PAGE>
(B) UCC financing statements executed by each Grantor (as
defined in the Security Agreement) with respect to such jurisdictions
and in such form as the Agent may require;
(C) evidence of the completion of all other recordings and
filings of or with respect to the Security Agreement that the Agent or
the Required Lenders may request in order to perfect and protect the
Liens created thereby;
(D) evidence reasonably obtainable prior to the date of the
initial Borrowing of the insurance required by the terms of the
Security Agreement;
(E) evidence that all other action that the Agent or the
Required Lenders may request in order to perfect and protect the Liens
created by the Security Agreement has been taken.
(viii) A guaranty in substantially the form of Exhibit F (as
amended from time to time in accordance with its terms, the "GUARANTY"),
--------
duly executed by each Subsidiary of the Borrower identified therein as a
"Guarantor" as of the Closing Date.
(f) A favorable opinion of (i) Davis Polk & Wardwell, special counsel
to the Borrower, in substantially the form of Exhibit G and as to such other
matters as the Agent or the Required Lenders may reasonably request, (ii) the
Vice President-General Counsel of the Borrower, in substantially the form of
Exhibit H and as to such other matters as the Agent or the Required Lenders may
reasonably request, and (iii) Sidley & Austin, special California counsel to the
Borrower, in substantially the form of Exhibit I.
(g) A favorable opinion of Shearman & Sterling, counsel for the Agent,
in form and substance satisfactory to the Agent.
(h) Such other financial, business and other information regarding
each Loan Party as the Agent or the Required Lenders shall have reasonably
requested.
SECTION 4.02. CONDITIONS PRECEDENT TO EACH BORROWING AND ISSUANCE.
---------------------------------------------------
The obligation of each Lender to make an Advance (other than an L/C Advance) on
the occasion of each Borrowing (including the initial Borrowing), and the right
of the Borrower to request the issuance of Letters of Credit, shall be subject
to the further conditions precedent that on the date of such Borrowing or
Issuance (a) the following statements shall be true (and each of the giving of
the applicable Notice of Borrowing or Notice of Issuance and the acceptance by
the Borrower of the proceeds of such Borrowing or of such Letter of Credit shall
constitute a representation and warranty by the Borrower that on the date of
such Borrowing or issuance such statements are true):
(i) the representations and warranties contained in each Loan
Document are correct on and as of the date of such Borrowing or issuance,
before and after giving effect to such Borrowing or issuance and to the
application of the proceeds therefrom, as though made on and as of such
date other than any such representations or warranties that, by their
terms, specifically refer to a date other than the date of such Borrowing
or Issuance; and
36
<PAGE>
(ii) no event has occurred and is continuing, or would result
from such Borrowing or issuance or from the application of the proceeds
therefrom, that constitutes a Default;
and (b) the Agent shall not have received any notification from the Required
Lenders (sufficiently in advance of any proposed Borrowing or issuance of a
Letter of Credit to act thereupon) that any condition precedent set forth above
in this Section 4.02 (and, in the case of the initial Borrowing, Section 4.01)
has not then been satisfied.
SECTION 4.03. DETERMINATIONS UNDER ARTICLE IV. For purposes of
-------------------------------
determining compliance with the conditions specified in Sections 4.01 and 4.02,
each Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders (or the Required
Lenders) unless an officer of the Agent responsible for the transactions
contemplated by the Loan Documents shall have received written notice from such
Lender prior to the applicable Borrowing or Issuance specifying its objection
thereto and, in the case of any such Borrowing, such Lender shall not have made
available to the Agent such Lender's ratable portion of such Borrowing. In the
absence of any such notice or actual knowledge to the contrary, the Agent shall
be entitled to assume that such conditions are satisfied and shall have no
liability or duty for the making or funding of any Advances, or the Issuance of
any Letters of Credit, at a time when any applicable condition set forth in
Section 4.01 or 4.02 has not been met.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
----------------------------------------------
Borrower represents and warrants as follows:
(A) ORGANIZATION; CORPORATE POWERS. Each Loan Party (i) is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which it owns or
leases property or in which the conduct of its business requires it to so
qualify or be licensed except where the failure to so qualify or be licensed
would not have a Material Adverse Effect and (iii) has all requisite corporate
power and authority to own or lease and operate and encumber its properties and
to carry on its business as now conducted and as proposed to be conducted.
(B) AUTHORITY; ENFORCEABILITY. Each Loan Party has the requisite
-------------------------
corporate power and authority (i) to execute, deliver and perform each of the
Loan Documents executed or to be executed by it, and (ii) to file the Loan
Documents filed by it, or to be filed by it, with each appropriate Governmental
Authority. The execution, delivery and performance (or filing, as the case may
be) by each Loan Party of each of the Loan Documents to which it is or is to be
a party and the consummation of the transactions contemplated thereby, have been
duly approved by the Board of Directors of such Loan Party and no other
corporate proceedings on the part of such Loan Party are necessary to consummate
such transactions. Each Loan Document to which the Borrower or any of its
Subsidiaries is, or is required by the terms hereof, to be party and which is
required to have been delivered on or before each date that this representation
and warranty is made or is deemed to have been made, has been duly executed and
delivered by the Borrower and/or such Subsidiary, as the case may be, and
constitutes
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each such Person's legal, valid and binding obligation, enforceable against such
Person in accordance with its terms, and is in full force and effect.
(C) SUBSIDIARIES AND OWNERSHIP OF CAPITAL STOCK. Set forth on
-------------------------------------------
Schedule 5.01(c) hereto is a complete and accurate list, as of the date hereof,
of all Subsidiaries of the Borrower whose total assets are equal to or greater
than $1,000,000. Schedule 5.01(c) hereto also sets forth as of the date hereof
(i) the number of issued and authorized shares of each class of capital stock of
each such Subsidiary of the Borrower and (ii) the identity of the holders of all
shares of each class of capital stock of each such Subsidiary of the Borrower.
Except as set forth on Schedule 5.01(c), as of the Closing Date, no capital
stock (or any securities, instruments, warrants, option or purchase rights,
conversion or exchange rights, calls, commitments or claims of any character
convertible into or exercisable for capital stock) of the Borrower or any
Subsidiary of the Borrower is subject to issuance under any security,
instrument, warrant, option or purchase rights, conversion or exchange rights,
call, commitment or claim of any right, title or interest therein or thereto.
The outstanding capital stock of the Borrower and each Subsidiary of the
Borrower is duly authorized, validly issued, fully paid and nonassessable.
(D) NO CONFLICT. The execution, delivery and performance by each Loan
-----------
Party of each Loan Document to which it is party and the consummation of the
transactions contemplated thereby do not and will not (i) constitute a tortious
interference with any Contractual Obligation of the Borrower or any of its
Subsidiaries to any Person, or (ii) conflict with or violate such Loan Party's
certificate or articles of incorporation or bylaws, or other organizational
documents, as the case may be, or (iii) conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a default under any
material Requirement of Law or material Contractual Obligation of the Borrower
or any of its Subsidiaries, or require termination of any material Contractual
Obligation of any such Person (other than the Existing Credit Agreement and the
Contractual Obligations relating thereto), or (iv) result in or require the
creation or imposition of any Lien whatsoever upon any of the properties or
assets of the Borrower or any of its Subsidiaries (other than Liens in favor of
the Agent arising pursuant to the Loan Documents or Liens permitted pursuant to
Section 6.02(a)), or (v) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of any Loan Party, except
for corporate authorizations described in Section 5.01(b) which have been
obtained and are in full force and effect on the Closing Date.
(E) GOVERNMENTAL CONSENTS. The execution, delivery and performance by
---------------------
each Loan Party of each Loan Document to which it is a party and consummation of
the transactions contemplated thereby do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by any Governmental Authority, except for (i) filings with the
Securities and Exchange Commission under the Securities Exchange Act and filings
to perfect the Liens created by the Collateral Documents which have been, or
will in due course prior to the time required, be made and (ii) filings required
for the Agent to receive payments directly from the United States government
under the Assignment of Claims Act, 31 U.S.C. (S) 3277 and 41 U.S.C. (S) 15,
which shall be made upon the request of the Agent in accordance with Section 8
of the Security Agreement.
(F) GOVERNMENTAL REGULATION. Neither the Borrower nor any Subsidiary
-----------------------
of the Borrower is subject to regulation under (i) the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, the
Investment Company Act of 1940, or (ii) any other federal or state regulatory
scheme such that its ability to incur Debt is limited or its ability to
consummate the transactions contemplated hereby is materially impaired.
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(G) FINANCIAL STATEMENTS AND CONDITION. Complete and accurate copies
----------------------------------
of the following financial statements and materials have been delivered to each
of the Lenders: the Annual Report of the Borrower on Form 10-K for Fiscal Year
1993 (including audited financial statements) and the Quarterly Report of the
Borrower on Form 10-Q for each of the first three quarters of Fiscal Year 1994.
All financial statements included in such materials furnished to any Lender, and
all Annual Reports of the Borrower on Form 10-K and Quarterly Reports of the
Borrower on Form 10-Q delivered after the Closing Date, were prepared in
conformity with GAAP consistently applied, except as otherwise noted therein,
and fairly present the Consolidated financial position of the Borrower and its
Subsidiaries as at the respective dates thereof and the Consolidated results of
operations and statement of cash flows of the Borrower and its Subsidiaries for
each of the periods covered thereby, subject, in the case of any unaudited
interim financial statements, to changes resulting from audit and normal year-
end adjustments.
(H) DEBT. Set forth on Schedule 5.01(h) hereto is a complete and
----
accurate list of all Surviving Debt, showing as of the date hereof the principal
amount outstanding thereunder for each issue of Debt having an outstanding
principal amount in excess of $250,000.
(I) SOLVENCY. Each Loan Party is, individually and together with its
--------
Subsidiaries, Solvent.
(J) LITIGATION; ADVERSE EFFECT. There is no action, suit, proceeding,
--------------------------
governmental investigation or arbitration, at law or in equity, or before or by
any Governmental Authority, pending, or to the knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries or any property of
any of them which has had or is reasonably likely to have a Material Adverse
Effect. Neither the Borrower nor any of its Subsidiaries is (i) in violation of
any applicable law which violation has had or is reasonably likely to have a
Material Adverse Effect, or (ii) subject to or in default with respect to any
final judgment, writ, order, injunction, decree, rule or regulation of any court
or Governmental Authority which has had or is reasonably likely to have a
Material Adverse Effect.
(K) NO MATERIAL ADVERSE EFFECT; ADVERSE AGREEMENTS. Since October 31,
----------------------------------------------
1993, after giving effect to this Agreement and the transactions contemplated by
the Loan Documents, there has occurred no event which has had or is reasonably
likely to have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary of the Borrower is a party to or subject to any Contractual
Obligation or other restriction contained in their respective charters, bylaws,
partnership documents or similar governing documents which has had or is
reasonably likely to have a Material Adverse Effect.
(L) TAX EXAMINATIONS. As of the date hereof, the Federal income tax
----------------
returns of the Borrower for the fiscal years ended (i) October 31, 1986 and
prior have been examined by the IRS and are closed by the applicable statutes of
limitations, (ii) October 31, 1987 and 1988 have been examined by the IRS and a
protest has been filed with the Appeals Division of the IRS to protest certain
adjustments proposed by the IRS, (iii) October 31, 1989, 1990, 1991, and 1992
have been examined by the IRS and the changes have been accepted by the
Borrower, and (iv) October 31, 1993 has not been examined by the IRS; this
return will be subject to review by the Joint Committee of Congress due to the
net operating loss carryback to the fiscal year ended October 31, 1990. All
deficiencies which have been asserted against the Borrower as a result of such
examinations have been fully paid or finally settled or are being contested in
good faith, and no issue has been raised in any such examinations which, by
application of similar principles, reasonably can be expected to result in
assertion of a material deficiency for any other year not so examined that has
not been accrued on the Borrower's audited financial statements for its Fiscal
Year ended October 31, 1993 that would be required to be so accrued in
accordance with GAAP. The Borrower does not anticipate any further material tax
liability with respect to any years which have
39
<PAGE>
not been closed, taken as a whole. The Borrower has no knowledge of any
material Federal income tax liability with respect to open taxable years in
excess of amounts accrued on the Borrower's audited financial statements which
would be required to be so accrued in accordance with GAAP. For purposes of
this Section, the term "THE BORROWER" shall include each other corporation with
------------
which the Borrower files consolidated or combined income tax returns or reports.
(M) PAYMENT OF TAXES. All federal and state income tax returns of the
----------------
Borrower and all other material tax returns and reports of the Borrower and each
Subsidiary of the Borrower required to be filed, have been timely filed, and all
taxes, assessments, fees and other governmental charges thereupon and upon their
respective properties, assets, income and franchises which are shown on such
returns as being due and payable, have been paid when due and payable, except
such taxes, if any, that are reserved against in accordance with GAAP, such
taxes as are being contested in good faith by appropriate proceedings or such
taxes the failure to make payment of which when due and payable would not have,
in the aggregate, a Material Adverse Effect. The Borrower has no knowledge of
any proposed tax assessment against it or any of its Subsidiaries that is
reasonably likely to have a Material Adverse Effect.
(N) PERFORMANCE OF CONTRACTUAL OBLIGATIONS. Neither the Borrower nor
--------------------------------------
any Subsidiary of the Borrower is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
Contractual Obligation applicable to it, and no condition exists which, with the
giving of notice or the lapse of time or both, would constitute a default under
such Contractual Obligation, except, in any such case, where the consequences,
direct or indirect, of such default or defaults, if any, would not have or are
not reasonably likely to have a Material Adverse Effect.
(O) MARGIN STOCK. Neither the Borrower nor any of its Subsidiaries is
------------
engaged in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock. Following application of the proceeds of each
Advance, not more than 25 percent of the value of the assets (either of the
Borrower only or of the Borrower and its Subsidiaries on a Consolidated basis)
subject to the provisions of Section 6.02(a) or 6.02(e) or subject to any
restriction contained in any agreement or instrument between the Borrower and
any Lender or any Affiliate of any Lender relating to Debt and within the scope
of Section 7.01(e) will be Margin Stock.
(P) DISCLOSURE. Neither the Information Memorandum nor the schedules,
----------
certificates and other written statements and materials and information
furnished by or on behalf of the Borrower or any of its Subsidiaries to the
Agent and the Lenders contain any material misstatement of fact or omit to state
a material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made and taken as a whole, not
misleading. Neither the Borrower nor any of its Subsidiaries has intentionally
withheld any fact known to it which has had or is reasonably likely to have a
Material Adverse Effect which has not been set forth or referred to in this
Agreement, the other Loan Documents, or such schedules, certificates, statements
or information furnished to the Agent and the Lenders.
(Q) REQUIREMENTS OF LAW. The Borrower and each of its Subsidiaries is
-------------------
in compliance with all Requirements of Law (including, without limitation, the
Securities Act and the Securities Exchange Act, and the applicable rules and
regulations thereunder, state securities laws and "blue sky" laws) applicable to
--------
them and their respective businesses, in each case, where the failure to so
comply would have or is reasonably likely to have a Material Adverse Effect.
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(R) INTELLECTUAL PROPERTY. The Borrower and each of its Subsidiaries
---------------------
own, are licensed or otherwise have the lawful right to use, or have all permits
and other governmental approvals, patents, trademarks, trade names, copyrights,
technology, know-how and processes used in or necessary for the conduct of their
businesses as currently conducted which are material to their condition
(financial or otherwise), operations, performance and prospects, taken as a
whole. The use of such permits and other governmental approvals, patents,
trademarks, trade names, copyrights, technology, know-how and processes by the
Borrower and each of its Subsidiaries does not infringe on the rights of any
Person, subject to such claims and infringements as do not, in the aggregate,
give rise to any liability on the part of the Borrower or any of its
Subsidiaries which has or is reasonably likely to have a Material Adverse
Effect.
(S) ENVIRONMENTAL MATTERS.
---------------------
(i)(A) Except as has not had and is not reasonably likely to have
a Material Adverse Effect, the operations and properties of the Borrower
and each of its Subsidiaries comply in all material respects with all
Environmental Laws, all necessary Environmental Permits have been obtained
and are in effect for the operations and properties of the Borrower and its
Subsidiaries and the Borrower and its Subsidiaries are in compliance in all
material respects with all such Environmental Permits, and (B) no
circumstances exist that would be reasonably likely to (1) form the basis
of an Environmental Action against the Borrower or any of its Subsidiaries
or any of their properties that would be reasonably likely to have a
Material Adverse Effect or (2) cause any such property to be subject to any
restrictions on ownership, occupancy, use or transferability under any
Environmental Law that would be reasonably likely to have a Material
Adverse Effect.
(ii) Except as has not had and is not reasonably likely to have
a Material Adverse Effect, none of the properties of the Borrower or any of
its Subsidiaries is listed or, to the Borrower's knowledge, is proposed for
listing on the National Priorities List under CERCLA or on the
Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the Environmental Protection Agency or any
analogous state list of sites requiring investigation or cleanup or is
adjacent to any such property, and no underground storage tanks, as such
term is defined in 42 U.S.C.(S) 6991, are located on any property of the
Borrower or any of its Subsidiaries or, to the Borrower's knowledge, on any
adjoining property.
(iii) Except as has not had and is not reasonably likely to have
a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries
has transported or arranged for the transportation of any Hazardous
Materials to any location that is listed or proposed for listing on the
National Priorities List under CERCLA or on the Comprehensive Environmental
Response, Compensation and Liability Information System maintained by the
Environmental Protection Agency or any analogous state list, Hazardous
Materials have not been generated, used, treated, handled, stored or
disposed of on, or released or transported to or from, any property of the
Borrower or any of its Subsidiaries or, to the Borrower's knowledge, any
adjoining property, except in compliance with all Environmental Laws and
Environmental Permits, and all other wastes generated at any such
properties have been disposed of in compliance with all Environmental Laws
and Environmental Permits.
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(T) ERISA MATTERS.
-------------
(i) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan of any Loan Party or any of its ERISA
Affiliates that has resulted in or is reasonably likely to result in a
material liability of any Loan Party or any of its ERISA Affiliates.
(ii) Schedule B (Actuarial Information) to the 1993 annual
report (Form 5500 Series) for each Plan of any Loan Party or any of its
ERISA Affiliates, copies of which have been filed with the Internal Revenue
Service, is complete and accurate and fairly presents the funding status of
such Plan, and since the date of such Schedule B there has been no adverse
change in such funding status that has had or would be reasonably likely to
have a Material Adverse Effect.
(iii) Neither any Loan Party nor any of its ERISA Affiliates has
incurred or is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan in an amount which has had or would be reasonably likely
to have a Material Adverse Effect.
(iv) Neither any Loan Party nor any of its ERISA Affiliates has
been notified by the sponsor of a Multiemployer Plan of any Loan Party or
any of its ERISA Affiliates that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and to the best knowledge of any Loan Party and any of its ERISA
Affiliates, no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA, in each case except for any such reorganization or termination which
would not be reasonably likely to have a Material Adverse Effect.
(v) Except as set forth in the financial statements referred to
in Sections 5.01 and 6.03, the Borrower and its Subsidiaries have no
material liability with respect to "expected post retirement benefit
obligations" within the meaning of Statement of Financial Accounting
Standards No. 106.
(U) NONCONTRAVENTION. Except as otherwise permitted hereunder, no
----------------
Contractual Obligation to which the Borrower or any of its Subsidiaries is a
party or by which any of them or any of their respective properties is bound or
to which any of them or any of their respective properties is subject restricts
any of them from granting Liens in their respective property.
(V) COLLATERAL. Each Loan Party has good and marketable title with
----------
respect to the Collateral in which a security interest has been granted to the
Agent by it, and all such Collateral is free and clear of all Liens except Liens
permitted by Section 6.02(a).
(W) INVESTMENTS. Set forth on Schedule 5.01(w) hereto is a complete
-----------
and accurate list of all Investments held by any Loan Party (other than Cash
Equivalents and Subsidiaries of such Loan Party) as of the Closing Date, showing
as of the Closing Date, the amount, obligor or issuer and maturity, if any,
thereof.
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ARTICLE VI
COVENANTS OF THE BORROWER
SECTION 6.01. AFFIRMATIVE COVENANTS. So long as any Advance shall
---------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will, unless the Required Lenders
shall otherwise consent in writing:
(A) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
-------------------------
Subsidiaries to comply, with all Requirements of Law, Contractual Obligations
and all restrictive covenants, noncompliance with which would be likely to have
a Material Adverse Effect.
(B) PAYMENT OF TAXES, ETC. Pay, and cause each of its Subsidiaries
---------------------
to pay, (i) all taxes, assessments and other governmental charges imposed upon
it or on any of its properties or assets or in respect of any of its franchises,
business, income or property before any penalty or interest accrues thereon, and
(ii) all claims (including, without limitation, claims for labor, services,
materials and supplies) for sums, nonpayment of which would have a Material
Adverse Effect, which have become due and payable and which by law have or may
become a Lien (other than a Permitted Lien) upon any of the Borrower's or such
Subsidiary's properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided that no such taxes, assessments
--------
and governmental charges referred to in clause (i) above or claims referred to
in clause (ii) above need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
(C) MAINTENANCE OF PROPERTIES, INSURANCE. Maintain, and cause each
------------------------------------
of its Subsidiaries to maintain, in good repair, working order and condition,
excepting ordinary wear and tear and damage due to casualty, all properties
material to its or its Subsidiary's operations and make, and cause each of its
Subsidiaries to make, all appropriate repairs, renewals and replacements
thereof, consistent with past practice. Maintain, and cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers,
insurance policies and programs consistent with its past practice and customary
industry standards for it and its Subsidiaries.
(D) PRESERVATION OF CORPORATE EXISTENCE, ETC. Maintain, and cause
----------------------------------------
each of its Subsidiaries to maintain, its corporate existence (other than
Subsidiaries which are not Guarantors, if the failure to maintain their
corporate existence would not, in the aggregate for all such Subsidiaries, have
a Material Adverse Effect and except as permitted by Section 6.02(d)) and
preserve and keep in full force and effect its rights and franchises the loss or
termination of which would be likely to have a Material Adverse Effect.
(E) VISITATION RIGHTS; BOOKS AND RECORDS. Permit, and cause each of
------------------------------------
its Subsidiaries to permit, any authorized representative designated by the
Agent or any Lender to visit and inspect any of the properties of the Borrower
or any of its Subsidiaries, including their financial and accounting records,
and to make copies and take extracts therefrom, and to discuss their affairs,
finances and accounts with their officers and independent certified public
accountants, all upon reasonable notice and at such reasonable times during
normal business hours, as often as may be reasonably requested (each such
visitation and inspection by or on behalf of any Lender shall be at such
Lender's expense and, for so long as no Default shall have occurred or is
continuing, each such visitation and inspection by or on behalf of the Agent
shall be at the Agent's expense) and keep, and cause each of its Subsidiaries to
keep,
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proper books of record and account in which entries in conformity with GAAP (and
all legal requirements) shall be made of all dealings and transactions in
relation to their businesses and activities.
(F) COLLATERAL DOCUMENTS. Deliver, and cause each of its
--------------------
Subsidiaries to deliver, share certificates and other instruments and documents
(including, without limitation, evidence of the insurance required by the
Security Agreement) and take actions, and cause each of its Subsidiaries to take
actions, necessary or desirable in the judgment of, or requested by, the Agent
or the Required Lenders to perfect, preserve, protect or evidence any Lien
securing, or intended to secure, the Obligations of the Loan Parties under the
Loan Documents or the priority thereof.
(G) ADDITIONAL GUARANTORS. Promptly cause each Guarantor and each
---------------------
Subsidiary of the Borrower (other than a Foreign Subsidiary) which at any time
has total assets with a value (determined in accordance with GAAP) equal to or
greater than $1,000,000 to execute and deliver to the Agent an amendment to the
Guaranty, in substantially the form of Exhibit J (whereby such Subsidiary shall
become a Guarantor) and promptly execute and deliver to the Agent, and cause
such Subsidiary to execute and deliver to the Agent, an amendment to the
Security Agreement, in substantially the form of Exhibit K (whereby such
Subsidiary shall grant a Lien on those of its assets described in the Security
Agreement) and promptly pledge to the Agent or cause to be pledged to the Agent
all of the outstanding capital stock of such Subsidiary owned by any Loan Party
to secure the Obligations under the Loan Documents and promptly take, and cause
such Subsidiary and each other Loan Party to take all action necessary or (in
the opinion of the Agent or the Required Lenders) desirable to perfect and
protect the Liens intended to be created by the Collateral Documents, as amended
pursuant to this Section 6.01(g).
SECTION 6.02. NEGATIVE COVENANTS. So long as any Advance shall
------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will not, at any time, without the
written consent of the Required Lenders or, if required under Section 9.01, of
all of the Lenders:
(A) LIENS, ETC. Create, incur, assume or suffer to exist, or permit
----------
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on
or with respect to any of its properties of any character (including, without
limitation, accounts) whether now owned or hereafter acquired, or sign or file,
or permit any of its Subsidiaries to sign or file, under the Uniform Commercial
Code of any jurisdiction, a financing statement (other than financing statements
filed for protective purposes in connection with true leases) that names the
Borrower or any of its Subsidiaries as debtor, or sign, or permit any of its
Subsidiaries to sign, any security agreement authorizing any secured party
thereunder to file such financing statement, or assign, or permit any of its
Subsidiaries to assign, any accounts or other right to receive income,
excluding, however, from the operation of the foregoing restrictions the
- - --------- -------
following:
(i) Liens created by the Collateral Documents and (with the
consent of the Required Lenders) Liens securing Permitted Refinancings;
(ii) Liens set forth on Schedule 6.02(a) and Liens on the same
property securing any refinancing permitted under Section 6.02(b)(ii) of
Debt secured by such Liens;
(iii) Permitted Liens;
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(iv) Liens with respect to judgments or attachments which do not
result in a Default under or other breach of any other provision of this
Agreement or any other Loan Document;
(v) purchase money Liens (including the interest of a lessor
under a Capitalized Lease) and Liens on property existing at the time of
acquisition thereof by the Borrower or any of its Subsidiaries securing
Debt permitted by Section 6.02(b)(vi), and Liens on the same property
securing any refinancing of any such Debt (without increase in the
principal amount of such Debt); and
(vi) payments to Northholme Partners under the Bermite
Development Agreement.
(B) DEBT. Create, incur, assume or suffer to exist, or permit any of
----
its Subsidiaries to create, incur, assume or suffer to exist, any Debt other
than:
(i) Debt under the Loan Documents;
(ii) the Surviving Debt, and Debt of a Person extending,
renewing, replacing or refinancing Surviving Debt (other than any such
Surviving Debt consisting of letters of credit) of that Person (or Debt of
the Borrower extending, renewing, replacing or refinancing Surviving Debt
of any of its Subsidiaries) on terms (when incurred and as amended from
time to time) not materially less favorable to the Person incurring such
Debt than the terms of such Surviving Debt and in any event not resulting
in an increase in the principal amount outstanding thereunder;
(iii) Subordinated Debt in an aggregate outstanding principal
amount not to exceed at any time $25,000,000;
(iv) unsecured Debt (in addition to Debt otherwise expressly
permitted hereunder) of the Borrower and its Subsidiaries in an aggregate
principal amount outstanding at any time under this clause (iv) not to
exceed $5,000,000;
(v) (A) Debt of the Borrower to any Subsidiary of the
Borrower, (B) Debt of any Domestic Guarantor to the Borrower or any
Subsidiary of the Borrower and (C) Debt of any Subsidiary of the Borrower
(other than a Domestic Guarantor) to the Borrower or any Subsidiary of the
Borrower, provided, that the aggregate outstanding principal amount of Debt
--------
for all such Subsidiaries permitted by clause (C) shall not at any time
exceed $3,000,000;
(vi) Capitalized Leases and purchase money Debt incurred to
finance the acquisition of fixed assets, and Debt incurred to refinance
such Capitalized Leases and purchase money Debt, in an aggregate
outstanding principal amount not at any one time exceeding $5,000,000;
(vii) Permitted Refinancings;
(viii) Debt of the Borrower consisting of guaranties of Debt of
the Borrower's Subsidiaries permitted under this Section 6.02(b) or other
Obligations of the Borrower's Subsidiaries permitted hereunder;
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<PAGE>
(ix) Debt in respect of surety bonds and appeal bonds required
in the ordinary course of business or in connection with the enforcement of
rights or claims of the Borrower or its Subsidiaries or in connection with
judgments which do not result in an Event of Default hereunder or other
breach hereof;
(x) Debt consisting of dividends and other payments permitted
by Section 6.02(g);
(xi) (A) Debt (in an aggregate principal amount not in excess
of $1,000,000 outstanding at any time) in respect of letters of credit
(other than Letters of Credit issued hereunder and other than letters of
credit to the extent backstopped by Letters of Credit issued hereunder) and
(B) Debt in respect of letters of credit to the extent backstopped by
Letters of Credit issued hereunder, provided, that any such Debt under this
--------
clause (xi) is not at any time more than three Business Days past due;
(xii) Debt of the Borrower with respect to Interest Rate
Contracts entered into to protect against fluctuations in interest rates
(and not for speculative investment), provided, that the aggregate notional
--------
amount of all Interest Rate Contracts outstanding on any day does not
exceed $90,000,000;
(xiii) Debt of the Borrower with respect to Currency Hedging
Agreements, provided, that the aggregate notional amount of all Currency
--------
Hedging Agreements outstanding on any day does not exceed $10,000,000;
(xiv) judgments or attachments secured by Liens permitted by
Section 6.02(a)(iv); and
(xv) obligations under the Bermite Development Agreement to pay
fees or other cash remuneration or compensation to or for the account of
Northholme Partners for development services.
(C) NEGATIVE PLEDGE. Create or otherwise permit to exist or become
---------------
effective, or permit any of its Subsidiaries to create or otherwise permit to
exist or become effective, any consensual restriction on the ability of the
Borrower or any of its Subsidiaries to grant Liens on its property or assets
other than (i) restrictions contained in agreements for the sale or lease of
assets if such sale or lease is permitted hereunder, and (ii) restrictions
applicable to assets subject to Liens permitted hereunder.
(D) MERGERS, ETC. Merge into or consolidate with any Person or permit
------------
any Person to merge into it, or permit any of its Subsidiaries to do so, except
that a Subsidiary of the Borrower may merge into the Borrower or another
Subsidiary of the Borrower, provided, that (A) before and after giving effect to
--------
the merger, no Default has occurred and is continuing and (B) if one Subsidiary
party to the merger is a Guarantor and is not the surviving entity, the merger
shall not be permitted until all actions necessary to cause the surviving entity
to become a Guarantor and to preserve and protect the Liens on the property and
capital stock of the Guarantor created by the Collateral Documents (and the
priority thereof) shall have been taken.
(E) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise dispose
---------------------
of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
dispose of, any Collateral (other than sales of inventory in the ordinary course
of business) or any substantial part of its assets other than Collateral,
46
<PAGE>
including, without limitation, any manufacturing plant or substantially all
assets constituting the business of a division, branch or other unit operation,
or grant any option or other right to purchase, lease or otherwise acquire any
Collateral other than inventory to be sold in the ordinary course of its
business, except:
(i) sales of equipment by the Borrower or any of its
Subsidiaries to the extent that such equipment is traded in for credit
against the purchase price of similar replacement equipment or that the
proceeds of such sale are promptly applied to the purchase price of such
replacement equipment;
(ii) sales or other dispositions of obsolete equipment;
(iii) sales of Cash Equivalents for cash;
(iv) transfers which are Investments permitted (when made) under
Section 6.02(f);
(v) the sale, lease, transfer or other disposition by the
Borrower and its Subsidiaries of assets identified on Schedule 6.02(e)(v)
so long as (A) each such sale, lease, transfer or other disposition is for
fair market value, and (B) the consideration received in each such
transaction is cash (except for non-cash consideration in the form of
promissory notes or similar instruments in an aggregate amount for all such
transactions (and all transactions under Section 6.02(e)(vii)) at any time
outstanding not to exceed $4,000,000 so long as each such promissory note
or similar instrument is, promptly upon receipt thereof, pledged to the
Agent pursuant to the Security Agreement);
(vi) the sale, lease, transfer or other disposition of assets in
the ordinary course of business (A) by the Borrower to any Domestic
Guarantor, and (B) by any Subsidiary of the Borrower to the Borrower or any
Domestic Guarantor; and
(vii) the sale, lease, transfer or other disposition of assets
by the Borrower and its Subsidiaries not otherwise permitted under this
Section 6.02(e) in an aggregate amount (based on the fair market value of
such assets as determined in good faith by the Borrower) for all such
transactions since the Closing Date not to exceed 10% of the Consolidated
Net Worth of the Borrower and its Subsidiaries as of the most recently
ended fiscal quarter of the Borrower and its Subsidiaries prior to the
consummation of such transaction (which determination shall be made as of
the consummation of each such transaction) so long as (A) each such sale,
lease, transfer or other disposition is for fair market value, and (B) the
consideration received in each such transaction is cash (except for non-
cash consideration in the form of promissory notes or similar instruments
in an aggregate amount for all such transactions (and all transactions
under Section 6.02(e)(v)) at any time outstanding not to exceed $4,000,000
so long as each such promissory note or similar instrument is, promptly
upon receipt thereof, pledged to the Agent pursuant to the Security
Agreement); provided, however, that this clause (vii) shall permit the sale
-------- -------
of capital stock of any Subsidiary of any Person only to the extent that
such sale consists of 100% of such capital stock and is otherwise permitted
hereunder.
(F) INVESTMENTS IN OTHER PERSONS. Make or hold, or permit any of its
----------------------------
Subsidiaries to make or hold, any Investment in any Person other than
47
<PAGE>
(i) Investments in Cash Equivalents;
(ii) Investments existing on the Closing Date and identified on
Schedule 5.01(w) and Investments in Subsidiaries made prior to the Closing
Date;
(iii) Investments consisting of capital contributions made by
the Borrower or any Domestic Guarantor after the Closing Date to any
Subsidiary of the Borrower, provided that the unrecovered amount of all
--------
such Investments made after the Closing Date in Subsidiaries which are not
wholly owned Domestic Guarantors shall not exceed $1,000,000 and, at the
time any such Investment is made, no Default has occurred and is
continuing;
(iv) Investments consisting of Debt permitted pursuant to
Section 6.02(b);
(v) Operating Investments (in addition to Investments
otherwise expressly permitted hereunder) so long as no Default has occurred
and is continuing or would occur as a result of the consummation thereof;
and
(A) the amount of each such Investment (or series of
related Investments) does not exceed 10% of the total assets of the
Borrower and its Subsidiaries (determined on a Consolidated basis in
accordance with GAAP at the time of such Investment); and
(B) the cumulative amount of all Operating Investments
made during any period of twelve consecutive months (including the
period prior to the Closing Date), whether or not outstanding or
recovered, does not exceed $35,000,000;
(vi) other Investments in joint ventures in which the Borrower
or any Domestic Guarantor has an interest, provided that the aggregate
--------
amount of all such Investments in joint ventures pursuant to this
clause (vi) shall not exceed $2,000,000;
(vii) Investments constituting non-cash consideration permitted
to be received in connection with dispositions of assets permitted under
Section 6.02(e);
(viii) Investments by the Borrower (in addition to Investments
otherwise expressly permitted hereunder) provided, that the sum of the
--------
outstanding amount of all such Investments which are Debt and the
unrecovered amount of all such equity Investments shall not at any time
exceed $3,000,000; and
(ix) Investments by the Borrower and its Subsidiaries received
in settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business.
(G) DIVIDENDS, ETC. Declare or pay any dividends, purchase, redeem,
--------------
retire, defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such, or permit any of its Subsidiaries to pay
any dividends or purchase, redeem, retire, defease or otherwise acquire for
value any capital stock of the Borrower or any warrants, rights or options to
acquire
48
<PAGE>
such capital stock or to issue or sell (except to the Borrower or a Domestic
Guarantor) any of such Subsidiary's capital stock or any warrants, rights or
options to acquire such capital stock, except:
(i) any dividends or distributions on the capital stock of a
Subsidiary of the Borrower to the Borrower or any of its Subsidiaries and
ratably to any other holder of such capital stock, provided, that if any
--------
such dividends or distributions are paid to any Subsidiary of the Borrower,
then the Subsidiary or Subsidiaries receiving such dividend or distribution
shall simultaneously pay a dividend or distribution to the Borrower in the
same amount;
(ii) so long as no Event of Default has occurred and is
continuing, any dividend by the Borrower or any of its Subsidiaries in
respect of (and paid to the holders of) such Person's common stock which
dividend is payable solely in shares of such Person's common stock;
(iii) so long as no Event of Default has occurred and is
continuing, payments due on outstanding claims or rights with respect to
unclaimed dividends and other similar claims or rights with respect to the
Borrower's capital stock (and the capital stock of present and former
Subsidiaries of the Borrower) listed on Schedule 6.02(g), provided, that
--------
the aggregate amount of such payments since the Closing Date shall not
exceed $2,000,000;
(iv) so long as no Event of Default has occurred and is
continuing, cash dividends on the Series D Participating Convertible
Preferred Stock, par value $1.00 per share, of the Borrower in accordance
with the terms thereof, but in any event in an aggregate amount not
exceeding $5,000 multiplied by the number of years (or fractions thereof)
during which such Securities have been outstanding;
(v) so long as no Event of Default has occurred and is
continuing, cash dividends on the $5.00 Cumulative Convertible Preferred
Stock, par value $1.00 per share, of the Borrower in accordance with the
terms thereof, but in any event in an amount not exceeding $100,000 in any
period of twelve consecutive months since the Closing Date;
(vi) so long as no Event of Default has occurred and is
continuing, cash dividends on the common stock of the Borrower (or cash
payments in connection with the redemption, retirement or acquisition by
the Borrower of its common stock (including in connection with the exercise
of employee stock options)) after the Closing Date, provided, that at the
--------
time of any such dividend or payment (A) the Fixed Charge Coverage Ratio
for the four quarter period ending on the last day of the then most
recently ended fiscal quarter of the Borrower is greater than 1.75 to 1.00
and (B) the cumulative amount of all such dividends and payments does not
exceed $100,000 plus 20% of the Consolidated Net Income of the Borrower and
----
its Subsidiaries from the first day of the first fiscal quarter of the
Borrower after the Closing Date through the last day of the then most
recently ended fiscal quarter of the Borrower and computed on a cumulative
basis in accordance with GAAP;
(vii) so long as no Event of Default has occurred and is
continuing, cash expenditures by the Borrower in connection with the
exercise of employee stock options in an aggregate amount not to exceed
$5,000,000;
49
<PAGE>
(viii) so long as no Event of Default has occurred and is
continuing, payments not exceeding $220,000 in the aggregate in respect of
the redemption or conversion of the $5.00 Cumulative Convertible Preferred
Stock, par value $1.00 per share, of the Borrower; and
(ix) any Foreign Subsidiary may issue or sell capital stock to
Persons other than the Borrower or a Domestic Guarantor to the extent
necessary to comply with applicable laws of non-U.S. jurisdictions relating
to investments by foreigners.
(H) CHANGE IN NATURE OF BUSINESS. Engage, or permit any of its
----------------------------
Subsidiaries to engage, in any business other than (i) the businesses engaged in
by it and its Subsidiaries as of the Closing Date, (ii) any business entered
into in connection with an Operating Investment, and (iii) any business or
activities which it deems substantially similar, related or incidental thereto.
(I) CHARTER AMENDMENTS. Adopt, or permit any of its Subsidiaries to
------------------
adopt, any amendment to the certificate of incorporation or bylaws of the
Borrower or any of its Subsidiaries, other than any amendment which could not
impair the rights or interests of the Agent or any Lender.
(J) ACCOUNTING CHANGES. Make or permit, or permit any of its
------------------
Subsidiaries to make or permit, any change in accounting policies or reporting
practices, except as required or permitted by generally accepted accounting
principles.
(K) PREPAYMENTS, ETC. OF SUBORDINATED DEBT. Prepay, redeem,
--------------------------------------
purchase, defease or otherwise satisfy prior to the scheduled maturity thereof
in any manner, or make any payment in violation of any subordination terms of,
any Subordinated Debt, or amend, modify or change in any manner any term or
condition of any Subordinated Debt (other than amendments, modifications and
changes which, either individually or in the aggregate, could not adversely
affect the rights or interests of the Agent or any Lender), or permit any of its
Subsidiaries to do any of the foregoing.
(L) PARTNERSHIPS. Become a general partner in any general or limited
------------
partnership, or permit any of its Subsidiaries to do so, other than any
Subsidiary the sole assets of which consist of its interest in such partnership.
(M) MARGIN REGULATIONS. Apply, or permit any of its Subsidiaries to
------------------
apply, the proceeds of any credit extended under this Agreement in any manner
which might cause the extension of credit or the application of such proceeds to
violate any regulation of the Board of Governors of the Federal Reserve System
or to violate the Securities Exchange Act or the Securities Act, in each case as
in effect on the date or dates such credit is extended.
(N) TRANSACTIONS WITH AFFILIATES. Enter into or permit to exist, or
----------------------------
permit any of its Subsidiaries to enter into or permit to exist, directly or
indirectly, any transaction (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Borrower, on terms that are less favorable to the Borrower or
such Subsidiary than those that might be obtained in an arm's length transaction
at the time from Persons who are not such an Affiliate; provided, however, that
-------- -------
nothing contained in this Section 6.02(n) shall prohibit:
(i) any transaction expressly permitted by Section 6.02(b)(v)
and (viii), 6.02(f) or 6.02(g);
(ii) customary directors' and officers' indemnities;
50
<PAGE>
(iii) customary directors' fees;
(iv) reasonable compensation to officers consistent with past
practice;
(v) any transaction among the Borrower and its Subsidiaries
expressly permitted by Section 6.02(e)(vi); and
(vi) administrative services provided by the Borrower to its
Subsidiaries in the ordinary course of business consistent with past
practice.
SECTION 6.03. REPORTING REQUIREMENTS. So long as any Advance shall
----------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will, unless the Required Lenders
shall otherwise consent in writing, furnish (or cause to be furnished) to the
Lenders:
(A) DEFAULT NOTICE. Promptly, and in any event within five Business
--------------
Days, upon any officer of the Borrower or any of its Subsidiaries obtaining
knowledge of (i) the existence of a Default, or becoming aware that any Lender
has given any notice with respect to a claimed Default under this Agreement, or
(ii) any condition or event which has or would be reasonably likely to have a
Material Adverse Effect, an Officers' Certificate specifying the nature and
period of existence of any such condition or event, or specifying the notice
given by such Lender and the nature of such claimed Default, event or condition,
and what action the Borrower has taken, is taking and proposes to take with
respect thereto.
(B) MONTHLY REPORTS. Not later than 21 Business Days after the end
---------------
of each fiscal month of the Borrower (subject to the proviso set forth below), a
written report for such fiscal month, which shall be signed by the chief
financial officer, controller or treasurer of the Borrower and which shall set
forth, for such month and as of the last Business Day of such month, in
substantially the form submitted to the Lenders (as defined therein) pursuant to
the Existing Credit Agreement, Consolidated and consolidating summaries of sales
and profits for that month and for the period from the beginning of the current
Fiscal Year to the end of that month, showing in comparative form for such month
and year-to-date periods (i) the Consolidated figures for the corresponding
periods of the previous Fiscal Year and (ii) the Consolidated figures for the
corresponding periods contained in the most recent plan or budget delivered
pursuant to Section 6.03(f); provided, however, that in the case of a fiscal
-------- -------
month which (A) is the last fiscal month of any of the first three fiscal
quarters of a fiscal year, the foregoing report for that month shall be
delivered no later than 45 calendar days after the last day of that month, and
(B) is the last fiscal month of a Fiscal Year, the foregoing report for that
month shall be delivered no later than 90 calendar days after the last day of
that month.
(C) QUARTERLY FINANCIALS. As soon as practicable, and in any event
--------------------
within 45 days after the end of each fiscal quarter in each Fiscal Year (or 90
days after the end of fiscal quarters which are the last fiscal quarter of a
Fiscal Year), the Consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such quarter and related Consolidated statements
of income and Consolidated statements of cash flow of the Borrower and its
Subsidiaries for such quarter, setting forth in comparative form on the basis of
fiscal quarterly periods in each case (i) the Consolidated figures for the
corresponding periods of the previous Fiscal Year and (ii) the Consolidated
figures for the corresponding periods contained in the most recent financial
projections delivered pursuant to Section 6.03(f) (or, if no such financial
projections have yet been so delivered, the financial projections delivered
prior to the Closing Date), together with a summary consolidating schedule of
aged accounts and inventory, all in
51
<PAGE>
reasonable detail and certified by the chief financial officer, controller or
treasurer of the Borrower as, to the extent applicable, having been prepared in
accordance with GAAP and as fairly presenting the financial condition, results
of operations and cash flows of the Borrower and its Subsidiaries as at the
dates and for the periods indicated, subject to changes resulting from audit and
normal year-end adjustments.
(D) ANNUAL FINANCIALS. As soon as practicable, and in any event
-----------------
within 90 days after the end of each Fiscal Year, Consolidated balance sheets of
the Borrower and its Subsidiaries as at the end of such Fiscal Year and the
related Consolidated statements of income and Consolidated statements of cash
flow of the Borrower and its Subsidiaries for such Fiscal Year, setting forth in
each case in comparative form the Consolidated figures for the Borrower and its
Subsidiaries for the previous Fiscal Year, all in reasonable detail and
accompanied by (i) a report thereon of independent certified public accountants
of recognized national standing satisfactory to the Required Lenders, which
report shall state without qualification that such Consolidated financial
statements present fairly, in all material respects, the financial position of
the Borrower and its Subsidiaries as at the dates indicated and the results of
their operations and cash flows for the periods indicated in conformity with
GAAP and that the examination by such accountants in connection with such
Consolidated financial statements has been made in accordance with generally
accepted auditing standards, and (ii) a written statement of such independent
certified public accountants that nothing has come to their attention to cause
such independent certified public accountants to believe that the calculations
contained in the Compliance Certificate delivered pursuant to Section 6.03(e)
(together with such financial statements) are inaccurate.
(E) COMPLIANCE CERTIFICATES. Together with each delivery of any
-----------------------
financial statements pursuant to Sections 6.03(c) and 6.03(d), (i) an Officers'
Certificate of the Borrower, stating that the executive officers signatory
thereto have reviewed the terms of this Agreement, and have made, or caused to
be made under their supervision, a review in reasonable detail of the
transactions and condition of the Borrower and its Subsidiaries taken as a
whole, during the accounting period covered by such financial statements, and
that such review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the existence
as at the date of the Officers' Certificate, of any condition or event which
constitutes a Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action the
Borrower or any Subsidiary has taken, is taking and proposes to take with
respect thereto, and (ii) an Officers' Certificate, in substantially the form of
Exhibit L, demonstrating (and showing calculations) in reasonable detail
compliance at the end of such accounting periods with the covenants contained in
Sections 6.02 and 6.04 (each such Officers' Certificate, a "Compliance
Certificate").
(F) ANNUAL FORECASTS. No later than the beginning of each Fiscal
----------------
Year, the five-year plan for the Borrower and its Subsidiaries, with financial
projections (including, without limitation, projected cash flow), prepared on a
quarterly basis for that Fiscal Year and on an annual basis for each of the four
succeeding Fiscal Years, and no later than 90 days after the beginning of each
Fiscal Year, the annual budget of the Borrower and its Subsidiaries, prepared on
a monthly basis for that Fiscal Year, in each case in substantially the form
submitted to the Lenders (as defined therein) pursuant to the Existing Credit
Agreement, together with all supporting details reasonably requested by the
Agent, and certified by the chief executive officer, president, chief financial
officer, controller or treasurer of the Borrower as being based on the
Borrower's best estimates, information and assumptions at the time, and all such
statements to be in reasonable detail and supported by a schedule or schedules
enumerating the assumptions therein.
52
<PAGE>
(G) ERISA EVENTS. Promptly and in any event within 15 days after any
------------
Loan Party or any of its ERISA Affiliates knows or has reason to know that any
ERISA Event with respect to any Loan Party or any of its ERISA Affiliates has
occurred, a statement of the chief financial officer, controller or treasurer of
the Borrower describing such ERISA Event and the action, if any, that such Loan
Party or such ERISA Affiliate has taken and proposes to take with respect
thereto.
(H) PLAN TERMINATIONS. Promptly and in any event within five Business
-----------------
Days after receipt thereof by any Loan Party or any of its ERISA Affiliates,
copies of each notice from the PBGC stating its intention to terminate any Plan
of any Loan Party or any of its ERISA Affiliates or to have a trustee appointed
to administer any such Plan.
(I) MULTIEMPLOYER PLAN NOTICES. Promptly and in any event within 30
--------------------------
days after receipt thereof by any Loan Party or any of its ERISA Affiliates from
the sponsor of a Multiemployer Plan of any Loan Party or any of its ERISA
Affiliates, copies of each notice concerning (i) the imposition of Withdrawal
Liability in excess of $5,000,000 by any such Multiemployer Plan, or (ii) the
reorganization or termination, within the meaning of Title IV of ERISA, of any
such Multiemployer Plan which has resulted or is reasonably expected to result
in an increase in contributions for any plan year or the imposition of a
liability to the Plan in excess of $1,000,000 or (iii) the amount of liability
incurred, or that may be incurred, by such Loan Party or any of its ERISA
Affiliates in connection with any event described in clause (i) or (ii).
(J) LITIGATION. Promptly upon any officer of the Borrower or any of
----------
its Subsidiaries obtaining knowledge thereof, notice of (i) the institution of,
or threat of, any action, suit, proceeding, governmental investigation or
arbitration against or affecting the Borrower or any such Subsidiary or any
property of the Borrower or any such Subsidiary not previously disclosed in
writing by the Borrower to the Lenders pursuant to this Section 6.03(j) or
Section 5.01(j), or (ii) any material development in any action, suit,
proceeding, governmental investigation or arbitration already disclosed, which,
in either case, has had or is reasonably likely to have a Material Adverse
Effect, and such other information as may be reasonably available to enable the
Lenders and their counsel to evaluate such matters.
(K) SECURITIES REPORTS. Promptly upon becoming available, copies of
------------------
all financial statements, reports and notices, if any, sent or made available
generally by the Borrower to the holders of its securities or filed with the
Securities and Exchange Commission, and of all press releases made available
generally by the Borrower or any of its Subsidiaries to the public concerning
material developments in the business of the Borrower or any such Subsidiary and
all notifications on Schedule 13-D received by the Borrower pursuant to the
Securities Exchange Act and the rules promulgated thereunder evidencing an
increase in ownership of the Borrower's capital stock of 5% or more.
(L) CREDITOR REPORTS. Promptly after the furnishing thereof, copies
----------------
of any material statement or report furnished to any other holder of the
securities of any Loan Party or of any of its Subsidiaries pursuant to the terms
of any indenture, loan or credit or similar agreement relating to Debt in excess
of $5,000,000 and not otherwise required to be furnished to the Lenders pursuant
to any other clause of this Section 6.03.
(M) ENVIRONMENTAL CONDITIONS. Promptly after the occurrence thereof,
------------------------
notice of any condition or occurrence on any property of any Loan Party or any
of its Subsidiaries that would be reasonably likely to (i) form the basis of an
Environmental Action against any Loan Party or any of its Subsidiaries or such
property that would be reasonably likely to have a Material Adverse Effect or
(ii)
53
<PAGE>
cause any such property to be subject to any restrictions on ownership,
occupancy, use or transferability under any Environmental Law that would be
reasonably likely to have a Material Adverse Effect.
(N) OTHER INFORMATION. Such other information regarding the business,
-----------------
condition (financial or otherwise), operations, performance, properties or
prospects of any Loan Party or any of its Subsidiaries as any Lender may from
time to time reasonably request.
(O) EXTENSION OF CERTAIN DELIVERY PERIODS. Notwithstanding any
-------------------------------------
contrary provision hereof, the financial statements, reports and certificates
required to be delivered pursuant to the foregoing Sections 6.03(b), (c), (d),
(e) and (f) with respect to the fiscal year of the Borrower ended October 30,
1994 and with respect to the annual budget of the Borrower for the fiscal year
started October 31, 1994 shall not be required to be delivered until 10 days
after the date such financial statements, reports, certificates and budget are
stated to be due pursuant to such Sections (as applicable).
SECTION 6.04. FINANCIAL COVENANTS. So long as any Advance shall
-------------------
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment hereunder, the Borrower will, unless the Required Lenders
otherwise consent in writing:
(A) FIXED CHARGE COVERAGE RATIO. Maintain for each period of four
---------------------------
consecutive fiscal quarters ending on the last day of any fiscal quarter a Fixed
Charge Coverage Ratio of not less than 1.50 to 1.0.
(B) LEVERAGE RATIO. Maintain at all times a ratio of Consolidated
--------------
Total Debt to Consolidated Total Capitalization of not greater than 0.50 to 1.0.
(C) CASH FLOW RATIO. Maintain at all times a Cash Flow Ratio of not
---------------
more than 4.0 to 1.0.
(D) CONSOLIDATED TANGIBLE NET WORTH. Maintain a Consolidated Tangible
-------------------------------
Net Worth, as determined as of the last day of each fiscal quarter, of not less
than the sum of (i) 50% of cumulative Consolidated Net Income for all fiscal
quarters commencing with and including the fiscal quarter ended October 30, 1994
(but excluding Consolidated Net Income for any fiscal quarter for which
Consolidated Net Income is a negative number), and (ii) $65,000,000.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. If any of the following events
-----------------
("EVENTS OF DEFAULT") shall occur and be continuing:
- - -------------------
(a) the Borrower shall fail to pay (i) any principal of any Advance
when the same becomes due and payable (or, if such failure to pay is due solely
to a failure of the wire transfer payments system and is not attributable to a
failure of the Borrower to timely initiate (or attempt to initiate) payment,
within one Business Day of the due date thereof), or (ii) interest on any
Advance or any fee payable hereunder or any Loan Party shall fail to make any
other payment under any Loan Document, in each case under this clause (ii)
within three Business Days of the date when the same becomes due and payable; or
54
<PAGE>
(b) any representation or warranty made by any Loan Party (or any of
its officers) under or in connection with any Loan Document shall prove to have
been incorrect in any material respect when made; or
(c) the Borrower shall fail to perform or observe any term, covenant
or agreement contained in Section 6.02, 6.03(a) or 6.04; or
(d) any Loan Party shall fail to perform any other term, covenant or
agreement contained in any Loan Document on its part to be performed or observed
if such failure shall remain unremedied for 30 days after written notice thereof
shall have been given to the Borrower by the Agent or any Lender; or
(e) any Loan Party or any of its Subsidiaries shall fail to pay any
principal of, premium or interest on or any other amount payable in respect of
any Debt (excluding Debt outstanding hereunder) that is outstanding in a
principal amount of at least $5,000,000 in the aggregate (it being understood
that the principal amount of any Hedge Agreement for purposes of this Section
7.01(e) shall be determined on a "marked to market" basis) of such Loan Party or
such Subsidiary (as the case may be), when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt or otherwise to cause, or to permit the holder thereof
to cause, such Debt to mature; or any such Debt shall be declared to be due and
payable or required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption and other than prepayments required
as a result of the sale of an asset which is permitted hereunder or casualty or
condemnation), purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its inability to
pay its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any Loan Party or
any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it)
that is being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of 60 days or any of the
actions sought in such proceeding (including, without limitation, the entry of
an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or any substantial part of its
property) shall occur; or any Loan Party or any of its Subsidiaries shall take
any corporate action to authorize any of the actions set forth above in this
subsection (f); or
(g) any judgment or order for the payment of money in excess of
$5,000,000 shall be rendered against any Loan Party or any of its Subsidiaries
and there shall be any period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
55
<PAGE>
(h) any material provision of any Loan Document after delivery thereof
pursuant to the terms hereof or of any other Loan Document shall for any reason
cease to be valid and binding on or enforceable against any Loan Party party to
it, or any such Loan Party shall so state in writing; or
(i) any Collateral Document after delivery thereof pursuant to the
terms hereof or of any other Loan Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid and perfected first
priority Lien on the Collateral purported to be covered thereby and the Required
Lenders shall have determined that such cessation has or is reasonably likely to
have a material adverse effect on the rights and remedies of the Agent and/or
the Lenders under the Loan Documents; or
(j) (i) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934),
directly or indirectly, of Voting Stock of the Borrower (or other securities
convertible into such Voting Stock) representing 35% or more of the combined
voting power of all Voting Stock of the Borrower; or (ii) during any period of
up to 24 consecutive months, commencing after the date of this Agreement,
individuals who at the beginning of such 24-month period were directors of the
Borrower (together with any new directors whose election by the Borrower's board
of directors or whose nomination for election by the Borrower's shareholders was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) shall cease for any reason
to constitute a majority of the board of directors of the Borrower; or (iii) any
Person or two or more Persons acting in concert shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, control over Voting
Stock of the Borrower (or other securities convertible into such securities)
representing 35% or more of the combined voting power of all Voting Stock of the
Borrower; or
(k) any ERISA Event shall have occurred with respect to a Plan of any
Loan Party or any of its ERISA Affiliates and the sum (determined as of the date
of occurrence of such ERISA Event) of the Insufficiency of such Plan and the
Insufficiency of any and all other Plans of the Loan Parties and their ERISA
Affiliates with respect to which an ERISA Event shall have occurred and then
exist (or the liability of the Loan Parties and their ERISA Affiliates related
to such ERISA Event) exceeds $5,000,000; or
(l) any Loan Party or any of its ERISA Affiliates shall be in default,
as defined in Section 4219(c)(5) of ERISA, with respect to any payment of
Withdrawal Liability and the sum of the outstanding balance of such Withdrawal
Liability and any amounts awarded under Section 502(g)(2) of ERISA and the
outstanding balance of any other Withdrawal Liability that any Loan Party or any
of its ERISA Affiliates has incurred exceeds $5,000,000; or
(m) any Loan Party or any of its ERISA Affiliates shall have been
notified by the sponsor of a Multiemployer Plan of any Loan Party or any of its
ERISA Affiliates that such Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions of the Loan
Parties and their ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or being terminated have been or will be increased over the
amounts contributed to such Multiemployer Plans for the plan years of such
Multiemployer Plans immediately preceding the plan year in which such
reorganization or termination occurs by an amount which would reasonably be
expected to have a Material Adverse Effect; or
56
<PAGE>
(n) there shall be any suspension or debarment of any contracting
rights of the Whittaker Electronic Systems division of the Borrower (or a
division of that division) in effect for more than 120 days from its
commencement (or the Borrower shall learn that any such suspension or debarment
shall be imposed for a period in excess of 120 days) or there shall be a
suspension or debarment of any contracting rights of any other division or
Subsidiary of the Borrower in effect for more than 30 days from its commencement
(or the Borrower shall learn that any such suspension or debarment will be
imposed for a period in excess of 30 days); or
(o) any order, judgment or decree shall be entered against the
Borrower or any of its Subsidiaries decreeing its involuntary dissolution or
split up and such order shall remain undischarged and unstayed for a period in
excess of 60 days; or the Borrower or any of its Subsidiaries shall otherwise
dissolve or cease to exist except as specifically permitted by this Agreement;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Total
Commitments and the obligation of each Lender to make Advances and of each
Issuing Bank to issue Letters of Credit to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Notes,
if any, the Advances, all interest thereon and all other amounts payable under
this Agreement and the other Loan Documents to be forthwith due and payable,
whereupon any such Notes, all outstanding Advances, all such interest and all
such amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that in the event of an actual or
-------- -------
deemed entry of an order for relief with respect to any Loan Party or any of its
Subsidiaries under the Federal Bankruptcy Code, (x) the Total Commitments and
the obligation of each Lender to make Advances and of each Issuing Bank to issue
Letters of Credit shall automatically be terminated and (y) the Notes, if any,
all outstanding Advances, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
SECTION 7.02. ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON
------------------------------------------------
DEFAULT. If any Event of Default shall have occurred and be continuing, the
- - -------
Agent may, irrespective of whether it is taking any of the actions described in
Section 7.01 or otherwise, make demand upon the Borrower to, and forthwith upon
such demand the Borrower will, pay to the Agent on behalf of the Lenders in same
day funds at the Agent's office designated in such demand, for deposit in the
L/C Cash Collateral Account, an amount equal to the aggregate Available Amount
of all Letters of Credit then outstanding. If at any time the Agent determines
that any funds held in the L/C Cash Collateral Account are subject to any right
or claim of any Person other than the Agent and the Lenders or that the total
amount of such funds is less than the aggregate Available Amount of all Letters
of Credit, the Borrower will, forthwith upon demand by the Agent, pay to the
Agent, as additional funds to be deposited and held in the L/C Cash Collateral
Account, an amount equal to the excess of (a) such aggregate Available Amount
over (b) the total amount of funds, if any, then held in the L/C Cash Collateral
Account that the Agent determines to be free and clear of any such right and
claim.
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ARTICLE VIII
THE AGENT
SECTION 8.01. AUTHORIZATION AND ACTION. Each Lender hereby appoints
------------------------
and authorizes the Agent to enter into the Collateral Documents and to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Notes, if any, and the Debt resulting from the Advances), the Agent shall
not be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding upon all Lenders and all holders of
Notes; provided, however, that the Agent shall not be required to take any
-------- -------
action that exposes the Agent to personal liability or that is contrary to this
Agreement or applicable law. The Agent agrees to give to each Lender prompt
notice of each notice given to it by the Borrower pursuant to the terms of this
Agreement.
SECTION 8.02. AGENT'S RELIANCE, ETC. Neither the Agent nor any of
---------------------
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the payee of any Note as the holder thereof and the Lender that made any Advance
as the holder of the Debt resulting therefrom until the Agent receives and
accepts an Assignment and Acceptance entered into by the Lender that is the
payee of such Note and/or such Lender, as the case may be, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 9.07; (ii) may consult
with legal counsel (including counsel for any Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with the Loan
Documents; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
other instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 8.03. NATIONSBANK AND AFFILIATES. With respect to its
--------------------------
Commitments, and the Advances made by it and the Notes, if any, issued to it,
NationsBank shall have the same rights and powers under the Loan Documents as
any other Lender and may exercise the same as though it were not the Agent; and
the term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include NationsBank in its individual capacity. NationsBank and its affiliates
may accept deposits from, lend money to, act as trustee under indentures of,
accept investment banking engagements from and generally engage in any kind of
business with, any Loan Party, any of its Subsidiaries and any Person who may do
business with or own securities of any Loan Party or any such Subsidiary, all as
if NationsBank were not the Agent and without any duty to account therefor to
the Lenders.
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SECTION 8.04. LENDER CREDIT DECISION. Each Lender acknowledges that
----------------------
it has, independently and without reliance upon the Agent or any other Lender
and based on the financial statements referred to in Section 4.01, Section 5.01
and/or Section 6.03, as the case may be, and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the 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 this Agreement.
SECTION 8.05. INDEMNIFICATION. Each Lender severally agrees to
---------------
indemnify the Agent (to the extent not promptly reimbursed by the Borrower),
from and against such Lender's Pro Rata Share of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of the Loan Documents or any action taken or omitted by the Agent under the
Loan Documents; provided, however, that no Lender shall be liable for any
-------- -------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
such Lender's Pro Rata Share of any costs and expenses payable by the Borrower
under Section 9.04, to the extent that the Agent is not promptly reimbursed for
such costs and expenses by the Borrower. The failure of any Lender to reimburse
the Agent promptly upon demand for its ratable share of any amount required to
be paid by the Lenders to the Agent as provided herein shall not relieve any
other Lender of its obligation hereunder to reimburse the Agent for its ratable
share of such amount, but no Lender shall be responsible for the failure of any
other Lender to reimburse the Agent for such other Lender's ratable share of
such amount.
SECTION 8.06. SUCCESSOR AGENTS. The Agent may resign at any time by
----------------
giving written notice thereof to the Lenders and the Borrower and the Agent may
be removed at any time by written notice with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Agent; provided, however, that so long as no
-------- -------
Event of Default has occurred and is continuing, the Borrower shall have the
right to approve any such successor Agent, such approval not to be unreasonably
withheld or delayed. If no successor Agent shall have been so appointed by the
Required Lenders (and approved by the Borrower, if applicable), and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation or the Required Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial bank organized under the laws of the United
States or of any State thereof and having a combined capital and surplus of at
least $500,000,000; provided, however, that so long as no Event of Default has
-------- -------
occurred and is continuing, the Borrower shall have the right to approve any
such successor Agent, such approval not to be unreasonably withheld or delayed.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent
and upon the execution and filing or recording of such financing statements, or
amendments thereto and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Agent shall succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under the
Loan Documents. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article VIII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC.; RELEASE OF COLLATERAL.
---------------------------------------
(A) AMENDMENTS, ETC. No amendment or waiver of any provision
----------------
of this Agreement, the Notes, if any, or any other Loan Document nor consent to
any departure by the Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Borrower and the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
-------- -------
(i) no amendment, waiver or consent shall, unless in writing and signed by the
Borrower and all the Lenders, do any of the following at any time: (A) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Notes, if any, and Advances, or the number of Lenders, that shall be
required for the Lenders or any of them to take any action hereunder, (B) amend
this Section 9.01, (C) subject the Lenders to any additional obligations, (D)
reduce the principal of, or interest on, the Notes or Advances or any fees or
other amounts payable hereunder, or (E) postpone any date fixed for any payment
of principal of, or interest on, the Notes or Advances or any fees or other
amounts payable hereunder; provided further that no amendment, waiver or consent
-------- -------
unless in writing and signed by the L/C Bank and each other Lender that is then
an Issuing Bank, in addition to the Lenders required above to take such action,
affect the rights or obligations of the Issuing Banks under this Agreement; and
provided further that no amendment, waiver or consent shall, unless in writing
- - -------- -------
and signed by the Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Agent under this Agreement or any
Note or any other Loan Documents.
(B) RELEASE OF COLLATERAL. So long as no Default under Section
---------------------
7.01(a) or (f) and no Event of Default has occurred and is continuing: (i) upon
the request of the Borrower, and without the consent of the Lenders or the
Required Lenders, the Agent is authorized to (A) release from the Lien of any
Collateral Document any item or items of Collateral comprising less than all or
substantially all of the Collateral at the time of such release (and, if such
Collateral consists of all of the Borrower's or any of its Subsidiaries'
interest in any Guarantor, to simultaneously release such Guarantor from its
obligations under the Guaranty and the Collateral Documents) and (B) to execute
any documents or instruments reasonably requested by the Borrower (as determined
by the Agent) in connection therewith, but in each case only if (A) such release
is requested in conjunction with the consummation of any sale or other
disposition of such Collateral by the Borrower or any of its Subsidiaries (or
the creation of any Lien) that is not prohibited by this Agreement, and (B) the
Borrower has delivered to the Agent (which shall deliver a copy to each Lender)
an Officers' Certificate certifying that no Default under Section 7.01(a) or (f)
or Event of Default has occurred and is continuing and that such sale or other
disposition (or such creation of a Lien) is not prohibited by this Agreement.
SECTION 9.02. NOTICES, ETC. Except as otherwise expressly
------------
provided herein, all notices and other communications provided for hereunder
shall be in writing (including telegraphic, telecopy, telex or cable
communication) and mailed, telegraphed, telecopied, telexed, cabled or
delivered, if to the Borrower, at its address at 10880 Wilshire Boulevard, Los
Angeles, California 90024, Telecopier No.: (213) 879-9442, Attention: John K.
Otto; if to any Initial Lender, at its Domestic Lending Office specified
opposite its name on Schedule I hereto; if to any other Lender, at its Domestic
Lending Office specified in the Assignment and Acceptance pursuant to which it
became a Lender; and if to the Agent, at its address at 901 Main Street, Dallas,
Texas 75202, Telecopier No.: (214) 508-3255, Attention: Molly Oxford, Agency
Services, with a copy to NationsBank, 444 South Flower Street, Suite 1500, Los
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<PAGE>
Angeles, California 90071, Attn: Andrea P. Collias; or, as to each party, at
such other address as shall be designated by such party in a written notice to
the other parties. All such notices and communications shall, when mailed,
telegraphed, telecopied, telexed or cabled, be effective when deposited in the
mails, delivered to the telegraph company, transmitted by telecopier, confirmed
by telex answerback or delivered to the cable company, respectively, except that
notices and communications to the Agent pursuant to Article II, IV or VIII shall
not be effective until received by the Agent.
SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of any
-------------------
Lender or the Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 9.04. COSTS, EXPENSES. (a) The Borrower agrees to pay on
---------------
demand (i) all reasonable costs and expenses of the Agent and the Arranger in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents (including, without limitation,
(A) all due diligence, transportation, computer, duplication, appraisal, audit,
insurance, consultant, search, filing and recording fees and expenses and (B)
the reasonable fees and expenses of counsel for the Agent with respect thereto,
with respect to advising the Agent as to its rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under the Loan
Documents, with respect to negotiations with any Loan Party or with other
creditors of any Loan Party or any of its Subsidiaries arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors' rights
generally and any proceeding ancillary thereto) and (ii) all costs and expenses
of the Agent and the Lenders in connection with the enforcement of the Loan
Documents, whether in any action, suit or litigation, any bankruptcy, insolvency
or other similar proceeding affecting creditors' rights generally or otherwise
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent and each Lender with respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the Agent and
each Lender and each of their Affiliates and their officers, directors,
employees, agents and advisors (each, an "INDEMNIFIED PARTY") from and against
-----------------
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or in connection with the
preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with (i) any Advances or Letters of
Credit, any use of the proceeds thereof, any of the transactions contemplated
hereby or by the other Loan Documents and any enforcement of rights and remedies
hereunder or under any other Loan Document, (ii) any acquisition or proposed
acquisition by the Borrower or any of its Subsidiaries, or (iii) the actual or
alleged presence of Hazardous Materials on any property of the Borrower or any
of its Subsidiaries or any Environmental Action relating in any way to the
Borrower or any of its Subsidiaries, in each case whether or not such
investigation, litigation or proceeding is brought by any Loan Party, its
directors, shareholders or creditors or an Indemnified Party or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated, except to the extent such claim, damage,
loss, liability or expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted solely from such Indemnified
Party's gross negligence or willful misconduct.
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(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender other
than on the last day of the Interest Period for such Advance, as a result of a
prepayment pursuant to Section 2.05, a payment or Conversion pursuant to Section
2.06 or 2.08, acceleration of the maturity of the Notes or Advances pursuant to
Section 7.01 or for any other reason, or by an Eligible Assignee to a Lender
other than on the last day of the Interest Period for such Advance upon an
assignment of rights and obligations under this Agreement pursuant to Section
9.07 as a result of a demand by the Borrower pursuant to Section 9.07(a), the
Borrower shall, upon demand by such Lender (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses that it may
reasonably incur as a result of such payment, including, without limitation, any
loss (including loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance. A certificate as to such amounts
submitted to the Borrower and the Agent by such Lender shall be conclusive and
binding for all purposes, absent manifest error. Any calculation or
determination under Sections 2.06, 2.08 4.08 or this Section 9.04(c) shall be
made on the assumption that each Lender has funded or will fund each Eurodollar
Rate Advance in the applicable interbank market, provided that each such Lender
shall be under no obligation to actually fund any Eurodollar Rate Advance in
such manner.
(d) Anything contained herein to the contrary notwithstanding, if any
Lender has sold a participation in any of its rights or obligations hereunder
and is entitled to any compensation, reimbursement or other payment under
Section 2.06, 2.08, 2.10, or this Section 9.04, the amount payable to such
Lender shall be determined and calculated as though no such participation had
been sold.
SECTION 9.05. RIGHT OF SET-OFF. Upon (a) the occurrence and during
----------------
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 7.01 to authorize the Agent to
declare the Notes and Advances due and payable pursuant to the provisions of
Section 7.01, each Lender and each of is Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and otherwise apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender or such Affiliate to or for the credit or the account of the
Borrower against any and all of the Obligations of the Borrower now or hereafter
existing under this Agreement and the Note or Notes, if any, held by such
Lender, irrespective of whether such Lender shall have made any demand under
this Agreement or any such Note or Notes and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any such
set-off and application; provided, however, that the failure to give such notice
-------- -------
shall not, to the fullest extent permitted by law, affect the validity of such
set-off and application. The rights of each Lender and its Affiliates under
this Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender and its Affiliates may
have.
SECTION 9.06. BINDING EFFECT. This Agreement shall become effective
--------------
when it shall have been executed by the Borrower and the Agent and when the
Agent shall have been notified by each Initial Lender that such Initial Lender
has executed it and thereafter shall be binding upon and inure to the benefit of
the Borrower, the Agent and each Lender and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lenders.
SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may
------------------------------
and, if demanded by the Borrower (following a demand by such Lender for
compensation pursuant to Section 2.08 or 2.10 upon at least 10 Business Days'
notice to such Lender and the Agent), will, assign to one
62
<PAGE>
or more banks or other entities all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitments and the Advances owing to it and the Note or Notes, if any, held by
it); provided, however, that (i) each such assignment shall be of a uniform, and
-------- -------
not a varying, percentage of all rights and obligations under and in respect of
all of the Facilities, (ii) except in the case of an assignment to a Person
that, immediately prior to such assignment, was a Lender or an assignment of all
of a Lender's rights and obligations under this Agreement, the aggregate amount
of the Commitments and Advances of the assigning Lender being assigned pursuant
to each such assignment shall in no event be less than $10,000,000 and shall be
an integral multiple of $1,000,000, (iii) each such assignment shall be to an
Eligible Assignee, (iv) each such assignment made as a result of a demand by the
Borrower pursuant to this Section 9.07(a) shall be arranged by the Borrower
after consultation with the Agent and shall be either an assignment of all of
the rights and obligations of the assigning Lender under this Agreement or an
assignment of a portion of such rights and obligations made concurrently with
another such assignment or other such assignments that together cover all of the
rights and obligations of the assigning Lender under this Agreement, (v) no
Lender shall be obligated to make any such assignment as a result of a demand by
the Borrower pursuant to this Section 9.07(a) unless and until such Lender shall
have received one or more payments from either the Borrower or one or more
Eligible Assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of the Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal amount and all
other amounts payable to such Lender under this Agreement, and (vi) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Note or Notes subject to such assignment and a processing and
recordation fee of $2,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (y) the Lender assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and 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 Lender shall cease to be a party
hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any Loan
Party or the performance or observance by any Loan Party of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 5.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender 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
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement as
are delegated to the Agent by the terms hereof,
63
<PAGE>
together with such powers and discretion as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Agreement are required to
be performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section
9.02 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Commitment of, and principal amount of the Advances owing to, each Lender
from time to time (the "REGISTER"). The entries in the Register shall be
--------
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit D hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower. Within five
Business Days after its receipt of such notice, the Borrower, at its own
expense, shall, if so requested in writing, execute and deliver to the Agent in
exchange for any surrendered Note or Notes a new Note or new Notes to the order
of such Eligible Assignee in an amount equal to the Commitments assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment hereunder, a new Note or New Notes to the order of the
assigning Lender in an amount equal to the Commitments retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the applicable Exhibit hereto.
(e) Each Lender may sell participations in or to all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Commitments, the Advances owing to it and any Note or
Notes held by it); provided, however, that (i) such Lender's obligations under
-------- -------
this Agreement (including, without limitation, its Commitments) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender shall remain
the holder of any such Note and such Advances for all purposes of this
Agreement, (iv) the Borrower, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and (v) no participant under any
such participation shall have any right to approve any amendment or waiver of
any provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Notes or Advances or any fees
or other amounts payable hereunder, in each case to the extent subject to such
participation, or postpone any date fixed for any payment of principal of, or
interest on, the Notes or Advances or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation.
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 9.07, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to the Borrower and its Subsidiaries furnished to such
Lender by or on behalf of the Borrower or any of its Subsidiaries; provided,
--------
however, that, prior to any such disclosure, the assignee or participant or
- - -------
proposed assignee or participant shall agree to
64
<PAGE>
preserve (in accordance with Section 9.16) the confidentiality of any
Confidential Information received by it from such Lender.
(g) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and any Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
SECTION 9.08. GOVERNING LAW. This Agreement and the Notes, if any,
-------------
shall be governed by, and construed in accordance with, the laws of the State of
New York.
SECTION 9.09. EXECUTION IN COUNTERPARTS. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.10. NO LIABILITY OF THE ISSUING BANKS. The Borrower
---------------------------------
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
any Issuing Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
------
Borrower shall have a claim against such Issuing Bank, and such Issuing Bank
shall be liable to the Borrower, to the extent of any direct, but not
consequential, damages suffered by the Borrower that the Borrower proves were
caused solely by (i) such Issuing Bank's willful misconduct or gross negligence
in determining whether documents presented under any Letter of Credit comply
with the terms of the Letter of Credit or (ii) such Issuing Bank's willful
failure to make lawful payment under a Letter of Credit after the presentation
to it of a draft and certificates strictly complying with the terms and
conditions of the Letter of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Bank may accept documents that appear on their face to
be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
SECTION 9.11. CHANGE IN ACCOUNTING PRINCIPLES. Except as otherwise
-------------------------------
provided herein, if any changes in accounting principles from those used in the
preparation of the financial statements referred to in Section 5.01(g) are
hereafter required or permitted by the rules, regulations, pronouncements and
opinions of the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or successors thereto or agencies with similar
functions) and are adopted by the Borrower with the agreement of its independent
certified public accountants and such changes result in a change in the method
of calculation of any of the financial covenants, standards or terms found in
Sections 6.02 or 6.04, the parties hereto agree to enter into negotiations in
order to amend such provisions so as to reflect equitably such changes with the
desired result that the criteria for evaluating the Borrower's financial
condition shall be the same after such changes as if such changes had not been
made; provided, that no change in generally accepted accounting principles that
--------
would affect the method of calculation of any of the financial covenants,
standards or terms shall be given effect in such
65
<PAGE>
calculations until such provisions are amended, in a manner satisfactory to the
Required Lenders, to so reflect such change in accounting principles.
SECTION 9.12. LIMITATION OF LIABILITY. No claim may be made by the
-----------------------
Borrower, any Lender or any other Person against the Agent, or any Lender or the
Affiliates, directors, officers, employees, or agents of any of them for any
special, indirect, consequential or punitive damages in respect of any claim for
breach of contract or any other theory of liability arising out of or related to
the transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith, and the Borrower and each Lender hereby
waives, releases and agrees not to sue upon any claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
SECTION 9.13. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST THE BORROWER WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE BORROWER ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE BORROW
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED
ON THE SIGNATURE PAGES HEREOF, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER
SUCH MAILING. EACH OF THE BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION
(INCLUDING WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION.
SECTION 9.14. PERFORMANCE OF OBLIGATIONS. The Borrower agrees that
--------------------------
the Agent may, but shall have no obligation to, make any payment or perform any
act required of the Borrower under any Loan Document or take any other action
which the Agent in its discretion deems necessary or desirable to protect or
preserve the Collateral, including, without limitation, any action to (a) pay or
discharge taxes, liens, security interests or other encumbrances levied or
placed on or threatened against any Collateral and (b) effect any repairs or
obtain any insurance called for by the terms of any of the Loan Documents and to
pay all or any part of the premiums therefor and the costs thereof. The Agent
shall use its best efforts to give the Borrower notice of any action taken under
this Section 9.14 prior to the taking of such action or promptly thereafter.
Any funds advanced by the Agent under this Section 9.14 shall constitute
Obligations hereunder and shall be repaid by the Borrower on demand with
interest from the date of disbursement by the Agent to the date of payment by
the Borrower accrued at the rate applicable at the time interest accrues to a
Borrowing of Base Rate Advances.
66
<PAGE>
SECTION 9.15. LENDERS' ACTION FOR THEIR OWN PROTECTION ONLY. The
---------------------------------------------
authority herein conferred upon the Agent and the Lenders, and any action taken
by the Agent and the Lenders to review, approve, consult with or be consulted by
or otherwise affect the business and operations of the Borrower, will be
exercised and taken by the Lenders, their agents and representatives for their
own protection only and may not be relied upon by the Borrower or any third
party for any purposes whatever; and neither the Lenders, nor their agents or
representatives shall be assumed to have assumed any responsibility to the
Borrower with respect to any such action herein authorized or taken with respect
to the Borrower, or the business or operations of the Borrower. Any review,
investigation or inspection conducted by the Lenders or their agents or
representatives in order to verify independently the Borrower's satisfaction of
any conditions precedent to the disbursement of any Advances, the Borrower's
performance of any of its covenants, agreements and obligations under the Loan
Documents, or the validity of any representations and warranties made by the
Borrower under the Loan Documents (regardless of whether or not the party
conducting such review, investigation or inspection should have discovered that
any of such conditions precedent were not satisfied or that any such covenants,
agreements or obligations were not performed or that any such representations or
warranties were not true) shall not affect (or constitute a waiver by the
Lenders of) (a) any of the representations and warranties made by the Borrower
under the Loan Documents or the Lenders' reliance thereon or (b) the Lenders'
reliance upon any certifications of the Borrower, its agents or representatives
required under the Loan Documents or any other facts, information or reports
furnished to the Lenders by the Borrower, its agents or representatives.
SECTION 9.16. CONFIDENTIALITY; DISCLOSURE.
---------------------------
(a) The Agent and each of the Lenders shall hold all non-public
information obtained pursuant to the requirements of this Agreement (which has
been identified as such by the Borrower) in accordance with its customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and will use such information
only in connection with the transactions contemplated by this Agreement, and in
any event may make disclosure of any such information (i) to the Agent or any
Lender, (ii) to the extent required by law (including statute, rule, regulation
or judicial process), (iii) to counsel for any Lender or the Agent or to their
respective accountants, each of whom shall also be bound by the confidentiality
obligations set forth herein, (iv) to bank examiners and auditors and
appropriate government examining authorities, (v) to the extent necessary or
appropriate in connection with any litigation to which any Lender or the Agent
is a party, or (vi) to any actual or prospective participant in or assignee of
any rights and obligations of such Lender under this Agreement.
(b) Nothing in this Agreement shall require the Borrower to disclose
any information if such disclosure would violate any Federal government
prohibitions on the disclosure of classified or confidential information.
SECTION 9.17. ENTIRE AGREEMENT. This Agreement, taken together with
----------------
all of the other Loan Documents and all certificates and other documents
delivered by the Borrower to the Agent or the Lenders, embodies the entire
agreement and supersedes all prior agreements, written and oral, relating to the
subject matter hereof.
SECTION 9.18. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT
--------------------
AND THE LENDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
67
<PAGE>
DOCUMENTS, THE ADVANCES OR THE ACTIONS OF THE AGENT OR ANY LENDER IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
68
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
WHITTAKER CORPORATION,
a Delaware corporation
/s/JOHN K. OTTO
By: ---------------------------------
Title: Treasurer
NATIONSBANK OF TEXAS, N.A.,
as Agent
/s/ ANDREA P. COLLIAS
By: ---------------------------------
Andrea P. Collias
Vice President
S-1
<PAGE>
Initial Lenders:
---------------
NATIONSBANK OF TEXAS, N.A.
/s/ ANDREA P. COLLIAS
By: ------------------------------------
Andrea P. Collias
Vice President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
/s/ L. KANNEGIETER
By: ------------------------------------
Title: Vice President
THE BANK OF CALIFORNIA, N.A.
/s/ J. D. WATSON
By: ------------------------------------
Title: Corporate Banking Officer
CITY NATIONAL BANK
/s/ ERICH BOLLINGER
By: ------------------------------------
Erich Bollinger
Vice President
KREDIETBANK N.V.
/s/ ROBERT SNAUFFER
By: ------------------------------------
Title: Robert Snauffer
Vice president
/s/ DIANE M. GRIMMIG
By: ------------------------------------
Title: Diane M. Grimmig
Vice President
SANWA BANK CALIFORNIA
/s/ DEL LORIMER
By: ------------------------------------
Title:
UNION BANK
/s/ ROBERT C. PETERSEN
By: ------------------------------------
Robert C. Petersen
Vice President
S-2
<PAGE>
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES
<TABLE>
<CAPTION>
TERM REVOLVING DOMESTIC LENDING EURODOLLAR LENDING
NAME OF LENDER COMMITMENT COMMITMENT OFFICE OFFICE
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NationsBank of Texas, N.A. 7,875,000 14,625,000 901 Main St. 901 Main St.
13th Floor 13th Floor
Dallas, TX 75202 Dallas, TX 75202
- - --------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------------------------------------------
Bank of America 5,250,000 9,750,000 333 S. Beaudry Ave. 333 S. Beaudry Ave.
Dept. 5583 Dept. 5583
Los Angeles, CA 90017 Los Angeles, CA 90017
- - --------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------------------------------------------
Bank of California 5,250,000 9,750,000 550 S. Hope St. 550 S. Hope St.
5th Floor 5th Floor
Los Angeles, CA 90071 Los Angeles, CA 90071
Attn: Hisako Sakamoto Attn: Hisako Sakamoto
- - --------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------------------------------------------
City National Bank 4,375,000 8,125,000 400 N. Roxbury Dr. 400 N. Roxbury Dr.
Beverly Hills, CA 90210 Beverly Hills, CA 90210
Attn: Manager Attn: Manager
Head Office Loans Head Office Loans
- - --------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------------------------------------------
Kredietbank 1,750,000 3,250,000 125 W. 55th St. 125 W. 55th St.
10th Floor 10th Floor
New York, NY 10019 New York, NY 10019
- - --------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------------------------------------------
Sanwa Bank 5,250,000 9,750,000 601 S. Figueroa St. 601 S. Figueroa St.
8th Floor 8th Floor
Los Angeles, CA 90071 Los Angeles, CA 90071
- - ---------------------------------------------------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------------------------------------------------
Union Bank 5,250,000 9,750,000 445 S. Figueroa St. 445 S. Figueroa Street
16th Floor 16th Floor
Los Angeles, CA 90071 Los Angeles, CA 90071
Attn: Robert C. Petersen Attn: Robert C. Petersen
Vice President Vice President
===========================================================================================================================
</TABLE>
I-I
<PAGE>
EXHIBIT A-1
FORM OF TERM NOTE
$[Amount of Lender's
Term Advance] January 24, 1995
FOR VALUE RECEIVED, the undersigned, WHITTAKER CORPORATION, a Delaware
corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of
--------
____________________ (the "LENDER") the principal sum of [amount of Lender's
------
Term Advance in words] ($________), in twenty (20) consecutive quarterly
installments until such principal sum shall be paid in full, on the 21st day of
each April, July, October and January of each year, commencing April 21, 1995,
the amount payable on each such installment being equal to the amount set forth
below opposite the period in which such installment is stated to be due below,
as such installment has been reduced by any prepayment received pursuant to
Section 2.05 of the Credit Agreement and applied to such installment:
<TABLE>
<CAPTION>
AMOUNT OF QUARTERLY
PERIOD INSTALLMENT
------ -----------
<S> <C>
Closing Date to January 31, 1996 $________
February 1, 1996 to and including
January 31, 1997 $________
February 1, 1997 to and including
January 31, 1998 $________
February 1, 1998 to and including
January 31, 1999 $________
February 1, 1999 to and including
January 31, 2000 $________
</TABLE>
provided, however that the last such installment shall be in the amount
- - -------- -------
necessary to repay in full the aggregate unpaid principal amount of this Note
and shall, in any event, be due and payable on January 21, 2000.
The Borrower promises to pay interest on the unpaid principal amount
of this Note from the date hereof until such principal amount is paid in full,
at such interest rates, and payable at such times, as are specified in the
Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America and in same day funds to the Lender in accordance with the
provisions of Section 2.09(a) of the Credit Agreement. All advances and
payments made on account of principal hereof shall be recorded by the Lender
and, prior to any transfer hereof, endorsed on the grid attached hereto which is
part of this Note; provided, however, that any failure to make such endorsement
-------- -------
on such grid shall in no way impair or endanger the Borrower's obligations
hereunder.
This Note is one of the Term Notes referred to in, and is entitled to
the benefits of, (i) the Credit Agreement dated as of January 23, 1995 (said
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "CREDIT AGREEMENT") among the
----------------
<PAGE>
Borrower, the Lender and certain other lenders and NationsBank of Texas, N.A.,
as Agent for the Lender and such other lenders, and (ii) the other Loan
Documents referred to therein and entered into pursuant thereto. The Credit
Agreement, among other things, (a) provides for the making of Term Advances (as
defined in the Credit Agreement) to the Borrower, the indebtedness of the
Borrower resulting from such Term Advance of the Lender being evidenced by this
Note, and (b) contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York.
WHITTAKER CORPORATION,
a Delaware corporation
By __________________________________
Title:
2
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
================================================================================
AMOUNT UNPAID
OF TYPE OF PRINCIPAL PRINCIPAL NOTATION
DATE ADVANCE ADVANCE PAYMENTS BALANCE MADE BY
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
================================================================================
</TABLE>
3
<PAGE>
EXHIBIT A-2
FORM OF REVOLVING NOTE
$_________________________ Date: January 24, 1995
FOR VALUE RECEIVED, the undersigned, WHITTAKER CORPORATION, a Delaware
corporation (the "BORROWER"), HEREBY PROMISES TO PAY to the order of
--------
__________________________________ (the "LENDER"), for the account of its
------
Applicable Lending Office (as defined in the Credit Agreement (as hereinafter
defined)), the aggregate principal amount of the Revolving Advances (as defined
below) owing to the Lender by the Borrower pursuant to the Credit Agreement on
the Revolving Commitment Termination Date (as defined in the Credit Agreement).
The Borrower promises to pay interest on the unpaid principal amount of
each Revolving Advance from the date of such Revolving Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America and in same day funds to the Lender in accordance with the
provisions of Section 2.09(a) of the Credit Agreement. Each Revolving Advance
owing to the Lender by the Borrower and the maturity thereof, and all payments
made on account of principal thereof, shall be recorded by the Lender and, prior
to any transfer hereof, endorsed on the grid attached hereto, which is part of
this Note; provided, however, that any failure to make such endorsement on such
-------- -------
grid shall in no way impair or endanger the Borrower's obligations hereunder.
This Note is one of the Revolving Notes referred to in, and is entitled to
the benefits of, the Credit Agreement dated as of January 23, 1995 (the "CREDIT
------
AGREEMENT") among the Borrower, the Lender and certain other lenders parties
- - ---------
thereto, and NationsBank of Texas, N.A., as Agent for the Lender and such other
lenders. The Credit Agreement, among other things, (i) provides for the making
of revolving advances (the "REVOLVING ADVANCES") by the Lender to the Borrower
------------------
from time to time in an aggregate amount not to exceed at any time outstanding
the U.S. dollar amount first above mentioned, the indebtedness of the Borrower
resulting from each such Revolving Advance being evidenced by this Note, and
(ii) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
WHITTAKER CORPORATION,
a Delaware corporation
By ________________________________
Title:
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
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</TABLE>
2
<PAGE>
EXHIBIT B
FORM OF NOTICE OF BORROWING
_______________, 19____
NationsBank of Texas, N.A.,
as Agent for the Lenders
under the Credit Agreement
(hereinafter defined)
901 Main Street, 13th Floor
Dallas, Texas 75202
Attention: Molly Oxford -- Agency Services
Ladies and Gentlemen:
The undersigned, WHITTAKER CORPORATION, a Delaware corporation, refers
to the Credit Agreement, dated as of January 23, 1995 (the "CREDIT AGREEMENT")
----------------
(the terms defined therein being used herein as therein defined), among the
undersigned, certain LENDERS thereto (the "LENDERS") and NATIONSBANK OF TEXAS,
-------
N.A., as Agent for said Lenders, and hereby gives you notice pursuant to Section
2.02 of the Credit Agreement that the undersigned hereby requests a Borrowing
under the Credit Agreement, and in that connection, sets forth below certain
information relating to such Borrowing (the "PROPOSED BORROWING"):
------------------
(i) The Business Day of the Proposed Borrowing is __________,
19__.
(ii) The Facility under which the Proposed Borrowing is requested
is the ____________ Facility.
(iii) The Interest Type of Advances comprising the Proposed
Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].
(iv) The aggregate amount of the Proposed Borrowing is
$__________.
(v) The initial Interest Period for each Eurodollar Rate Advance
made as part of the Proposed Borrowing is ____ month[s].
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in each Loan Document
are correct on and as of the date of the Proposed Borrowing, before and
after giving effect to the Proposed Borrowing requested hereby and to the
application of the proceeds therefrom, as though made on and as of such
date, except and only to the extent that any of those representations and
warranties relate solely to a date earlier than that of the Proposed
Borrowing; and
<PAGE>
(B) no event has occurred and is continuing, or would result from the
Proposed Borrowing requested hereby or from the application of the proceeds
therefrom, that constitutes a Default.
Very truly yours,
WHITTAKER CORPORATION,
a Delaware corporation
By _____________________________________
Title:
2
<PAGE>
EXHIBIT C
FORM OF NOTICE OF ISSUANCE
____________, 19___
NationsBank of Texas, N.A., as Agent
for the Lenders under
the Credit Agreement
(as hereinafter defined)
901 Main Street, 13th Floor
Dallas, Texas 75202
Attention: Molly Oxford -- Agency Services
[Name and address of
Issuing Bank]
Attention: __________
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of January 23, 1995
(the "CREDIT AGREEMENT") among WHITTAKER CORPORATION, a Delaware corporation
----------------
(the "BORROWER"), NATIONSBANK OF TEXAS, N.A., as Agent and the LENDERS
--------
thereunder. Capitalized terms used and not otherwise defined herein are used
herein as defined in the Credit Agreement.
Pursuant to Section 3.02(a) of the Credit Agreement, you are hereby
notified that the Borrower requests the issuance (the "PROPOSED ISSUANCE")
-----------------
of a Letter of Credit as follows:
(i) The requested Letter of Credit is a [Commercial]
[Financial Standby] [Performance Standby] Letter of
Credit.
(ii) The requested Business Day of the Proposed Issuance is
__________, 19__.
(iii) The requested Available Amount of such Letter of
Credit is
$_______________.
(iv) The requested expiration date of such Letter of Credit
is
______________, 19____.
<PAGE>
(v) The name and address of the beneficiary of such
requested Letter of Credit is as follows:
------------------------------------
------------------------------------
------------------------------------
(vi) The requested form of such Letter of Credit and a copy
of the Letter of Credit Agreement are attached hereto.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Issuance:
(A) the representations and warranties contained in each Loan
Document are correct on and as of the date of the Proposed Issuance, before
and after giving effect to the Proposed Issuance requested hereby, as
though made on and as of such date, except and only to the extent that any
of those representations and warranties relate solely to a date earlier
than that of the Proposed Issuance; and
(B) no event has occurred and is continuing, or would result from the
Proposed Issuance requested hereby, that constitutes a Default.
Very truly yours,
WHITTAKER CORPORATION,
a Delaware corporation
By_______________________________
Title:
2
<PAGE>
EXHIBIT D
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of January 23, 1995
(the "CREDIT AGREEMENT") among WHITTAKER CORPORATION, a Delaware corporation
----------------
(the "BORROWER"), the LENDERS (as defined in the Credit Agreement) and
--------
NATIONSBANK OF TEXAS, N.A., as agent for the Lenders (the "AGENT"). Terms
-----
defined in the Credit Agreement are used herein with the same meaning.
The "ASSIGNOR" and the "ASSIGNEE" as defined on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor's rights and obligations under the Credit Agreement as of the date
hereof equal to the percentage interest specified on Schedule 1 of all
outstanding rights and obligations under the Credit Agreement Facilities
specified on Schedule 1. After giving effect to such sale and assignment, the
Assignee's Commitments and the amount of the Advances owing to the Assignee will
be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under the
Loan Documents or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Note or Notes, if any, held by the Assignor and requests
that the Agent exchange such Note or Notes for a new Note or Notes payable to
the order of the Assignee in an amount equal to the Commitments assumed by the
Assignee pursuant hereto or new Notes payable to the order of the Assignee in an
amount equal to the Commitments assumed by the Assignee pursuant hereto and the
Assignor in an amount equal to the Commitments retained by the Assignor under
the Credit Agreement, respectively, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Sections 4.01, 5.01 and 6.03 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; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor 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; (iii) confirms that[, subject to the
Borrower's approval as provided in the Credit Agreement,] it is an Eligible
Assignee; (iv) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Credit Agreement
as are delegated to the Agent by the terms thereof, together with such powers
and discretion as are reasonably incidental thereto; (v) agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of the Credit Agreement are required to be performed by it as a Lender; and (vi)
attaches any U.S. Internal Revenue Service forms required under Section 2.10 of
the Credit Agreement.
<PAGE>
4. Following the execution of this Assignment and Acceptance, it will
be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "EFFECTIVE DATE") shall
--------------
be the date of acceptance hereof by the Agent and delivery of the processing and
recordation fee set forth in Section 9.07(a) of the Credit Agreement, unless
otherwise specified on Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) 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 (ii) 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.
6. Upon such acceptance and recording by the Agent, from and after
the Effective Date, the Agent shall make all payments under the Credit Agreement
and the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule
1 to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
2
<PAGE>
SCHEDULE 1
TO
ASSIGNMENT AND ACCEPTANCE
<TABLE>
<CAPTION>
As to each Facility in respect of which
an interest is being assigned: Term Facility Revolving Facility
------------------------- ---------------------------
<S> <C> <C>
Percentage interest assigned: ____________% ______________%
Assignee's Commitment $___________ $____________
Aggregate outstanding principal $___________ $____________
amount of Advances assigned:
Principal amount of Note payable $___________ $___________
to Assignee:
Principal amount of Note payable $___________ $___________
to Assignor:
Effective Date (if other than date of
acceptance by Agent): _______, 19__
</TABLE>
[NAME OF ASSIGNOR], as Assignor
By _______________________________________
Title:
Dated: ________________, 19____
[NAME OF ASSIGNEE], as Assignee
By _______________________________________
Title:
Domestic Lending Office:
Eurodollar Lending Office:
S-1
<PAGE>
Accepted this ____ day
of _________________, 19____
[NAME OF AGENT]
By ______________________________________
Title:
S-2
<PAGE>
EXHIBIT E
FORM OF
SECURITY AGREEMENT
This SECURITY AGREEMENT (as it may be amended, supplemented or
otherwise modified from time to time, this "AGREEMENT") is dated as of January
---------
23, 1995 and is made by WHITTAKER CORPORATION, a Delaware corporation with its
principal place of business located at 10880 Wilshire Boulevard, Los Angeles,
California 90024 (the "COMPANY"), BLUE BELL LEASE, INC., a California
-------
corporation, METROPOLITAN FINANCIAL SERVICES CORPORATION, a Colorado
corporation, PARK CHEMICAL COMPANY, a Michigan corporation, WHITTAKER CONTROLS,
INC., a California corporation, WHITTAKER CORP., a Maine corporation, WHITTAKER
ORDNANCE, INC., a Delaware corporation, WHITTAKER PORTA BELLA DEVELOPMENT, INC.,
a California corporation, WHITTAKER SERVICES CORPORATION, a California
corporation, WHITTAKER TECHNICAL PRODUCTS, INC., a Colorado corporation,
WHITTAKER DEVELOPMENT CO., a Delaware corporation, and any future Subsidiary, if
any, of the Company that becomes a party to this Agreement (each such party
other than the Company is referred to herein as a "SUBSIDIARY GRANTOR" and
------------------
together with the Company any other Person agreeing to be bound hereby as a
"GRANTOR" are collectively referred to herein as the "GRANTORS") in favor of and
------- --------
for the benefit of NATIONSBANK OF TEXAS, N.A. ("NATIONSBANK") as agent (together
-----------
with any successor appointed pursuant to Article VIII of the Credit Agreement
(as hereinafter defined), the "AGENT") for the financial institutions (the
-----
"LENDERS" and, together with the Agent, each a "SECURED PARTY" and,
------- -------------
collectively, the "SECURED PARTIES") that are or may hereafter become party to
---------------
the Credit Agreement.
PRELIMINARY STATEMENTS.
(1) The Agent, the Company, and the Lenders have entered into a Credit
Agreement dated as of January 23, 1995 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "CREDIT AGREEMENT",
----------------
the terms defined therein and not otherwise defined herein being used herein as
therein defined), pursuant to which Lenders have agreed, among other things, and
subject to the terms and conditions set forth in the Credit Agreement, to make
Advances and issue Letters of Credit for the account of the Company.
(2) Pursuant to that certain Guaranty (as it may be amended,
supplemented or otherwise modified from time to time, the "GUARANTY") of even
--------
date herewith, the Subsidiary Grantors have guaranteed all obligations of the
Company under the Credit Agreement.
(3) Each Grantor is the owner of the shares (the "PLEDGED SHARES") of
--------------
stock described in Part I of Schedule I hereto and issued by the corporations
named therein and of the indebtedness (the "PLEDGED DEBT") described in Part II
------------
of said Schedule I and issued by the obligors named therein, in each case to the
extent such Pledged Shares and Pledged Debt are attributed on such Schedule to
the ownership of such Grantor.
(4) It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lenders under the Credit Agreement that
each Grantor shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Advances and issue Letters of Credit under the Credit
Agreement, the Grantors, and each of them, hereby agree with the Agent for its
benefit and the ratable benefit of the Lenders as follows:
<PAGE>
SECTION 1. GRANT OF SECURITY. Each Grantor hereby assigns and
-----------------
pledges to the Agent for its benefit and the ratable benefit of the Lenders, and
hereby grants to the Agent for its benefit and the ratable benefit of the
Lenders a first priority security interest in, all of such Grantor's right,
title and interest, whether now owned or hereafter acquired, in and to the
following (collectively, the "COLLATERAL"):
----------
(A) all equipment in all of its forms, wherever located, now or
hereafter existing (including, but not limited to, all manufacturing,
distribution, selling, data processing and office equipment, all machinery,
all furniture, furnishings, appliances, tools, tooling, molds, dies,
vehicles, vessels, aircraft and all other goods of every type and
description other than Inventory as hereinafter defined), all fixtures and
trade fixtures and all parts thereof and all accessions thereto, excluding
from the foregoing any equipment of such Grantor subject to any lien
identified on Schedule 6.02(a) of the Credit Agreement (but only excluding
such equipment to the extent and for so long as the terms of any such lien
prohibit such Grantor from granting a security interest with respect to
such equipment) (any and all of the foregoing being the "EQUIPMENT");
---------
(B) all inventory in all of its forms, wherever located, now or
hereafter existing (including, but not limited to, (i) all goods which are
held for sale or lease or to be furnished (or which have been furnished)
under any contract of service, or which are raw materials, work in process
therefor, finished goods thereof or materials used or consumed in the
manufacture or production thereof, and (ii) goods in which such Grantor has
an interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which such Grantor has an interest
or right as consignee) and (iii) goods that are returned to or repossessed
by such Grantor), and all accessions thereto and products thereof and
documents therefor (any and all of the foregoing being the "INVENTORY");
---------
(C) all accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind,
now or hereafter existing, whether or not arising out of or in connection
with the sale or lease of goods or the rendering of services, and all
rights now or hereafter existing in and to all security agreements, leases
and other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, instruments, deposit accounts, general
intangibles or obligations (any and all such accounts, contract rights,
chattel paper, instruments, deposit accounts, general intangibles and
obligations, to the extent not referred to in clause (d), (e), (f), (g),
(h) or (i) below, being the "RECEIVABLES", and any and all such leases,
-----------
security agreements and other contracts being the "RELATED CONTRACTS");
-----------------
(D) all of the following (the "SECURITY COLLATERAL"):
-------------------
(i) the Pledged Shares and the certificates representing
the Pledged Shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares;
(ii) the Pledged Debt and the instruments evidencing the
Pledged Debt, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Debt;
(iii) all additional shares of stock of any issuer of the
Pledged Shares and of any other Subsidiary (with respect to any such
other Subsidiary, to the extent
2
<PAGE>
required by Section 6.01(g) of the Credit Agreement), from time to
time acquired by such Grantor in any manner, and the certificates
representing such additional shares, and all dividends, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such shares; and
(iv) all additional indebtedness from time to time owed to
such Grantor by any obligor of the Pledged Debt or any other Person
and the instruments evidencing such indebtedness, and all interest,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such indebtedness;
(E) each Hedge Agreement to which such Grantor is now or may
hereafter become a party, in each case as such agreements may be amended or
otherwise modified from time to time (collectively, the "ASSIGNED
--------
AGREEMENTS"), together with, (i) all rights of such Grantor to receive
----------
moneys due and to become due under or pursuant to the Assigned Agreements,
(ii) all rights of such Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of such Grantor for damages arising out of or for breach of or
default under the Assigned Agreements and (iv) the right of such Grantor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder (any and all of
the foregoing being the "AGREEMENT COLLATERAL");
--------------------
(F) all of the following (collectively, the "ACCOUNT
-------
COLLATERAL"):
----------
(i) the L/C Cash Collateral Account (as hereinafter
defined), all funds held therein and all certificates and instruments,
if any, from time to time representing or evidencing the L/C Cash
Collateral Account;
(ii) all other deposit accounts of such Grantor, all funds
held therein and all certificates and instruments, if any, from time
to time representing or evidencing such deposit accounts;
(iii) all Collateral Investments (as hereinafter defined)
from time to time and all certificates and instruments, if any, from
time to time representing or evidencing the Collateral Investments;
(iv) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Agent for or on behalf of such Grantor
in substitution for or in addition to any or all of the then-existing
Account Collateral; and
(v) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then-
existing Account Collateral;
(G) all trademarks and service marks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos, and any other designs or sources of business
identifiers, indicia of origin or similar devices, all registrations with
respect thereto, all applications with respect to the foregoing, and all
extensions and renewals with respect to any of the foregoing, together with
all of the goodwill associated with any and all of the foregoing,
throughout the world, in each case whether now or hereafter
3
<PAGE>
existing, together with all rights and interests associated with the
foregoing, including, without limitation, license royalties, claims or
rights against third parties for any past, present or future infringement
of any trademark or similar device or registration thereof, or for any
injury to the goodwill associated therewith, and all corresponding rights
throughout the world (any and all of the foregoing being the "TRADEMARKS");
----------
(H) all copyrights and all copyrights of works based on,
incorporated in, derived from or relating to works covered by any such
copyrights, and all right, title and interest to make and exploit all
derivative works based on or adopted from works covered by any such
copyrights, all registrations with respect thereto, all applications with
respect to the foregoing, and all extensions and renewals with respect to
any of the foregoing, in each case whether now or hereafter existing,
together with all rights associated with the foregoing, including, without
limitation, license royalties, rights to print, publish and distribute,
rights to unpublished works, claims or rights against third parties for any
past, present or future infringement of any copyright or registration
thereof, and all corresponding rights throughout the world (any and all of
the foregoing being the "COPYRIGHTS");
----------
(I) all patents and patent applications, and the inventions and
improvements described and claimed therein, and patentable inventions and
the reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing and any written agreement
granting to such Grantor any right to use any invention on which a
subsisting patent exists (collectively, the "PATENTS" and, together with
-------
the Trademarks and the Copyrights, the "INTELLECTUAL PROPERTY"); and
---------------------
(J) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) - (f) of this Section 1) and, to the extent
not otherwise included, all (i) payments under insurance (whether or not
the Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral and (ii) cash;
provided, however, the foregoing grant of a security
-------- -------
interest shall be deemed not to grant a security interest in any of
the property described below (such property being hereinafter referred
to as "EXCLUDED PROPERTY"):
-----------------
(x) any Related Contracts or Intellectual Property, but
only to the extent that, under applicable law, the applicable
Grantor is expressly prohibited from granting a security interest
therein or applicable law provides for the involuntary forfeiture
of the property in the event a security interest is granted
therein without the consent of the appropriate Governmental
Authority, or at all; provided, however, that if such
-------- -------
prohibition or the condition requiring such consent relates only
to the foreclosure of a security interest or the exercise of
other rights and remedies upon a default but not to the granting
of a security interest therein, then a security interest in such
property shall be deemed to be granted by this Agreement subject
to the condition that the consent of such Governmental Authority
is obtained by the Agent prior to foreclosure or exercising its
other rights or remedies hereunder as to which such consent is
required; and
(y) any Related Contracts or Intellectual Property, but
only to the extent that the terms and provisions of a written
agreement, document or
4
<PAGE>
instrument in effect on the Closing Date creating or evidencing
such property or any rights relating thereto expressly prohibit
the granting of a security interest therein or condition the
granting of a security interest therein on the consent of a third
party whose consent has not been obtained or would cause, or
allow a third party to cause, the forfeiture of such property
upon the granting of a security interest therein; provided,
--------
however, that if such prohibition or the condition requiring such
-------
consent relates only to the foreclosure of a security interest or
the exercise of other rights or remedies upon a default, then a
security interest in such property shall be deemed to be granted
by this Agreement subject to the condition that the consent of
such third party is obtained by the Agent prior to foreclosure or
exercising of its other rights or remedies hereunder as to which
such consent is required.
In the event of the termination or elimination of any prohibition or
the requirement for any consent contained in any law, rule, regulation,
agreement, document or instrument to the extent sufficient to permit any
Excluded Property to become Collateral hereunder, or upon the granting of any
such consent, or waiving or terminating any requirement for such consent, a
security interest in such Excluded Property shall be automatically and
simultaneously granted hereunder in such Excluded Property, and the Excluded
Property automatically and simultaneously shall be deemed to be assigned and
pledged to the Agent and shall be included as Collateral hereunder.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures with
------------------------
respect to each Grantor, and the Collateral of such Grantor is collateral
security for, the prompt payment and performance in full when due, whether on a
specified payment date, at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code or any similar law) of all Obligations of such Grantor to any Secured Party
now or hereafter existing under the Credit Agreement, this Agreement, the
Guaranty, the Notes, if any, the other Loan Documents and any and all Hedge
Agreements, in each case whether for principal (including reimbursement for
amounts drawn or available to be drawn under Letters of Credit), interest
(including, without limitation, interest that, but for the filing of a petition
in bankruptcy would accrue on such obligations), fees, expenses, increased
costs, indemnification or otherwise (any and all such Obligations being the
"SECURED OBLIGATIONS"); provided that any Hedge Agreement to which a Lender is a
------------------- --------
party shall be a Secured Obligation only so long as there are any Borrowings or
Commitments outstanding under the Credit Agreement. Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
that constitute part of the Secured Obligations and would be owed by any Grantor
to the Agent or the Lenders under the Credit Agreement, this Agreement, the
Guaranty, the Notes, if any, and the other Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding.
SECTION 3. GRANTORS REMAINS LIABLE. Anything herein to the contrary
-----------------------
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements (including, without limitation, the Assigned Agreements) included in
the Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Agent of any of the rights hereunder shall not
release any Grantor from any of its duties or obligations under the contracts
and agreements (including, without limitation, the Assigned Agreements) included
in the Collateral and (c) neither the Agent nor any Lender shall have any
obligation or liability under the contracts and agreements (including, without
limitation, the Assigned Agreements) included in the Collateral by reason of
this Agreement, nor shall the Agent or any Lender be obligated to perform any of
the obligations or duties of any Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
5
<PAGE>
SECTION 4. DELIVERY OF SECURITY COLLATERAL AND ACCOUNT COLLATERAL.
------------------------------------------------------
All certificates or instruments representing or evidencing Security Collateral
or Account Collateral shall be delivered to and held by or on behalf of the
Agent pursuant hereto and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent. The Agent shall
have the right, upon the occurrence and during the continuance of an Event of
Default, without notice to any Grantor, to transfer to or to register in the
name of the Agent or any of its nominees any or all of the Security Collateral
and Account Collateral, subject only to the revocable rights specified in
Section 12(a). In addition, the Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing Security
Collateral or Account Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 5. MAINTAINING THE L/C CASH COLLATERAL ACCOUNT. If any
-------------------------------------------
Event of Default shall have occurred and shall be continuing:
(A) The Agent may, and upon request of the Agent the Company
shall, open a non-interest bearing cash collateral account (the "L/C CASH
--------
COLLATERAL ACCOUNT") with NationsBank, in the name of the Company but under
------------------
the sole dominion and control of the Agent and subject to the terms of this
Agreement; and
(B) It shall be a term and condition of the L/C Cash Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the L/C Cash Collateral Account, and except as
otherwise provided by the provisions of Section 19, that no amount
(including interest on Collateral Investments (as hereinafter defined))
shall be paid or released to or for the account of, or withdrawn by or for
the account of, the Company or any other Person (other than the Agent) from
the L/C Cash Collateral Account.
The L/C Cash Collateral Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
then or thereafter be in effect.
SECTION 6. INVESTING AND RELEASE OF AMOUNTS IN THE L/C CASH
------------------------------------------------
COLLATERAL ACCOUNT. If requested by the Company, the Agent will, subject to the
- - ------------------
provisions of Section 19, from time to time (a) invest amounts on deposit in the
L/C Cash Collateral Account in such Cash Equivalents in the name of the Agent as
the Company may select and the Agent may approve, and (b) invest interest paid
on the Cash Equivalents referred to in clause (a) above, and reinvest other
proceeds of any such Cash Equivalents that may mature or be sold, in each case
in such Cash Equivalents in the name of the Agent as the Company may select and
the Agent may approve (the Cash Equivalents referred to in clauses (a) and (b)
above being collectively referred to herein as "COLLATERAL INVESTMENTS").
----------------------
Interest and proceeds that are not invested or reinvested in Collateral
Investments as provided above shall be deposited and held in the L/C Cash
Collateral Account. If, at any time after amounts have been deposited in the
L/C Cash Collateral Account, no Event of Default exists, the Agent shall, upon
the written request of the Company, release all amounts on deposit in the L/C
Cash Collateral Account to the Company.
SECTION 7. REPRESENTATIONS AND WARRANTIES. Each Grantor hereby
------------------------------
represents and warrants as follows:
(A) All of the Equipment and Inventory are located at the places
specified in Schedule II hereto, except for (i) Inventory and Equipment in
transit and (ii) other Collateral with an aggregate value that does not
exceed $500,000. The chief place of business and chief executive office of
such Grantor and the office where such Grantor keeps its records concerning
the Receivables, and the original copies of each Assigned Agreement and all
originals of all
6
<PAGE>
chattel paper that evidence Receivables, are located at the address
specified for such Grantor on Schedule III hereto. None of the Receivables
or Agreement Collateral is evidenced by a promissory note or other
instrument. Such Grantor's federal tax identification number is as set
forth on Schedule III.
(B) Such Grantor is the legal and beneficial owner of the
Collateral free and clear of any Lien, except for Liens permitted under
Section 6.02(a) of the Credit Agreement. No effective financing statement
or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office, except such as may have been
filed in favor of the Agent relating to this Agreement or any other Loan
Document and except for liens permitted under Section 6.02(a) of the Credit
Agreement. As of the date of this Agreement, such Grantor currently
conducts business only under its own name and, in certain areas and for
certain operations, the trade names listed on Schedule IV. Neither such
Grantor nor any corporate predecessor has, during the preceding five (5)
years, been known as or used any other corporate or fictitious name, except
such names as are disclosed on Schedule IV.
(C) Such Grantor has exclusive possession and control of the
Equipment and Inventory of such Grantor except for (i) Equipment leased by
such Grantor as a lessee and Equipment in the possession and control of
such Grantor's lessees and licensees under written lease and license
agreements entered into in the ordinary course of business and consistent
with past practice, (ii) Equipment and Inventory in transit with common or
other carriers, and (iii) Equipment and Inventory in the possession of a
bailee, provided that if any bailee is in possession of Equipment and
--------
Inventory with a value in excess of One Million Dollars ($1,000,000), the
bailee has been notified by the Grantor of the security interests created
by this Agreement.
(D) The Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable. The Pledged Debt of such
Grantor, if any, is in all respects what it purports to be and represents
genuine debt owing to such Grantor arising from bona fide transactions
completed in accordance with the terms and provisions contained in the
documents delivered to the Agent with respect thereto.
(E) The pledge of the Pledged Shares and Pledged Debt, if any,
pursuant to this Agreement creates a valid and first priority perfected
security interest in the Pledged Shares and the Pledged Debt, respectively,
subject only to Liens of the type described in clause (a) or (b) of the
definition of "Permitted Liens" contained in the Credit Agreement.
(F) The Pledged Shares constitute, as of the Closing Date, all of
the issued and outstanding shares of stock of the respective issuers
thereof indicated on Schedule I hereto and owned by the Grantors, and, as
of the Closing Date, there is no other class of shares issued and
outstanding of the respective issuers thereof. The Pledged Debt
constitutes, as of the Closing Date, all of the notes and instruments
payable to or owned by such Grantor, except for notes and instruments with
an outstanding principal amount of less than One Million Dollars
($1,000,000) and except for notes and instruments received in the ordinary
course of business and which such Grantor is not required to deliver to the
Agent pursuant to Section 8 hereof or of which the Agent has not at any
time requested possession and which are not a material portion of the
Collateral either singly or in the aggregate, and the security interest of
the Agent therein has been duly perfected with first priority.
(G) Appropriate financing statements have been filed in the
necessary jurisdictions (or have been executed and delivered by the
applicable Grantor in appropriate form for filing in the necessary
jurisdictions) with respect to the Collateral as to which financing
7
<PAGE>
statements are required to be filed, so that the security interests granted
pursuant to this Agreement, to the extent they may be perfected by filing
financing statements in the necessary jurisdictions, constitute (or in the
case of any such financing statements not yet filed, will constitute upon
filing thereof) valid, continuing and perfected security interests in and
liens on the Collateral to the extent a security interest can be created
therein under the Uniform Commercial Code as in effect in the applicable
jurisdictions in the United States, securing the payment of the Secured
Obligations, subject only to Liens of the type described in clause (a) or
(b) of the definition of "Permitted Liens" contained in the Credit
Agreement. All other actions necessary or requested by the Agent to
perfect and protect such security interest in each item of Collateral
(including, without limitation, the actions described in clauses (i) and
(ii) of Section 8(a) to the extent required therein) have been duly taken
to the extent a security interest can be created therein under the Uniform
Commercial Code as in effect in the applicable jurisdictions of the United
States.
(H) No authorization, approval or other action by, and no notice
to or filing with, any Governmental Authority (other than such
authorizations, approvals and other actions as have already been taken or
are in full force and effect) is required (A) for the pledge of the
Security Collateral, for the assignment of the Assigned Agreements, for the
grant of the security interest in the Collateral held by such Grantor
hereby or for the execution, delivery or performance of this Agreement by
such Grantor, or (B) for the exercise by the Agent of the voting rights in
the Pledged Shares or of any other rights or remedies in respect of the
Collateral hereunder except as may be required in connection with any
disposition of Collateral consisting of securities by laws affecting the
offering and sale of securities generally and except as may be required for
the Agent to receive payments directly from the United States government
under the Assignment of Claims Act, 31 U.S.C. (S) 3727 and 41 U.S.C. (S) 15
(the "ASSIGNMENT OF CLAIMS ACT").
------------------------
(I) The Inventory has been produced by such Grantor in compliance
with all requirements of the Fair Labor Standards Act.
(J) To the best of such Grantor's knowledge, each trademark,
copyright and patent material to the operations of the Company and its
Subsidiaries taken as a whole is validly subsisting and is presently in
good standing.
(K) Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, no claim has been made by a third party
that any Intellectual Property is invalid or unenforceable.
(L) Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, no claim has been made that the use of any
Intellectual Property does or may violate the rights of any third party.
(M) In connection with the sale in May 1990 of the business of
Whittaker Technical Products, Inc. and/or its predecessor entities located
in Pawcatuck, Connecticut to Yardney Technical Products, Inc. (the
"BUYER"), (i) a conveyance of all the rights in all of the contracts
-----
associated with such business was made to the Buyer, including those
contracts listed on the Financing Statement dated May 11, 1990, File No.
9012940 as filed with the Secretary of State of California, (ii) such
contracts do not constitute assets of the Company, and (iii) the Company is
not entitled to receive benefit from such contracts.
8
<PAGE>
SECTION 8. FURTHER ASSURANCES.
------------------
(A) Each Grantor agrees that from time to time, at the expense of
such Grantor, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or desirable, or that the Agent may reasonably request, in order
to perfect, protect and maintain the priority of any pledge, assignment or
security interest granted or purported to be granted hereby or to enable
the Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the
foregoing, each Grantor will: (i) at the request of the Agent made at any
time after the occurrence and during the continuation of an Event of
Default, mark conspicuously each document included in the Inventory, each
chattel paper included in the Receivables, each Related Contract, each
Assigned Agreement and each of its records pertaining to the Collateral
with a legend, in form and substance satisfactory to the Agent, indicating
that such document, chattel paper, Related Contract, Assigned Agreement or
Collateral is subject to the security interest granted hereby; (ii) if any
Collateral shall be evidenced by, or if such Grantor shall otherwise be the
payee under, a promissory note or other instrument or chattel paper having
a principal balance in excess of One Million Dollars ($1,000,000), deliver
and pledge to the Agent hereunder such note or instrument or chattel paper
duly indorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Agent; and (iii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Agent may reasonably request, in order to perfect and
preserve, with the required priority, the pledge, assignment and security
interest granted or purported to be granted hereby.
(B) Each Grantor hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral without the signature of such Grantor
where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by
law.
(C) Each Grantor will furnish to the Agent, from time to time,
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Agent may
reasonably request, all in reasonable detail.
(D) Each Grantor agrees that, at the request of the Agent,
following the occurrence and during the continuance of an Event of Default,
such Grantor will execute any and all documents, notices or instruments as
may be necessary or desirable, or as the Agent may reasonably request, to
direct the United States government to pay to the Agent, for the account of
the Agent and the Lenders, all amounts otherwise payable to the Grantors
under the Assignment of Claims Act.
(E) Each Grantor shall (i) preserve and maintain all material
rights in the Intellectual Property, and (ii) upon the occurrence and
during the continuation of an Event of Default, use its best efforts to
obtain any consents, waivers or agreements necessary to enable the Agent to
exercise its remedies with respect to the Intellectual Property. No
Grantor shall abandon any material right to file a copyright, patent or
trademark application nor shall any Grantor abandon any material pending
copyright, patent or trademark application, or material Copyright, Patent
or Trademark without the prior written consent of Agent.
9
<PAGE>
SECTION 9. AS TO EQUIPMENT AND INVENTORY.
-----------------------------
(A) Each Grantor shall keep the Equipment and Inventory of such
Grantor (other than (i) Inventory sold in the ordinary course of business,
and (ii) Equipment and Inventory with an aggregate value that does not
exceed $500,000) at the places therefor specified on Schedule II or, upon
prior written notice to the Agent, at such other places in a jurisdiction
where all action required by Section 8 shall have been taken with respect
to the Equipment and Inventory.
(B) Each Grantor shall cause the Equipment material to its
operations to be maintained and preserved in good repair and working order,
ordinary wear and tear and damage due to casualty excepted, and make or
cause to be made all appropriate repairs, renewals and replacements
thereof, to the extent not obsolete, and consistent with past practice of
such Grantor, as quickly as practicable after the occurrence of any loss or
damage thereto, that are necessary or desirable to such end. Each Grantor
shall promptly furnish to the Agent a statement respecting any material
loss or damages to any of the Equipment or Inventory.
SECTION 10. INSURANCE.
---------
(A) Each Grantor (or the Company, on behalf of each Grantor)
shall, at its own expense, maintain insurance with respect to the Equipment
and Inventory of such Grantor with financially sound and reputable insurers
in such amounts, against such risks and in such form as is consistent with
past practice and as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which
such Grantor operates. Each policy for property damage insurance shall
provide for all losses (except for losses of less than $5,000,000 per
occurrence) to be paid directly to the Agent. Each such policy shall in
addition (i) name such Grantor (or the Company) and the Agent as insured
parties thereunder (without any representation or warranty by or obligation
upon the Agent) as their interests may appear, (ii) in the case of property
damage insurance, contain the agreement by the insurer that any loss
thereunder shall be payable to the Agent notwithstanding any action,
inaction or breach of representation or warranty by such Grantor, (iii) not
contain any provision providing for recourse against the Agent for payment
of premiums or other amounts with respect thereto and (iv) provide that at
least 10 days' prior written notice of cancellation or of lapse shall be
given to the Agent by the insurer. Each Grantor (or the Company) shall, if
so requested by the Agent, deliver to the Agent original or duplicate
policies of such insurance and, as often as the Agent may reasonably
request, a report of a reputable insurance broker with respect to such
insurance. Further, each Grantor (or the Company) shall, at the request of
the Agent, duly exercise and deliver instruments of assignment of such
insurance policies to comply with the requirements of this Section 10 and
cause the insurers to acknowledge notice of such assignment.
(B) Reimbursement under any liability insurance maintained by
such Grantor pursuant to this Section 10 may be paid directly to the Person
who shall have incurred liability covered by such insurance. In case of
any loss involving damage to Equipment or Inventory when subsection (c) of
this Section 10 is not applicable, such Grantor shall make or cause to be
made the necessary repairs to or replacements of such Equipment or
Inventory, and any proceeds of insurance maintained by such Grantor
pursuant to this Section 10 and received by the Agent shall be released to
such Grantor as reimbursement for the costs of such repairs or
replacements.
(C) At the request of the Agent, upon the occurrence and during
the continuance of any Event of Default, all insurance payments in respect
of such Equipment or Inventory shall be paid to and applied by the Agent as
specified in Section 19(b) hereof.
10
<PAGE>
SECTION 11. PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES;
--------------------------------------------------------
INTELLECTUAL PROPERTY.
- - ---------------------
(A) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning
the Collateral and all originals of all chattel paper that evidence
Receivables, at the location therefor specified on Schedule II or, upon
prior written notice to the Agent, at such other locations in a
jurisdiction where all actions required by Section 8 shall have been taken
with respect to the Collateral. Each Grantor will hold and preserve such
records, Assigned Agreements and chattel paper and will permit
representatives of the Agent at any time during normal business hours to
inspect and make abstracts from such records and chattel paper.
(B) Except as otherwise provided in this subsection (b), each
Grantor shall continue to collect in accordance with its customary
practice, at its own expense, all amounts due or to become due such Grantor
under the Receivables and, prior to the occurrence of an Event of Default,
such Grantor shall have the right to adjust, settle or compromise the
amount or payment of any Account, or release wholly or partly any account
debtor or obligor thereof, or allow any credit or discount thereon, all in
accordance with its customary practices. In connection with such
collections, each Grantor may take (and, upon the occurrence and during the
continuation of an Event of Default, at the Agent's direction, shall take)
such action as such Grantor or the Agent may deem necessary or advisable to
enforce collection of the Receivables; provided, however, that the Agent
-------- -------
shall have the right, 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 notify the obligors under any Receivables of the assignment of
such Receivables to the Agent and to direct such obligors to make payment
of all amounts due or to become due to such Grantor thereunder directly to
the Agent and, upon such notification and at the expense of such 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 such Grantor might have done. After receipt by such Grantor
or Grantors of the notice from the Agent referred to in the proviso to the
-------
preceding sentence, (i) all amounts and proceeds (including instruments)
received by such Grantor in respect of the Receivables shall be received in
trust for the benefit of the Agent hereunder, shall be segregated from
other funds of such Grantor and shall be forthwith paid over to the Agent
in the same form as so received (with any necessary indorsement) to be
applied as provided by Section 19(b) and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any Receivable,
release wholly or partly any obligor thereof, or allow any credit or
discount thereon.
SECTION 12. VOTING RIGHTS; DIVIDENDS; ETC.
-----------------------------
(A) So long as no Event of Default shall have occurred and be
continuing (and, during the continuance of any Event of Default so long as
no notice has been given pursuant to Section 12(b)):
(i) Each Grantor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Security
Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the other Loan Documents; provided,
--------
however, that no Grantor shall exercise or refrain from exercising any
-------
such right if such action would have a material adverse effect on the
value of the Security Collateral or the benefits of this Agreement to
the Secured Parties.
11
<PAGE>
(ii) Each Grantor shall be entitled to receive and retain
any and all dividends and interest paid in respect of the Security
Collateral; provided, however, that any and all dividends and interest
-------- -------
paid or payable other than in cash in respect of, and any and all
instruments and other property (other than cash) received, receivable
or otherwise distributed in respect of or in exchange for, any
Security Collateral shall be forthwith delivered to the Agent to hold
as, Security Collateral and shall, if received by such Grantor, be
received in trust for the benefit of the Agent, be segregated from the
other property or funds of such Grantor and be forthwith delivered to
the Agent as Security Collateral in the same form as so received (with
any necessary indorsement).
(iii) The Agent shall execute and deliver (or cause to be
executed and delivered) to any Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it
is entitled to exercise pursuant to clause (i) above and to receive
the dividends or interest payments that it is authorized to receive
and retain pursuant to clause (ii) above.
(B) Upon the occurrence and during the continuance of an Event of
Default and after notice to the Company from the Agent or the Required
Lenders:
(i) All rights of each Grantor (x) to exercise or refrain
from exercising the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 12(a)(i) and (y)
to receive the dividends and interest payments that it would otherwise
be authorized to receive and retain pursuant to Section 12(a)(ii)
shall cease, and all such rights shall thereupon become vested in the
Agent, so long as an Event of Default shall continue, which shall
thereupon have the sole right to exercise or refrain from exercising
such voting and other consensual rights and to receive and hold as
Security Collateral such dividends and interest payments. Each
Grantor shall execute and deliver such instruments evidencing such
Grantor's right to exercise such voting rights as the Agent may
request.
(ii) All dividends and interest payments that are received by any
Grantor contrary to the provisions of paragraph (i) of this Section
12(b) shall be received in trust for the benefit of the Agent, shall
be segregated from other funds of such Grantor and shall be forthwith
paid over to the Agent as Security Collateral in the same form as so
received (with any necessary indorsement).
SECTION 13. AS TO THE ASSIGNED AGREEMENTS.
-----------------------------
Each Grantor shall at its expense:
(i) except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect, perform and observe all the
terms and provisions of the Assigned Agreements to be performed or observed
by it, maintain the Assigned Agreements in full force and effect, enforce
the Assigned Agreements in accordance with their terms;
(ii) take all such action to such end as may be from time to
time reasonably requested by the Agent; and
(iii) from time to time furnish to the Agent such information
and reports regarding the Assigned Agreements as the Agent may reasonably
request.
12
<PAGE>
SECTION 14. PAYMENTS UNDER THE ASSIGNED AGREEMENTS. Upon the written
--------------------------------------
request of the Agent at any time when an Event of Default has occurred and is
continuing, each Grantor agrees to instruct each other party to each Assigned
Agreement of such Grantor, that so long as any Event of Default shall have
occurred and be continuing, all payments due or to become due under or in
connection with such Assigned Agreement shall be made directly to the Agent.
SECTION 15. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES.
--------------------------------------------
(A) Except as otherwise permitted under the Credit Agreement, no
Grantor shall (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, or (ii) create or suffer to exist any Lien upon or with respect
to any of the Collateral.
(B) Each Grantor shall (i) cause each issuer of the Pledged
Shares not to issue any stock or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer, except to such
Grantor or as otherwise permitted under the Credit Agreement, and (ii)
pledge hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all such additional shares of stock or other securities
issued to such Grantor. Each Grantor hereby authorizes the Agent to modify
this Agreement by amending Schedule I to include such additional shares or
other securities.
SECTION 16. AGENT APPOINTED ATTORNEY-IN-FACT. Each Grantor hereby
--------------------------------
irrevocably appoints the Agent such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Agent's discretion, to take any action
and to execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(A) to obtain and, upon the occurrence and during the continuance
of an Event of Default, adjust insurance required to be paid to the Agent
pursuant to Section 10,
(B) upon the occurrence of an Event of Default and while it is
continuing, to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral including, without limitation,
to receive, endorse and collect all instruments made payable to such
Grantor representing any dividend, interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same,
(C) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) or
(b) above, and
(D) upon the occurrence of an Event of Default and while it is
continuing, to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with
the terms and conditions of any Assigned Agreement or the rights of the
Agent with respect to any of the Collateral.
SECTION 17. AGENT MAY PERFORM. If any Grantor fails to perform any
-----------------
agreement contained herein, the Agent, upon written notice, if practicable, to
such Grantor or the Company, may itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Agent incurred in connection
therewith shall be payable by such Grantor and the Company under Section 21(b).
13
<PAGE>
SECTION 18. THE AGENT'S DUTIES. The powers conferred on the Agent
------------------
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Security Collateral, whether or not the Agent or any Lender has or is deemed to
have knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which NationsBank accords its
own property.
SECTION 19. REMEDIES. If any Event of Default shall have occurred
--------
and be continuing:
(A) The Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the Uniform Commercial Code in effect in the State of New
York at such time (the "N.Y. UNIFORM COMMERCIAL CODE") (whether or not the
----------------------------
N.Y. Uniform Commercial Code applies to the affected Collateral) and also
may (i) require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Agent forthwith, assemble all
or part of the Collateral as directed by the Agent and make it available to
the Agent at a place to be designated by the Agent that is reasonably
convenient to both parties and (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Agent may deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale shall be required by law, at least 10 days' notice to
such Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(B) All cash proceeds received by the Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Agent, be held by the Agent as
collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Agent pursuant to Section 21) in
whole or in part by the Agent for the ratable benefit of the Lenders
against, all or any part of the Secured Obligations in such order as the
Agent shall elect. Any surplus of such cash or cash proceeds held by the
Agent and remaining after payment in full of all the Secured Obligations
shall be promptly paid over to the Company or to whomsoever may be lawfully
entitled to receive such surplus.
(C) The Agent may exercise any and all rights and remedies of any
Grantor under or in connection with the Assigned Agreements or otherwise in
respect of the Collateral, including, without limitation, any and all
rights of any Grantor to demand or otherwise require payment of any amount
under, or performance of any provision of, any Assigned Agreement.
(D) All payments received by any of the Grantors under or in
connection with any Assigned Agreement or otherwise in respect of the
Collateral shall be received in trust for the benefit of the Agent, shall
be segregated from other funds of such Grantor and shall be
14
<PAGE>
forthwith paid over to the Agent in the same form as so received (with any
necessary indorsement).
(E) The Agent may, without notice to any Grantor except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against the L/C
Cash Collateral Account or any part thereof.
SECTION 20. REGISTRATION RIGHTS. If the Agent shall determine to
-------------------
exercise its right to sell all or any of the Pledged Shares pursuant to Section
19, each Grantor agrees that, upon request of the Agent, such Grantor will, at
its own expense:
(A) execute and deliver, and cause each issuer of the Pledged
Shares contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to
be done all such other acts and things, as may be necessary or, in the
opinion of the Agent, advisable to register such Pledged Shares under the
provisions of the Securities Act of 1933, as from time to time amended (the
"SECURITIES ACT"), to cause the registration statement relating thereto to
--------------
become effective and to remain effective for such period as prospectuses
are required by law to be furnished and to make all amendments and
supplements thereto and to the related prospectus that, in the opinion of
the 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;
(B) use its best efforts to qualify the Pledged Shares under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Shares, as requested by
the Agent;
(C) provide the Agent with such other information and projections
as may be necessary or, in the opinion of the Agent, advisable to enable
the Agent to effect the sale of such Pledged Shares; and
(D) do or cause to be done all such other acts and things as may
be necessary to make such sale of the Pledged Shares or any part thereof
valid and binding and in compliance with applicable law.
The Agent is authorized, in connection with any sale of the Pledged Shares
pursuant to Section 19, to deliver or otherwise disclose to any prospective
purchaser of the Pledged Shares (i) any registration statement or prospectus,
and all supplements and amendments thereto, prepared pursuant to clause (a)
above, (ii) subject to the requirements imposed by the securities laws, any
information and projections provided to it pursuant to clause (d) above and
(iii) subject to the requirements imposed by the securities laws, any other
information in its possession relating to the Pledged Shares.
Each Grantor acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Agent or the Lenders by reason of the
failure by any Grantor to perform any of the covenants contained in this Section
and, consequently, agrees that, if any Grantor shall fail to perform any of such
covenants, such Grantor or the Company shall pay, as liquidated damages and not
as a penalty, an amount equal to the value of the Pledged Shares on the date the
Agent shall demand compliance with this Section.
SECTION 21. INDEMNITY AND EXPENSES; TAXES. (A) Each Grantor agrees,
-----------------------------
jointly and severally, to indemnify each Indemnified Party from and against any
and all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this
15
<PAGE>
Agreement), except claims, losses or liabilities resulting from such Indemnified
Party's gross negligence or willful misconduct as determined by a final judgment
of a court of competent jurisdiction.
(B) Each Grantor agrees, jointly and severally, to pay to the Agent,
upon written demand, the amount of any and all reasonable expenses, including
the reasonable fees and expenses of its counsel and of any experts and agents,
that the Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Agent or the Lenders
hereunder or (iv) the failure by such Grantor to perform or observe any of the
provisions hereof.
(C) Each Grantor shall pay (i) all taxes, assessments and other
charges of Governmental Authorities imposed upon any of the Collateral before
any material penalty or interest accrues thereon, and (ii) all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums materially adversely affecting the Collateral, which have
become due and payable and which by law have or may become a Lien (other than a
Permitted Lien) upon any of the Collateral prior to the time when any material
penalty or fine shall be incurred with respect thereto; provided, that no such
--------
taxes, assessments and charges of Governmental Authorities referred to in clause
(i) above or claims referred to in clause (ii) above need to be paid if being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and enforcement thereof is stayed and if a reserve or other
appropriate provision required in conformity with GAAP shall have been made
therefor and if, at the request of the Agent, it posts a bond or other form of
indemnity satisfactory to the Agent in the amount of such contested taxes,
assessments and charges plus any applicable interest and penalties.
SECTION 22. SECURITY INTEREST ABSOLUTE. The obligations of each Grantor
--------------------------
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against each Grantor to enforce
this Agreement, irrespective of whether any action is brought against the
Company or whether the Company is joined in any such action or actions. All
rights of the Agent and the pledge, assignment and security interest hereunder,
and all obligations of each Grantor hereunder, shall be absolute and
unconditional, irrespective of:
(A) any lack of validity or enforceability of any Loan Document
or any other agreement or instrument relating thereto;
(B) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations or any other
amendment or waiver of or any consent to any departure from any Loan
Document, including, without limitation, any increase in the Secured
Obligations resulting from the extension of additional credit to the
Company or any of its Subsidiaries or otherwise;
(C) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(D) any manner of application of collateral, or proceeds thereof,
to all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of the Company or any of its Subsidiaries;
(E) any change, restructuring or termination of the corporate
structure or existence of the Company or any of its Subsidiaries; or
16
<PAGE>
(F) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, such Grantor or a third party
grantor of a security interest.
SECTION 23. AMENDMENTS; WAIVERS; ETC. No amendment or waiver of any
------------------------
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent and each Grantor, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that any amendment to this Agreement that is in
-------- -------
substantially the same form as Exhibit K to the Credit Agreement shall be
effective when signed by only the Agent and the Additional Grantor (as defined
therein). No failure on the part of the Agent to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 24. ADDRESSES FOR NOTICES. All notices and other
---------------------
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and, mailed, telegraphed, telecopied,
telexed, cabled or delivered to each Grantor or to the Agent, as the case may
be, in each case addressed to it at its address specified in the Credit
Agreement or on the signature pages hereof, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. All such notices
and other communications shall, when mailed, telecopied, telegraphed, telexed or
cabled, respectively, be effective when deposited in the mails, telecopied,
delivered to the telegraph company, confirmed by telex answerback or delivered
to the cable company, respectively, addressed as aforesaid.
SECTION 25. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE
---------------------------------------------------
CREDIT AGREEMENT. This Agreement shall create a continuing security interest in
- - ----------------
the Collateral and shall (a) remain in full force and effect until the later of
the payment in full in cash of the Secured Obligations or the termination of the
Commitments of the Lenders, (b) be binding upon each Grantor, its successors and
assigns and (c) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Agent, the Lenders and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitment, the Advances owing to
it and the Notes, if any, held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Lender herein or otherwise, in each case as provided in Section 9.07 of
the Credit Agreement.
SECTION 26. TERMINATION. Upon the payment in full of the Secured
-----------
Obligations and the termination of the Commitments of the Lenders, the security
interest granted hereby shall terminate and all rights to the Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof shall
revert to the applicable Grantor. Upon the termination of any such security
interest, or upon the Agent's release of any of the Collateral pursuant to
Section 9.01 of the Credit Agreement, the Agent shall promptly return to the
applicable Grantor, at such Grantor's expense, such of the Collateral (and, in
the case of a release, such of the released Collateral) held by the Agent as
shall not have been sold or otherwise applied pursuant to the terms hereof. The
Agent will, at such Grantor's expense, execute and deliver to the Agent such
other documents as the Agent shall reasonably request to evidence such
termination or release, as the case may be.
SECTION 27. GOVERNING LAW; TERMS. This Agreement shall be governed
--------------------
by and construed in accordance with the laws of the State of New York, except
to the extent that the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the State of New York. Unless
otherwise
17
<PAGE>
defined herein or in the Credit Agreement, terms used in Article 9 of the N.Y.
Uniform Commercial Code are used herein as therein defined.
SECTION 28. SEVERABILITY OF PROVISIONS. 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 or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 29. COUNTERPARTS. This Agreement may be executed in any
------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart of a signature page to this Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Agreement.
SECTION 30. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS
AVAILABLE. EACH GRANTOR IRREVOCABLY DESIGNATES AND APPOINTS THE PRENTICE HALL
CORPORATION SYSTEM, INC., ONE GULF & WESTERN PLAZA,NEW YORK, NEW YORK 10023 AS
ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH COURT,
SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH PERSONS TO BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT. EACH GRANTOR IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE SIGNATURE PAGES HEREOF,
SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. EACH OF THE
GRANTORS, THE AGENT, AND THE LENDERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED UPON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE AGENT TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE
COURTS OF ANY OTHER JURISDICTION.
SECTION 31. WAIVER OF JURY TRIAL. EACH OF THE GRANTORS, THE AGENT
--------------------
AND THE LENDERS IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE ACTIONS OF THE AGENT OR ANY
LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
18
<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
WHITTAKER CORPORATION,
a Delaware corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
BLUE BELL LEASE, INC.,
a California corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
S-1
<PAGE>
METROPOLITAN FINANCIAL SERVICES CORPORATION
a Colorado corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
PARK CHEMICAL COMPANY,
a Michigan corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
WHITTAKER CONTROLS, INC.,
a California corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
S-2
<PAGE>
WHITTAKER CORP.,
a Maine corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
WHITTAKER ORDNANCE, INC.,
a Delaware corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
WHITTAKER PORTA BELLA DEVELOPMENT, INC.,
a California corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
S-3
<PAGE>
WHITTAKER SERVICES CORPORATION,
a California corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
WHITTAKER TECHNICAL PRODUCTS, INC.,
a Colorado corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
WHITTAKER DEVELOPMENT CO.,
a Delaware corporation
By:______________________________
Title:
Notice Address:
_________________________________
_________________________________
Attention:_______________________
S-4
<PAGE>
SCHEDULE I PART I
PLEDGED SHARES AND PLEDGED DEBT
-------------------------------
<TABLE>
<CAPTION>
STOCK NUMBER OF % OF
PAR CERTIFICATES OUTSTANDING OUTSTANDING
STOCK ISSUER CLASS OF STOCK VALUE NO.(S) SHARES SHARES
<S> <C> <C> <C> <C> <C>
Blue Bell Lease, Inc. Common $1.00 2 1000 100
Metropolitan Financial Services Common NONE 1 100 100
Corporation
Park Chemical Company Common $1.00 2 1000 100
Whittaker Controls, Inc. Common $1.00 2 1000 100
Whittaker Corp. Common $1.00 1 1000 100
Whittaker Development Co. Common $1.00 1 1000 100
Whittaker Ordnance, Inc. Common NONE 2 1 100
Whittaker Porta Belle Development, Common $1.00 1 1000 100
Inc.
Whittaker Services Corporation Common NONE 1 1000 100
Whittaker Technical Products, Inc. Common $1.00 1 1000 100
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I PART II
WHITTAKER CORPORATION AND SUBSIDIARIES
NOTES RECEIVABLE ($ in 000)/1/
___________________________________________________________________
Current
Interest Principal Final
Grantor Debtor Rate Amount Maturity
======= ====== ======== ========= ==========
<S> <C> <C> <C> <C>
Whittaker Corporation Maine Central 15% 2,025 Oct 2, 1998
</TABLE>
___________________________
/1/Estimated as of Closing Date.
115
<PAGE>
SCHEDULE II
LOCATIONS OF EQUIPMENT AND INVENTORY
------------------------------------
LOCATIONS OF INVENTORY
- - ----------------------
WHITTAKER CORPORATION
1785 Voyager Avenue
Simi Valley, CA 93063
1915 Voyager Avenue
Simi Valley, CA 93063
15275 Southwest Koll Parkway
Beaverton, OR 97006
1955 North Surveyor Avenue
Simi Valley, CA 93063
2731 Systron Drive
Concord, CA 94518
BLUE BELL LEASE, INC.
None
METROPOLITAN FINNANCIAL SERVICES
None
PARK CHEMICAL COMPANY
None
WHITTAKER CONTROLS, INC.
12838 Saticoy Street
North Hollywood, CA 91605
WHITTAKER CORP. (a Maine Corporation)
None
WHITTAKER DEVELOPMENT CO.
None
WHITTAKER ORDNANCE, INC.
None
<PAGE>
WHITTAKER SERVICES, INC.
None
WHITTAKER TECHNICAL PRODUCTS, Inc.
3850 Olive Street
Denver, CO 80207
LOCATIONS OF EQUIPMENT
- - ----------------------
WHITTAKER CORPORATION
10880 Wilshire Boulevard
Los Angeles, CA 90024
1785 Voyager Avenue
Simi Valley, CA 93063
1915 Voyager Avenue
Simi Valley, CA 93063
2361 South Jefferson Davis Highway
Suite 1006
Arlington, VA 22202
15275 Southwest Koll Parkway
Beaverton, OR 97006
1955 North Surveyor Avenue
Simi Valley, CA 93063
2731 Systron Drive
Concord, CA 94518
Admiral Gate Tower
221 3rd Street
Newport, RI 02840
BLUE BELL LEASE, INC
None
METROPOLITAN FINANCIAL SERVICES
None
PARK CHEMICAL COMPANY
None
2
<PAGE>
WHITTAKER CONTROLS, INC.
12838 Saticoy Street
North Hollywood, CA 91605
WHITTAKER CORP. (a Maine corporation)
None
WHITTAKER DEVELOPMENT CO.
None
WHITTAKER ORDNANCE, INC.
None
WHITTAKER PORTA BELLA DEVELOPMENT, INC.
None
WHITTAKER SERVICES CORPORATION
1955 North Surveyor Avenue
Simi Valley, CA 93603
60 Hammarlund Way
Middleton, RI 02840
1611 Beach Drive
El Paso, Texas 79925
3313 Memorial Parkway
#112
Huntsville, Alabama 35801
WHITTAKER TECHNICAL PRODUCTS, INC.
3850 Olive Street
Denver, CO 80207
3
<PAGE>
SCHEDULE III
PLACE OF BUSINESS AND TAX IDENTIFICATION NUMBER
-----------------------------------------------
<TABLE>
<CAPTION>
Chief Executive Offices and
Federal E.I Number Name Chief Place of Business
- - ------------------ ---- ---------------------------
<C> <S> <C>
95-4033076 Whittaker Corporation 10880 Wilshire boulevard, 8th Floor
Los Angeles, California 90024
95-3917177 Blue Bell Lease, Inc. 1785 Voyager Avenue
Simi Valley, California 93063
Metropolitan Financial Services 1785 Voyager Avenue
Corporation Simi Valley, California 93063
38-0907830 Park Chemical Company 1785 Voyager Avenue
Simi Valley, California 93063
95-3917547 Whittaker Controls, Inc. 12838 Saticoy Street
Post Office Box 3951
North Hollywood, California 91605
95-2625099 Whittaker Corp. (A Maine 1785 Voyager Avenue
Corporation) Simi Valley, California 93063
95-3991526 Whittaker Development Co. 1785 Voyager Avenue
Simi Valley, California 93063
94-1715628 Whittaker Ordnance, Inc. 1785 Voyager Avenue
Simi Valley, California 93063
95-4506693 Whittaker Porta Bella 1785 Voyager Avenue
Development, Inc. Simi Valley, California 93063
77-0323260 Whittaker Services Corporation 1955 North Surveyor Avenue
Simi Valley, California 93063
13-5513968 Whittaker Technical Products, 3850 Olive Street
Inc. Denver, Colorado 80207
</TABLE>
<PAGE>
SCHEDULE IV
TRADE NAMES
-----------
WHITTAKER CORPORATION
Electronic Resources, a Division of Whittaker Corporation
Whittaker Electronic Systems
Whittaker Electronic Resources
Whittaker Communications
Whittaker Communications, Inc.
Whittaker Safety systems, Inc.
Whittaker Systron Donner Safety Systems
BLUE BELL LEASE, INC.
None
METROPOLITAN FINANCIAL SERVICES CORP.
None
PARK CHEMICAL COMPANY
Park Chemical
WHITTAKER CONTROLS, INC.
Whittaker Controls
Controls Division
WHITTAKER CORP. (a Maine corporation)
None
WHITTAKER DEVELOPMENT CO.
None
WHITTAKER ORDNANCE, INC.
None
WHITTAKER PORTA BELLA DEVELOPMENT, INC.
None
<PAGE>
WHITTAKER SERVICES CORPORATION
None
WHITTAKER TECHNICAL PRODUCTS, INC.
Whittaker Power Storage Systems
Power Storage Systems
Power Storage
<PAGE>
EXHIBIT F
FORM OF
GUARANTY
GUARANTY dated as of January 23, 1995 (this "GUARANTY") made by BLUE
--------
BELL LEASE, INC., a California Corporation, METROPOLITAN FINANCIAL SERVICES
CORPORATION, a Colorado corporation, PARK CHEMICAL COMPANY, a Michigan
corporation, WHITTAKER CONTROLS, INC., a California corporation, WHITTAKER
CORP., a Maine corporation, WHITTAKER ORDNANCE, INC., a Delaware corporation,
WHITTAKER PORTA BELLA DEVELOPMENT, INC., a California corporation, WHITTAKER
SERVICES CORPORATION, a California corporation, WHITTAKER TECHNICAL PRODUCTS,
INC., a Colorado corporation, and WHITTAKER DEVELOPMENT CO., a Delaware
corporation (each, together with any future subsidiary, if any, of the Borrower
(as hereinafter defined) that becomes a party to this Agreement, a "GUARANTOR"
---------
and, collectively, the "GUARANTORS"), in favor of the financial institutions
----------
(the "LENDERS") from time to time party to the Credit Agreement (as hereinafter
-------
defined) and NATIONSBANK OF TEXAS, N.A. ("NATIONSBANK") as agent (in such
-----------
capacity, together with any successor appointed pursuant to Article VIII of the
Credit Agreement, the "AGENT") for the Lenders.
-----
PRELIMINARY STATEMENT. The Lenders and the Agent are parties to a
Credit Agreement dated as of January 23, 1995 (said Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT"; the terms defined therein and not otherwise
----------------
defined herein being used herein as therein defined) with Whittaker Corporation,
a Delaware corporation (the "BORROWER"). The Guarantors will derive substantial
--------
direct and indirect benefit from the transactions contemplated by the Credit
Agreement. It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lenders under the Credit Agreement that the
Guarantors shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Advances and issue Letters of Credit under the Credit
Agreement, the Guarantors hereby agree, jointly and severally, as follows:
SECTION 1. GUARANTY. Each Guarantor, jointly and severally, hereby
--------
unconditionally guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations of the Borrower now
or hereafter existing under the Credit Agreement, the Notes, if any, and each
other Loan Document and under each Hedge Agreement to which any Lender is a
party, including in each case any extensions, modifications, substitutions,
amendments and renewals thereof, including in each case whether for principal
(including reimbursement for amounts drawn under Letters of Credit), interest,
fees, expenses, indemnification or otherwise (such Obligations being the
"GUARANTEED OBLIGATIONS"), and agrees to pay any and all expenses (including
- - -----------------------
reasonable counsel fees and expenses) incurred by the Agent or the Lenders in
enforcing any rights under this Guaranty; provided that any Hedge Agreement to
--------
which a Lender is a party shall be a Guaranteed Obligation only so long as there
are any Borrowings or Commitments outstanding under the Credit Agreement; and
provided further, that each Guarantor and, by acceptance hereof, the Agent and
- - -------- -------
each Lender hereby confirms that it is the intention of all such parties that
the guarantee by such Guarantor pursuant to this Guaranty not constitute a
fraudulent transfer or conveyance for purposes of Title 11 of the U.S. Code, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law. To effectuate the foregoing intention, the
obligations of each Guarantor under this guaranty shall be limited to the
maximum amount as will, after giving effect to all other liabilities of such
Guarantor (including, but not limited to, contingent liabilities, but excluding
the liabilities of such Guarantor hereunder) and after giving effect to any
collections from or payments made by or on behalf of any other guarantor in
respect of the obligations of such other Guarantor under this Guaranty or
pursuant to Section
<PAGE>
8 hereof, result in the obligations of such Guarantor under this guaranty not
constituting such fraudulent transfer or conveyance. Without limiting the
generality of the foregoing (but subject to the preceding sentence), each
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Borrower to the Agent and the
Lenders under the Loan Documents but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Loan Party.
SECTION 2. GUARANTY ABSOLUTE. Each Guarantor guarantees that the
-----------------
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or the Lenders with respect thereto. The Obligations of the Guarantors
under this Guaranty are independent of the Guaranteed Obligations, and a
separate action or actions may be brought and prosecuted against the Guarantors
to enforce this Guaranty, irrespective of whether any action is brought against
the Borrower or whether the Borrower is joined in any such action or actions.
The liability of each Guarantor under this Guaranty shall be absolute and
unconditional, and shall not be affected or released in any way, irrespective
of:
(A) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating thereto for any reason, including, without limitation, the
existence of a bankruptcy, reorganization or similar proceeding involving
any Loan Party;
(B) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations or any of
the Loan Documents, or any other taking, release, amendment or waiver of or
any consent to any departure from the Credit Agreement, any other Loan
Document or any other guaranty of any or all of the Guaranteed Obligations,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Loan Party or
otherwise;
(C) any enforcement of any Loan Document, including the taking,
exchange, holding, sale, additional guarantee or other disposition of any
Collateral, or any amendment, alteration, exchange, substitution, transfer,
enforcement, waiver, subordination, termination or release of any
Collateral or such guaranties, or non-perfection of any Liens created by
any Collateral Document, or any consent to departure from any such guaranty
for all or any of the Guaranteed Obligations;
(D) any refusal of payment by the Agent or any Lender, in whole
or in part, from any obligor or guarantor in connection with any of the
Guaranteed Obligations, whether or not with notice to, or further assent
by, or any reservation of rights against, any Guarantor;
(E) any change, restructuring or termination of the corporate
structure or existence of any Loan Party;
(F) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Loan Party or any other
guarantor of the Guaranteed Obligations;
(G) any manner of application of any Collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale
or other disposition of any Collateral for all or any of the Guaranteed
Obligations or any other assets of any Loan Party; or
2
<PAGE>
(H) any modification, compounding, compromise, settlement,
release by any lender or any other Person (or by operation of the law or
otherwise), collection or other liquidation of the Obligations or the
liability of any Loan Party, or of the Collateral, in whole or in part.
This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Lender or any other Person upon
the insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all
as though such payment had not been made.
SECTION 3. WAIVERS. Each Guarantor hereby waives, to the extent
-------
permitted by applicable law:
(A) promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations or any other
obligations under the Loan Documents or this Guaranty;
(B) any requirement that the Agent or any Lender or any other
Person protect, secure or insure any Lien or any property subject thereto
or exhaust any right or take any action against any Loan Party or any other
Person or any Collateral;
(C) any defense arising by reason of any claim or defense based
upon an election of remedies by any Lender which in any manner impairs,
reduces, releases or otherwise adversely affects its subrogation,
contribution or reimbursement rights (if any) or other rights (if any) to
proceed against any Loan Party or any other Person or any Collateral; and
(D) any duty on the part of the Agent or any Lender to disclose
to such Guarantor any matter, fact or thing relating to the business,
operation or condition of any Loan Party and its assets now know or
hereafter known by the Agent or such Lender.
SECTION 4. WAIVER OF SUBROGATION; SUBORDINATION.
------------------------------------
(A) Until all the Guaranteed Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the obligation
of the Lenders to make Advances and issue Letters of Credit shall have
expired or terminated (and except as otherwise provided in Section 8), each
Guarantor (i) agrees that it shall not enforce or otherwise exercise any
right of subrogation to any of the rights of the Agent or any Lender
against the Borrower or any right of reimbursement or contribution or
similar right against the Borrower, any endorser or any other guarantor of
all or any part of the Guaranteed Obligations or any guarantor thereof and
(ii) waives the benefit of, and any right to participate in, any security
or collateral given to the Agent or any Lender to secure payment of the
Guaranteed Obligations. If any amount shall be paid to any Guarantor on
account of such subrogation, reimbursement or contribution rights at any
time prior to the later of (x) the payment in full of the Guaranteed
Obligations and all other amounts payable under this Guaranty and (y) the
expiration or termination of the obligation of the Lenders to make Advances
and issue Letters of Credit, such amount shall be held in trust for the
benefit of the Lenders and shall forthwith be paid to the Agent to be
credited and applied against the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement or to be
held by the Agent as collateral security for any Guaranteed Obligations
thereafter existing. Each Guarantor hereby agrees that it shall not, so
long as an Event of Default has occurred and is continuing and until all
the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full and the obligation of the Lenders to
3
<PAGE>
make Advances and issue Letters of Credit shall have expired or terminated,
assert any claim or counterclaim it may have against the Borrower or setoff
any of its obligations to the Borrower against any obligations of the
Borrower to it.
(B) Each Guarantor hereby agrees that any indebtedness of the
Borrower now or hereafter owing to such Guarantor (the "SUBORDINATED DEBT")
-----------------
is hereby subordinated to all of the Guaranteed Obligations and all other
amounts payable under this Guaranty, whether heretofore, now or hereafter
created, and that without the prior consent of the Agent, the Subordinated
Debt shall not be paid in whole or in part until the Guaranteed Obligations
and all other amounts payable under this Guaranty have been paid in full
and the Credit Agreement has been terminated and is of no further force or
effect, except that payments of principal and interest on the Subordinated
Debt shall be permitted (i) so long as no Event of Default shall have
occurred and be continuing and (ii) during the continuance of any Event of
Default so long as the Agent has not provided the Company and each
Guarantor with written notice of default stating that such payment shall no
longer be permitted, but in either of the foregoing events only to the
extent such payments would not render the Borrower incapable of performing
the Guaranteed Obligations. Each Guarantor agrees that it will not accept
any payment of or on account of any Subordinated Debt at any time in
contravention of the foregoing. At the request of the Agent, following the
occurrence and during the continuance of an Event of Default, each
Guarantor hereby agrees to direct the Borrower to pay to the Agent, for the
account of the Agent and the Lenders, all or any part of the Subordinated
Debt and any amount so paid to the Agent shall be applied to payment of the
Guaranteed Obligations and all other amounts payable under this Guaranty.
Each payment on the Subordinated Debt received in violation of any of the
provisions hereof shall be deemed to have been received as trustee for the
Agent and shall be paid over to the Agent immediately on account of the
Guaranteed Obligations, but without otherwise affecting in any manner any
Guarantor's liability under any of the provisions of this Guaranty. Each
Guarantor agrees to file all claims against the Borrower in any bankruptcy
or other proceeding in which the filing of claims is required by law in
respect of any Subordinated Debt, and the Agent shall be entitled to all of
such Guarantor's rights thereunder. If for any reason any Guarantor fails
to file such claim at least 30 days prior to the last date on which such
claim should be filed, the Agent, as such Guarantor's attorney-in-fact, is
hereby authorized to do so in such Guarantor's name or, in the Agent's
discretion, to assign such claim to and cause proof of claim to be filed in
the name of the Agent or its nominee. In all such cases, whether in
reorganization, bankruptcy or otherwise, the Person or Persons authorized
to pay such claim shall pay to the Agent, for the account of the Agent and
the Lenders, the full amount payable on the claim in the proceeding, and,
to the full extent necessary for that purpose, each Guarantor hereby
assigns to the Agent, for the account of the Agent and the Lenders, all of
such Guarantor's rights to any payments or distributions to which such
Guarantor otherwise would be entitled. If the amount so paid is greater
than such Guarantor's liability hereunder, the Agent will pay the excess
amount to the party entitled thereto. In addition, each Guarantor hereby
appoints the Agent as its attorney-in-fact to exercise all of such
Guarantor's voting rights in connection with any bankruptcy proceeding or
any plan for the reorganization of the Borrower.
SECTION 5. PAYMENTS FREE AND CLEAR OF TAXES, ETC.
-------------------------------------
(A) Any and all payments made by the Guarantors hereunder shall
be made, in accordance with Section 2.09 of the Credit Agreement, free and
clear of, and without deduction for, any and all present or future Taxes.
If any Guarantor shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to any Lender or the Agent, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 5) such
4
<PAGE>
Lender or the Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such
Guarantor shall make such deductions and (iii) such Guarantor shall pay the
full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(B) In addition, each Guarantor agrees to pay any present or
future Other Taxes.
(C) Each Guarantor will indemnify each Lender and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section 5) paid by such Lender or the Agent (as the case may be) and
any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto.
(D) Each Guarantor shall indemnify the Agent and each Lender
for the full amount of Taxes and Other Taxes, and for the full amount of
taxes imposed by any jurisdiction on amounts payable under this Section,
paid by the Agent or such Lender and any liability (including penalties,
additions to tax, interest and expenses) arising therefrom or with respect
thereto. Payments pursuant to this indemnification shall be made within 30
days from the date such Lender makes written demand therefor setting forth
in reasonable detail the basis of the Guarantor's obligation to indemnify
such Lender pursuant to this Section; provided, however, that (i) in the
-------- -------
case of any Taxes or Other Taxes not required by law to be deducted by the
applicable Guarantor from or in respect of any sum payable hereunder to the
Agent or any Lender, such Guarantor shall be obligated to make payment to
the Agent or such Lender pursuant to this Section (A) in respect of such
Taxes or Other Taxes only if written demand therefor has been made by the
Lender within 180 days from the date on which the Lender or the Agent, as
the case may be, actually makes payment of the Taxes or Other Taxes to the
relevant taxing authority, and (B) in respect of penalties and additions to
tax attributable to late payment only to the extent that such penalties or
additions to tax are accrued after the written demand therefore has been
made by the Lender and (ii) no Guarantor shall be obligated to pay any
Taxes or Other Taxes to the extent the Taxes or Other Taxes result from a
change in the Lender's Applicable Lending Office.
(E) Within 30 days after the date of any payment of Taxes
pursuant to this Section, the applicable Guarantor shall furnish to the
Agent, at its address referred to in the Credit Agreement, evidence
reasonably satisfactory to the Agent of payment thereof. In the case of
any payment hereunder for the account of the Agent or any Lender which is
made by any Guarantor through an account or branch outside the United
States or on behalf of any Guarantor by a payor that is not a United States
person, if the applicable Guarantor determines that no Taxes are payable in
respect thereof, such Guarantor shall, except where such mode of payment is
at the request of the Agent or such Lender, furnish, or cause such payor to
furnish, to the Agent, at such address, a certificate from the appropriate
taxing authority or authorities or an opinion of counsel acceptable to the
Agent, in either case stating that such payment is exempt from Taxes. For
purposes of this subsection (d), the terms "UNITED STATES" and "UNITED
------------- ------
STATES PERSON" shall have the meanings specified in Section 7701 of the
-------------
Internal Revenue Code.
(F) Without prejudice to the survival of any other agreement of
any Guarantor hereunder, the agreements and obligations of each Guarantor
contained in this Section 5 shall survive the payment in full of the
Guaranteed Obligations and all other amounts payable under this Guaranty.
5
<PAGE>
SECTION 6. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby
------------------------------
represents and warrants as follows:
(A) Such Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, and has made all necessary filings and done all other actions
necessary to permit it (and has all requisite corporate power and
authority) to own and operate its properties, to carry on business
conducted by it, to enter into and perform this Guaranty and to carry out
the transactions contemplated hereby.
(B) Such Guarantor's execution, delivery and performance of
this Guaranty and all instruments executed in connection herewith have been
duly authorized by all necessary corporate action on the part of such
Guarantor. This Guaranty has been duly executed and delivered by such
Guarantor and constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms. No consent, approval
or authorization or other action by any governmental authority is required
to be obtained by such Guarantor in connection with the execution, delivery
or performance of this Guaranty.
(C) The execution, delivery and performance by such Guarantor
of this Guaranty do not and will not (i) constitute a tortious interference
with any Contractual Obligation of such Guarantor, or (ii) conflict with,
result in a breach of or constitute (with or without notice or lapse of
time or both) a default under any material Requirements of Law or material
Contractual Obligation of such Guarantor, or require termination of any
material Contractual Obligation, or (iii) result in or require the creation
or imposition of any Lien whatsoever upon any of the properties or assets
of such Guarantor (other than any Lien securing such Guarantor's
liabilities hereunder), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of such
Guarantor.
(D) There is no action, suit, proceeding, governmental
investigation or arbitration, at law or in equity, before or by any
Governmental Authority pending or, to the knowledge of the Guarantor,
threatened against the Guarantor or any of its property which seeks to
enjoin the consummation of, or which questions the legality, validity or
enforceability of, any of the transactions contemplated by this Guaranty or
any of the other Loan Documents to which such Guarantor is a party.
(E) There are no conditions precedent to the effectiveness of
this Guaranty that have not been satisfied or waived.
(F) Such Guarantor has, independently and without reliance upon
the Agent or any Lender and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter
into this Guaranty.
SECTION 7. COVENANTS. So long as any part of the Guaranteed
---------
Obligations shall remain unpaid or any Lender shall have any Commitment, each
Guarantor agrees that if, under the terms of the Credit Agreement, the Borrower
is required to cause such Guarantor or any of such Guarantor's Subsidiaries to
take, or to refrain from taking, any action, or to comply with any requirements,
obligations, limitations or restrictions contained therein, in each case whether
individually or together with any other Loan Parties, such Guarantor shall, and
shall cause each of its Subsidiaries to, take or refrain from taking (as the
case may be) any such action and comply with all such requirements, obligations,
limitations and restrictions.
6
<PAGE>
SECTION 8. CONTRIBUTION. In order to provide for just and equitable
------------
contribution among the Guarantors, the Guarantors agree, inter se, that in the
----- --
event any payment or distribution is made by any Guarantor (a "FUNDING
-------
GUARANTOR") under this Guaranty, such Funding Guarantor shall be entitled to a
contribution from all other Guarantors in a pro rata amount based on the
--- ----
Adjusted Net Assets (as hereinafter defined) of each Guarantor (including the
Funding Guarantor) for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Guaranteed Obligations or any other
Guarantor's Obligations with respect to this Guaranty. "ADJUSTED NET ASSETS" of
-------------------
any Guarantor at any date means the lesser of (a) the amount by which the fair
value of the property of such Guarantor exceeds the total amount of liabilities
(including, without limitation, contingent liabilities, but excluding
liabilities of such Guarantor under this Guaranty) of such Guarantor at such
date, and (b) the amount by which the present fair salable value of the assets
of such Guarantor at such date exceeds the amount that will be required to pay
the probable liability of such Guarantor on its debts (after giving effect to
all contingent liabilities, but excluding liabilities of such Guarantor under
this Guaranty) as they become absolute and matured.
SECTION 9. INDEMNITY AND EXPENSES.
----------------------
(A) Each Guarantor agrees to defend, protect, indemnify and
hold harmless the Agent and each Lender from and against any and all
claims, losses and liabilities growing out of or resulting from this
Guaranty with respect to such Guarantor (including, without limitation,
enforcement of this guaranty against such Guarantor), except claims, losses
or liabilities resulting from the Agent's or such Lender's own gross
negligence or willful misconduct as determined by a final judgment of a
court of competent jurisdiction.
(B) Each Guarantor further agrees to pay to the Agent upon
written demand, for the account of the Agent and each Lender, the amount of
any and all reasonable expenses, including the reasonable fees and expenses
of the Agent's or such Lender's counsel and other experts and agents, which
the Agent or such Lender may incur in connection with the exercise or
enforcement of any of the rights of the Agent or any Lender under this
Guaranty with respect to such Guarantor.
SECTION 10. AMENDMENTS, ETC. No amendment or waiver of any provision
---------------
of this Guaranty and no consent to any departure by the Guarantor therefrom
shall in any event be effective unless the same shall be in writing and signed
by each Guarantor and the Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that any amendment to this Guaranty that is in
-------- -------
substantially the same form as Exhibit J to the Credit Agreement shall be
effective when signed by only the Agent and the Additional Guarantor (as defined
therein).
SECTION 11. NOTICES, ETC. All notices and other communications
------------
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered to it, if to a Guarantor, addressed to it at its address
specified on the signature pages hereof, if to the Agent or any Lender, at its
address specified in the Credit Agreement, or as to any party at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed,
telegraphed, telecopied, telexed or cabled, be effective when deposited in the
mails, delivered to the telegraph company, transmitted by telecopier, confirmed
by telex answerback or delivered to the cable company, respectively.
SECTION 12. NO WAIVER; REMEDIES. No failure on the part of the Agent
-------------------
or any Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor
7
<PAGE>
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 13. RIGHT OF SET-OFF. Upon (a) the occurrence and during the
----------------
continuance of any Event of Default and (b) either (i) the making of the request
or the granting of the consent specified by Section 7.01 of the Credit Agreement
to authorize the Agent to declare the Advances due and payable pursuant to the
provisions of said Section 7.01, or (ii) the actual or deemed entry of an order
for relief with respect to any Loan Party or any of its Subsidiaries under the
Federal Bankruptcy Code each Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of any Guarantor against any and all of the
Obligations of such Guarantor now or hereafter existing under this Guaranty,
whether or not such Lender shall have made any demand under this Guaranty and
although such Obligations may be unmatured to the fullest extent permitted by
law. Each Lender agrees promptly to notify the Guarantor after any such set-off
and application made by such Lender; provided, however, that to the fullest
-------- -------
extent permitted by law, the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender may have.
SECTION 14. CONTINUING GUARANTY; ASSIGNMENTS UNDER THE CREDIT
-------------------------------------------------
AGREEMENT. This Guaranty is a continuing guaranty and shall (a) remain in full
- - ---------
force and effect until the later of the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty and the
Termination Date, (b) be jointly and severally binding upon each Guarantor, its
successors and assigns and (c) inure to the benefit of and be enforceable by the
Lenders, the Agent and their successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), any Lender may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Notes held by it, to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise, in each
case as provided in Section 9.07 of the Credit Agreement.
SECTION 15. FINANCIAL CONDITION OF LOAN PARTIES. Each Guarantor
-----------------------------------
represents to the Agent and each Lender that such Guarantor is now and will be
completely familiar with the business, operations and condition of the Loan
Parties, and each Guarantor hereby waives and relinquishes any duty on the part
of the Agent or any Lender to disclose any matter, fact or thing relating to the
business, operations or conditions of any Loan Party now known or hereafter
known by the Agent or such Lender.
SECTION 16. JOINT AND SEVERAL LIABILITY. The liability of the
---------------------------
Guarantors hereunder shall be joint and several.
SECTION 17. SEVERABILITY OF PROVISIONS. Any provision of this
--------------------------
Guaranty 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 or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 18. COUNTERPARTS. This Guaranty may be executed in any
------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same
8
<PAGE>
agreement. Delivery of an executed counterpart of a signature page to this
Guaranty by telecopier shall be effective as delivery of a manually executed
counterpart of this Guaranty.
SECTION 19. AMENDMENTS; WAIVERS; ETC. No amendment or waiver of any
-------------------------
provision of this Guaranty, and no consent to any departure by any Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent and each Guarantor, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No failure on the part of the Agent to exercise, and no delay
in exercising any right hereunder, shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 20. GOVERNING LAW. This Guaranty shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
SECTION 21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS
AVAILABLE. EACH GUARANTOR IRREVOCABLY DESIGNATES AND APPOINTS THE PRENTICE HALL
CORPORATION SYSTEM, INC., ONE GULF & WESTERN PLAZA, NEW YORK, NEW YORK 10023 AS
ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH COURT,
SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH PERSONS TO BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT. EACH GUARANTOR IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE SIGNATURE PAGES HEREOF,
SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. EACH OF THE
GUARANTORS, THE AGENT, AND THE LENDERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED UPON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE AGENT TO BRING PROCEEDINGS AGAINST ANY GUARANTOR IN THE
COURTS OF ANY OTHER JURISDICTION.
SECTION 22. WAIVER OF JURY TRIAL. EACH OF THE GUARANTORS, THE AGENT
--------------------
AND THE LENDERS IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE ACTIONS OF THE AGENT OR ANY
LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
9
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
BLUE BELL LEASE, INC.,
a California corporation
By ___________________________
Title:
Notice Address:
______________________________
______________________________
Attention: ___________________
METROPOLITAN FINANCIAL SERVICES
CORPORATION,
a Colorado corporation
By ____________________________
Title:
Notice Address:
_______________________________
_______________________________
Attention: ____________________
PARK CHEMICAL COMPANY,
a Michigan corporation
By ____________________________
Title:
Notice Address:
_______________________________
_______________________________
Attention: ____________________
S-1
<PAGE>
WHITTAKER CONTROLS, INC.,
a California Corporation
By ____________________________
Title:
Notice Address:
_______________________________
_______________________________
Attention: ____________________
WHITTAKER CORP.,
a Maine corporation
By ____________________________
Title:
Notice Address:
_______________________________
_______________________________
Attention: ____________________
WHITTAKER ORDNANCE, INC.,
a Delaware corporation
By ____________________________
Title:
Notice Address:
_______________________________
_______________________________
Attention: ____________________
S-2
<PAGE>
WHITTAKER PORTA BELLA
DEVELOPMENT, INC.,
a California corporation
By ____________________________
Title:
Notice Address:
_______________________________
_______________________________
Attention: ____________________
WHITTAKER SERVICES CORPORATION,
a California corporation
By ____________________________
Title:
Notice Address:
_______________________________
_______________________________
Attention: ____________________
WHITTAKER TECHNICAL PRODUCTS,
INC.,
a Colorado corporation
By ____________________________
Title:
Notice Address:
_______________________________
_______________________________
Attention: ____________________
S-3
<PAGE>
WHITTAKER DEVELOPMENT CO.,
a Delaware corporation
By ____________________________
Title:
Notice Address:
_______________________________
_______________________________
Attention: ____________________
S-4
<PAGE>
EXHIBIT J
FORM OF AMENDMENT TO GUARANTY
This Amendment to Guaranty (this "AMENDMENT"), dated as of
---------
____________ ___, 199___, relates to the Guaranty dated as of January 23, 1995
(as amended to date, the "GUARANTY"), among the Subsidiaries of Whittaker
--------
Corporation parties thereto as Guarantors (collectively the "GUARANTORS") in
----------
favor of the Lenders (as defined in the Credit Agreement (as hereinafter
defined)) and NationsBank of Texas, N.A., as Agent (the "AGENT").
-----
In compliance with Section 6.01(g) of the Credit Agreement dated as of
January 23, 1995 (as amended from time to time, the "CREDIT AGREEMENT") among
----------------
Whittaker Corporation (the "BORROWER"), the Agent and the Lenders, and in
--------
conjunction with the execution by the parties hereto of the Amendment to
Security Agreement dated of even date herewith, [SUBSIDIARY] (the "ADDITIONAL
----------
GUARANTOR") and the Guarantors hereby agree as follows (capitalized terms used
- - ---------
but not otherwise defined herein shall have the meanings ascribed to them in the
Credit Agreement):
1. Amendment. The Guaranty is hereby amended to add as a party,
---------
and more specifically, as a Guarantor, thereunder, the Additional Guarantor.
2. Representations and Warranties. The Additional Guarantor
------------------------------
represents and warrants to the Agent and the Lenders that each of the
representations and warranties of a Guarantor contained in the Guaranty is
hereby made by the Additional Guarantor as of the date hereof and is true and
correct as to the Additional Guarantor as of the date hereof.
3. Additional Guarantor as Guarantor. The Additional Guarantor
---------------------------------
assumes all of the obligations and liabilities of a Guarantor under the
Guaranty, agrees to be bound thereby as if the Additional Guarantor were an
original party to the Agreement and shall be a Guarantor for all purposes under
the Loan Documents.
4. Effectiveness. This Amendment shall become effective on the
-------------
date hereof upon the execution hereof by the Guarantors, the Additional
Guarantor and the Agent and delivery hereof to the Agent.
5. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
[ADDITIONAL GUARANTOR]
By: ___________________________
Title:
Notice Address:
_______________________________
_______________________________
_______________________________
Attention:
<PAGE>
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: ___________________________
Title:
2
<PAGE>
EXHIBIT K
FORM OF AMENDMENT TO SECURITY AGREEMENT
This Amendment to Security Agreement (this "AMENDMENT"), dated as of
---------
____________ ___, 199___, relates to the Security Agreement dated as of January
23, 1995 (as amended to date, the "AGREEMENT") executed by Whittaker Corporation
---------
(the "BORROWER") and the Subsidiaries of Whittaker Corporation parties thereto
--------
as Subsidiary Grantors (collectively, the "GRANTORS") in favor of NationsBank of
--------
Texas, N.A. (the "AGENT") for the benefit of the Agent and the Lenders (as
-----
defined in the Credit Agreement as hereinafter defined).
In compliance with Section 6.01(g) of the Credit Agreement dated as of
January 23, 1995 (as amended from time to time, the "CREDIT AGREEMENT") among
----------------
the Borrower, the Agent and the Lenders, and in conjunction with the execution
by the parties hereto of the Amendment to Guaranty dated of even date herewith,
[SUBSIDIARY] (the "ADDITIONAL GRANTOR") and the Agent hereby agree as follows
------------------
(capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Credit Agreement):
1. Amendment. The Agreement is hereby amended to add as a party,
---------
and more specifically, as a Grantor, thereunder, the Additional Grantor.
2. Representations and Warranties. The Additional Grantor
------------------------------
represents and warrants to the Agent and the Lenders that each of the
representations and warranties of a Subsidiary Grantor contained in the
Agreement is hereby made by the Additional Grantor as of the date hereof and is
true and correct as to the Additional Grantor as of the date hereof.
3. Grant of Security Interest. The Additional Grantor, to secure
--------------------------
the complete and timely payment, observance and performance of all of its
Obligations at any time arising under or in connection with the Guaranty, the
Agreement and each other Loan Document, hereby assigns and pledges to the Agent,
and hereby grants to the Agent for its benefit and the benefit of the Lenders, a
first priority security interest and lien under the Agreement, in all of the
Additional Grantor's right, title and interest in and to the Collateral (as
defined in the Agreement), whether now owned or existing or hereafter arising or
acquired and wheresoever located, together in each instance, with all accessions
and additions thereto, substitutions therefor, and replacements, proceeds and
products thereof.
4. Assumption of Rights, Obligations and Liabilities. The
-------------------------------------------------
Additional Grantor assumes all of the rights, obligations and liabilities of a
Grantor under the Agreement and agrees to be bound thereby as if the Additional
Grantor were an original party to the Agreement.
5. Effectiveness. This Amendment shall become effective on the
-------------
date hereof upon the execution hereof by the Additional Grantor and the Agent
and delivery hereof to the Agent.
<PAGE>
6. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
[ADDITIONAL GRANTOR]
By: ___________________________
Title:
Notice Address:
_______________________________
_______________________________
Attention: ___________________
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: ___________________________
Title:
2
<PAGE>
EXHIBIT L
FORM OF COMPLIANCE CERTIFICATE
Pursuant to Section 6.03(e) of the Credit Agreement (as it may be
amended from time to time, the "Credit Agreement") dated as of January 23, 1995
among Whittaker Corporation (the "Borrower"), the financial institutions (the
"Lenders"), and NationsBank of Texas, N.A. ("NationsBank"), as agent for the
Lenders (the "Agent") the Borrower hereby delivers to each Lender, together with
the financial statements being delivered to the Lenders pursuant to Section
6.03(c) or Section 6.03(d) of the Credit Agreement, this Compliance Certificate
(the "Certificate") for the accounting period from and including _________, to
and including _________. Capitalized terms used herein and not otherwise
defined herein shall have the meanings set forth in the Credit Agreement. For
purposes hereof, section and subsection references herein relate to sections and
subsections, respectively, of the Credit Agreement.
Certain terms, phrases and calculations are presented herein in
abbreviated form for ease of reference. To the extent of any conflict between
the terminology used in this Certificate and the Credit Agreement, the terms of
the Credit Agreement shall control.
We are the duly elected, qualified and acting [Chief Financial
Officer, Controller or Treasurer] and [President, Vice President, Treasurer or
Controller], respectively, of the Borrower.
We have reviewed and are familiar with the contents of this
Certificate. We are providing this Certificate solely in our capacity as
officers of the Borrower. The matters set forth herein are true to our
knowledge, after a review in reasonable detail, but we express no personal
opinion as to any conclusions of law or other legal matters.
We have reviewed the terms of the Credit Agreement and the other Loan
Documents and have made, or caused to be made under our supervision, a review in
reasonable detail of the transactions and condition of the Borrower and its
Subsidiaries taken as a whole during the accounting period covered by the
attached financial statements (the "Financial Statements"). Such review did not
disclose the existence during or at the end of the accounting period covered by
the attached Financial Statements, and we have no knowledge of the existence as
of the date of this Certificate, of any condition or event which constitutes a
Default [if any Default did or does exist, include the words "except as set
forth below" and describe here (or in a separate attachment) in reasonable
detail such Default or Defaults, the duration thereof and what action the
Borrower has taken, is taking and proposes to take with respect thereto]:
Demonstration of compliance with certain covenants contained in
Sections 6.02 and 6.04 of the Credit Agreement:
(a) Debt
----
(i) Subsection 6.02(b)(iii). The maximum aggregate
-----------------------
outstanding principal amount of Subordinated Debt outstanding at any
time during the period covered by this Certificate:
Amount ___________
Maximum Amount $25,000,000
<PAGE>
(ii) Subsection 6.02(b)(iv). The maximum aggregate
----------------------
outstanding principal amount of unsecured Debt of the Borrower and its
Subsidiaries outstanding at any time during the period covered by this
Certificate (other than any such Debt expressly permitted by another
subsection of Section 6.02(b)):
Amount __________
Maximum Amount $5,000,000
(iii) Subsection 6.02(b)(v)(C). The maximum aggregate
------------------------
outstanding principal amount of Debt of any Subsidiary of the Borrower
(other than a Domestic Guarantor) to the Borrower or any Subsidiary of
the Borrower at any time during the period covered by this Certificate:
Amount __________
Maximum Amount $3,000,000
(iv) Subsection 6.02(b)(vi). The maximum aggregate
----------------------
outstanding principal amount of Capitalized Leases and purchase money
Debt incurred to finance the acquisition of fixed assets, and Debt
incurred to refinance such Capitalized Leases and purchase money Debt at
any time during the period covered by this Certificate:
Amount __________
Maximum Amount $5,000,000
(v) Subsection 6.02(b)(xi). The maximum aggregate
----------------------
principal amount of Debt in respect of letters of credit (other than
Letters of Credit issued under the Credit Agreement and other than
letters of credit to the extent backstopped by Letters of Credit)
outstanding at any time during the period covered by this Certificate:
Amount __________
Maximum Amount $1,000,000
None of such Debt is, or was at any time during the period covered by
this Certificate, more than three Business Days past due.
(vi) Subsection 6.02(b)(xii). The maximum aggregate
-----------------------
outstanding notional amount of Interest Rate Contracts on any day during
the period covered by this Certificate:
Amount ___________
Maximum Amount $90,000,000
(vii) Subsection 6.02(b)(xiii). The maximum aggregate
------------------------
outstanding notional amount of Currency Hedging Agreements on any day
during the period covered by this Certificate:
Amount __________
Maximum Amount $10,000,000
2
<PAGE>
(b) Sales, Etc. of Assets
---------------------
(i) Subsection 6.02(e)(v) and (vii). The maximum
-------------------------------
aggregate amount of non-cash consideration in the form of promissory
notes or similar instruments payable to the Borrower or any of its
Subsidiaries in connection with transactions under Section 6.02(e)(v)
and (vii) :
Amount __________
Maximum Amount $4,000,000
(ii) Subsection 6.02(e)(vii). The aggregate value of
-----------------------
assets sold, leased, transferred or otherwise disposed of since the
Closing Date (based on the fair market value of such assets as
determined in good faith by the Borrower):
Amount __________
Maximum Amount __________
The maximum aggregate amount for the sale, lease, transfer or other
disposition of assets is determined to be 10% of Consolidated Net Worth
as of the most recently ended fiscal quarter prior to the consummation
of such transaction.
(c) Investments in Other Persons
----------------------------
(i) Subsection 6.02(f)(iii). The maximum aggregate
-----------------------
unrecovered amount of all capital contributions made by the Borrower or
any Domestic Guarantor after the Closing Date to any Subsidiary of the
Borrower which is not a wholly owned Domestic Guarantor at any time
during the period covered by this Certificate:
Amount __________
Maximum Amount $1,000,000
(ii) Subsection 6.02(f)(v). The cumulative amount of all
---------------------
Operating Investments made during the period of twelve consecutive
months (including the period prior to the Closing Date) ending as of the
last day of the period covered by this Certificate, whether or not
outstanding or recovered:
Amount __________
Maximum Amount $35,000,000
No such Investment (or series of related Investments) exceeds 10% of the
total assets of the Borrower and its Subsidiaries.
(iii) Subsection 6.02(f)(vi). The aggregate contributions
----------------------
to joint ventures in which the Borrower or any Domestic Guarantor has an
interest:
Amount __________
Maximum Amount $2,000,000
3
<PAGE>
(iv) Subsection 6.02(f)(viii). The aggregate amount of
------------------------
other Investments (determined based on the outstanding amount of any
such Investments which are Debt and the unrecovered amount of all such
equity Investments):
Amount __________
Maximum Amount $3,000,000
(d) Dividends, Etc.
---------------
(i) Subsection 6.02(g)(iii). The aggregate amount of
-----------------------
payments on outstanding claims or rights with respect to unclaimed
dividends and other similar claims or rights with respect to the
Borrower's capital stock (and the capital stock of present and former
Subsidiaries of the Borrower) listed on Schedule 6.02(g):
Amount __________
Maximum Amount $2,000,000
(ii) Subsection 6.02(g)(iv). The aggregate amount of cash
----------------------
dividends on the Series D Participating Convertible Preferred Stock, par
value $1.00 per share, of the Borrower so long as no Event of Default
has occurred or is continuing:
Amount __________
Maximum Amount __________
The maximum amount of cash dividends on the Series D Participating
Convertible Preferred Stock is determined to be $5,000 multiplied by the
number of years (or fractions thereof) during which the Securities have
been outstanding.
(iii) Subsection 6.02(g)(v). The aggregate amount of cash
---------------------
dividends on the $5.00 Cumulative Convertible Preferred Stock, par value
$1.00 per share, of the Borrower in any period of twelve consecutive
months since the Closing Date:
Amount __________
Maximum Amount $100,000
(iv) Subsection 6.02(g)(vi). The cumulative amount of cash
----------------------
dividends on common stock of the Borrower (or cash payments in
connection with the redemption, retirement or acquisition by the
Borrower of its common stock (including in connection with the exercise
of employee stock options)) after the Closing Date:
Amount __________
Maximum Amount __________
The maximum amount of all such dividends and payments is the sum of
$100,000 plus 20% of the Consolidated Net Income of the Borrower and its
Subsidiaries from the first day of the first fiscal quarter after the
Closing Date through the last day of the then most recently ended fiscal
quarter and computed on a cumulative basis in accordance with GAAP.
4
<PAGE>
At the time of any such dividend or payment the Fixed Charge Coverage
Ratio for the four quarter period ending on the last day of the then
most recently ended fiscal quarter was greater than 1.75 to 1.00 and no
Event of Default had occurred and was continuing.
(v) Subsection 6.02(g)(vii). The aggregate amount of cash
-----------------------
expenditures in connection with the exercise of employee stock options:
Amount ___________
Maximum Amount $5,000,000
(vi) Subsection 6.02(g)(viii). The aggregate amount of
------------------------
payments in respect of the redemption or conversion of the $5.00
Cumulative Convertible Preferred Stock, par value $1.00 per share, of
the Borrower:
Amount _________
Maximum Amount $220,000
(e) Fixed Charge Coverage Ratio
---------------------------
Subsection 6.04(a)
------------------
Fixed Charge Coverage Ratio for the period of four
consecutive fiscal quarters ending on the last day of the period covered
by this Certificate:
Ratio ____________
Minimum Ratio 1.50 to 1.00
The Fixed Charge Coverage Ratio was determined by dividing (a)
Consolidated EBITDA less Consolidated Capital Expenditures by (b)
Consolidated Interest Expense plus scheduled principal payments for each
period of four consecutive fiscal quarters as follows (in $000):
net income (or net loss) x
plus interest expense x
plus income tax expense x
plus depreciation expense x
plus amortization expense x
------------------------- -
EBITDA x
minus Capital Expenditures x
-------------------------- -
(a) EBITDA-Capital Expenditures x
Consolidated Interest Expense x
plus scheduled principal payments x
--------------------------------- -
(b) fixed charges x
5
<PAGE>
(a)/(b) EBITDA-Capital Expenditures/fixed charges
(f) Leverage Ratio
--------------
Subsection 6.04(b)
------------------
Consolidated Total Debt to Consolidated Total Capitalization
as of the last day of the period covered by this Certificate:
Ratio ____________
Maximum Ratio 0.50 to 1.00
The Leverage Ratio was determined by dividing (a) Consolidated Total
Debt by (b) Consolidated Total Debt plus Consolidated Net Worth as
follows (in $000):
(a) Consolidated Total Debt x
plus Consolidated Net Worth x
--------------------------- -
(b) Consolidated Total
Capitalization x
(a)/(b) Consolidated Total Debt/
Total Capitalization
(g) Cash Flow Ratio
---------------
Subsection 6.04(c)
------------------
Cash Flow Ratio as of the last day of the period covered by
this Certificate:
Ratio ____________
Maximum Ratio 4.00 to 1.00
The Cash Flow Ratio was determined by dividing (a) Consolidated
Total Debt by (b) Consolidated EBITDA for each period of four
consecutive fiscal quarters as follows (in $000):
(a) Consolidated Total Debt x
(b) EBITDA x
(a)/(b) Consolidated Total Debt/EBITDA
(h) Consolidated Tangible Net Worth
-------------------------------
Subsection 6.04(d)
------------------
6
<PAGE>
Consolidated Tangible Net Worth as determined as of the last
day of the period covered by this Certificate:
Amount __________
Minimum Amount __________
The minimum Consolidated Tangible Net Worth is determined to be the sum
of (i) 50% of cumulative Consolidated Net Income for all fiscal quarters
commencing with and including the fiscal quarter ended October 30, 1994
(but excluding Consolidated Net Income for any fiscal quarter for which
Consolidated Net Income is a negative number), and (ii) $65,000,000 [and
(iii) ____% of the net proceeds of any capital stock issued by the
Borrower].
Consolidated Tangible Net Worth was determined by subtracting (a) total
liabilities on a Consolidated basis in accordance with GAAP from (b)
total assets on a Consolidated basis in accordance with GAAP minus
goodwill and any other intangibles in accordance with GAAP as follows:
total assets x
minus goodwill x
minus other intangibles x
----------------------- -
(a) total tangible assets x
(b) total liabilities x
(a)/(b) tangible assets - liabilities
We hereby certify, in our capacity as officers of the Borrower, that the
information set forth above, to our knowledge, is accurate as of ___________.
Dated:
WHITTAKER CORPORATION
______________________________________
______________________________________
7
<PAGE>
SECURITY AGREEMENT
This SECURITY AGREEMENT (as it may be amended, supplemented or
otherwise modified from time to time, this "AGREEMENT") is dated as of January
---------
23, 1995 and is made by WHITTAKER CORPORATION, a Delaware corporation with its
principal place of business located at 10880 Wilshire Boulevard, Los Angeles,
California 90024 (the "COMPANY"), BLUE BELL LEASE, INC., a California
-------
corporation, METROPOLITAN FINANCIAL SERVICES CORPORATION, a Colorado
corporation, PARK CHEMICAL COMPANY, a Michigan corporation, WHITTAKER CONTROLS,
INC., a California corporation, WHITTAKER CORP., a Maine corporation, WHITTAKER
ORDNANCE, INC., a Delaware corporation, WHITTAKER PORTA BELLA DEVELOPMENT, INC.,
a California corporation, WHITTAKER SERVICES CORPORATION, a California
corporation, WHITTAKER TECHNICAL PRODUCTS, INC., a Colorado corporation,
WHITTAKER DEVELOPMENT CO., a Delaware corporation, and any future Subsidiary, if
any, of the Company that becomes a party to this Agreement (each such party
other than the Company is referred to herein as a "SUBSIDIARY GRANTOR" and
------------------
together with the Company any other Person agreeing to be bound hereby as a
"GRANTOR" are collectively referred to herein as the "GRANTORS") in favor of and
------- --------
for the benefit of NATIONSBANK OF TEXAS, N.A. ("NATIONSBANK") as agent (together
-----------
with any successor appointed pursuant to Article VIII of the Credit Agreement
(as hereinafter defined), the "AGENT") for the financial institutions (the
-----
"LENDERS" and, together with the Agent, each a "SECURED PARTY" and,
------- -------------
collectively, the "SECURED PARTIES") that are or may hereafter become party to
---------------
the Credit Agreement.
PRELIMINARY STATEMENTS.
(1) The Agent, the Company, and the Lenders have entered into a Credit
Agreement dated as of January 23, 1995 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "CREDIT AGREEMENT",
----------------
the terms defined therein and not otherwise defined herein being used herein as
therein defined), pursuant to which Lenders have agreed, among other things, and
subject to the terms and conditions set forth in the Credit Agreement, to make
Advances and issue Letters of Credit for the account of the Company.
(2) Pursuant to that certain Guaranty (as it may be amended,
supplemented or otherwise modified from time to time, the "GUARANTY") of even
--------
date herewith, the Subsidiary Grantors have guaranteed all obligations of the
Company under the Credit Agreement.
(3) Each Grantor is the owner of the shares (the "PLEDGED SHARES") of
--------------
stock described in Part I of Schedule I hereto and issued by the corporations
named therein and of the indebtedness (the "PLEDGED DEBT") described in Part II
------------
of said Schedule I and issued by the obligors named therein, in each case to the
extent such Pledged Shares and Pledged Debt are attributed on such Schedule to
the ownership of such Grantor.
(4) It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lenders under the Credit Agreement that
each Grantor shall have granted the assignment and security interest and made
the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Advances and issue Letters of Credit under the Credit
Agreement, the Grantors, and each of them, hereby agree with the Agent for its
benefit and the ratable benefit of the Lenders as follows:
<PAGE>
SECTION 1. GRANT OF SECURITY. Each Grantor hereby assigns and
-----------------
pledges to the Agent for its benefit and the ratable benefit of the Lenders, and
hereby grants to the Agent for its benefit and the ratable benefit of the
Lenders a first priority security interest in, all of such Grantor's right,
title and interest, whether now owned or hereafter acquired, in and to the
following (collectively, the "COLLATERAL"):
----------
(A) all equipment in all of its forms, wherever located, now
or hereafter existing (including, but not limited to, all manufacturing,
distribution, selling, data processing and office equipment, all machinery,
all furniture, furnishings, appliances, tools, tooling, molds, dies,
vehicles, vessels, aircraft and all other goods of every type and
description other than Inventory as hereinafter defined), all fixtures and
trade fixtures and all parts thereof and all accessions thereto, excluding
from the foregoing any equipment of such Grantor subject to any lien
identified on Schedule 6.02(a) of the Credit Agreement (but only excluding
such equipment to the extent and for so long as the terms of any such lien
prohibit such Grantor from granting a security interest with respect to
such equipment) (any and all of the foregoing being the "EQUIPMENT");
---------
(B) all inventory in all of its forms, wherever located, now
or hereafter existing (including, but not limited to, (i) all goods which
are held for sale or lease or to be furnished (or which have been
furnished) under any contract of service, or which are raw materials, work
in process therefor, finished goods thereof or materials used or consumed
in the manufacture or production thereof, and (ii) goods in which such
Grantor has an interest in mass or a joint or other interest or right of
any kind (including, without limitation, goods in which such Grantor has an
interest or right as consignee) and (iii) goods that are returned to or
repossessed by such Grantor), and all accessions thereto and products
thereof and documents therefor (any and all of the foregoing being the
"INVENTORY");
---------
(C) all accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind,
now or hereafter existing, whether or not arising out of or in connection
with the sale or lease of goods or the rendering of services, and all
rights now or hereafter existing in and to all security agreements, leases
and other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, instruments, deposit accounts, general
intangibles or obligations (any and all such accounts, contract rights,
chattel paper, instruments, deposit accounts, general intangibles and
obligations, to the extent not referred to in clause (d), (e), (f), (g),
(h) or (i) below, being the "RECEIVABLES", and any and all such leases,
-----------
security agreements and other contracts being the "RELATED CONTRACTS");
-----------------
(D) all of the following (the "SECURITY COLLATERAL"):
-------------------
(i) the Pledged Shares and the certificates representing
the Pledged Shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares;
(ii) the Pledged Debt and the instruments evidencing the
Pledged Debt, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Debt;
(iii) all additional shares of stock of any issuer of the
Pledged Shares and of any other Subsidiary (with respect to any such
other Subsidiary, to the extent
2
<PAGE>
required by Section 6.01(g) of the Credit Agreement), from time to
time acquired by such Grantor in any manner, and the certificates
representing such additional shares, and all dividends, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such shares; and
(iv) all additional indebtedness from time to time owed to
such Grantor by any obligor of the Pledged Debt or any other Person
and the instruments evidencing such indebtedness, and all interest,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such indebtedness;
(E) each Hedge Agreement to which such Grantor is now or may
hereafter become a party, in each case as such agreements may be amended or
otherwise modified from time to time (collectively, the "ASSIGNED
--------
AGREEMENTS"), together with, (i) all rights of such Grantor to receive
----------
moneys due and to become due under or pursuant to the Assigned Agreements,
(ii) all rights of such Grantor to receive proceeds of any insurance,
indemnity, warranty or guaranty with respect to the Assigned Agreements,
(iii) claims of such Grantor for damages arising out of or for breach of or
default under the Assigned Agreements and (iv) the right of such Grantor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder (any and all of
the foregoing being the "AGREEMENT COLLATERAL");
--------------------
(F) all of the following (collectively, the "ACCOUNT
-------
COLLATERAL"):
----------
(i) the L/C Cash Collateral Account (as hereinafter
defined), all funds held therein and all certificates and instruments,
if any, from time to time representing or evidencing the L/C Cash
Collateral Account;
(ii) all other deposit accounts of such Grantor, all funds
held therein and all certificates and instruments, if any, from time
to time representing or evidencing such deposit accounts;
(iii) all Collateral Investments (as hereinafter defined)
from time to time and all certificates and instruments, if any, from
time to time representing or evidencing the Collateral Investments;
(iv) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Agent for or on behalf of such Grantor
in substitution for or in addition to any or all of the then-existing
Account Collateral; and
(v) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then-
existing Account Collateral;
(G) all trademarks and service marks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos, and any other designs or sources of business
identifiers, indicia of origin or similar devices, all registrations with
respect thereto, all applications with respect to the foregoing, and all
extensions and renewals with respect to any of the foregoing, together with
all of the goodwill associated with any and all of the foregoing,
throughout the world, in each case whether now or hereafter
3
<PAGE>
existing, together with all rights and interests associated with the
foregoing, including, without limitation, license royalties, claims or
rights against third parties for any past, present or future infringement
of any trademark or similar device or registration thereof, or for any
injury to the goodwill associated therewith, and all corresponding rights
throughout the world (any and all of the foregoing being the "TRADEMARKS");
----------
(H) all copyrights and all copyrights of works based on,
incorporated in, derived from or relating to works covered by any such
copyrights, and all right, title and interest to make and exploit all
derivative works based on or adopted from works covered by any such
copyrights, all registrations with respect thereto, all applications with
respect to the foregoing, and all extensions and renewals with respect to
any of the foregoing, in each case whether now or hereafter existing,
together with all rights associated with the foregoing, including, without
limitation, license royalties, rights to print, publish and distribute,
rights to unpublished works, claims or rights against third parties for any
past, present or future infringement of any copyright or registration
thereof, and all corresponding rights throughout the world (any and all of
the foregoing being the "COPYRIGHTS");
----------
(I) all patents and patent applications, and the inventions and
improvements described and claimed therein, and patentable inventions and
the reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing and any written agreement
granting to such Grantor any right to use any invention on which a
subsisting patent exists (collectively, the "PATENTS" and, together with
-------
the Trademarks and the Copyrights, the "INTELLECTUAL PROPERTY"); and
---------------------
(J) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) - (f) of this Section 1) and, to the extent
not otherwise included, all (i) payments under insurance (whether or not
the Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Collateral and (ii) cash;
provided, however, the foregoing grant of a security
-------- -------
interest shall be deemed not to grant a security interest in any of
the property described below (such property being hereinafter referred
to as "EXCLUDED PROPERTY"):
-----------------
(x) any Related Contracts or Intellectual Property, but
only to the extent that, under applicable law, the applicable
Grantor is expressly prohibited from granting a security interest
therein or applicable law provides for the involuntary forfeiture
of the property in the event a security interest is granted
therein without the consent of the appropriate Governmental
Authority, or at all; provided, however, that if such prohibition
-------- -------
or the condition requiring such consent relates only to the
foreclosure of a security interest or the exercise of other
rights and remedies upon a default but not to the granting of a
security interest therein, then a security interest in such
property shall be deemed to be granted by this Agreement subject
to the condition that the consent of such Governmental Authority
is obtained by the Agent prior to foreclosure or exercising its
other rights or remedies hereunder as to which such consent is
required; and
(y) any Related Contracts or Intellectual Property, but
only to the extent that the terms and provisions of a written
agreement, document or
4
<PAGE>
instrument in effect on the Closing Date creating or evidencing
such property or any rights relating thereto expressly prohibit
the granting of a security interest therein or condition the
granting of a security interest therein on the consent of a third
party whose consent has not been obtained or would cause, or
allow a third party to cause, the forfeiture of such property
upon the granting of a security interest therein; provided,
--------
however, that if such prohibition or the condition requiring such
-------
consent relates only to the foreclosure of a security interest or
the exercise of other rights or remedies upon a default, then a
security interest in such property shall be deemed to be granted
by this Agreement subject to the condition that the consent of
such third party is obtained by the Agent prior to foreclosure or
exercising of its other rights or remedies hereunder as to which
such consent is required.
In the event of the termination or elimination of any prohibition or
the requirement for any consent contained in any law, rule, regulation,
agreement, document or instrument to the extent sufficient to permit any
Excluded Property to become Collateral hereunder, or upon the granting of any
such consent, or waiving or terminating any requirement for such consent, a
security interest in such Excluded Property shall be automatically and
simultaneously granted hereunder in such Excluded Property, and the Excluded
Property automatically and simultaneously shall be deemed to be assigned and
pledged to the Agent and shall be included as Collateral hereunder.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures with
------------------------
respect to each Grantor, and the Collateral of such Grantor is collateral
security for, the prompt payment and performance in full when due, whether on a
specified payment date, at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code or any similar law) of all Obligations of such Grantor to any Secured Party
now or hereafter existing under the Credit Agreement, this Agreement, the
Guaranty, the Notes, if any, the other Loan Documents and any and all Hedge
Agreements, in each case whether for principal (including reimbursement for
amounts drawn or available to be drawn under Letters of Credit), interest
(including, without limitation, interest that, but for the filing of a petition
in bankruptcy would accrue on such obligations), fees, expenses, increased
costs, indemnification or otherwise (any and all such Obligations being the
"SECURED OBLIGATIONS"); provided that any Hedge Agreement to which a Lender is a
------------------- --------
party shall be a Secured Obligation only so long as there are any Borrowings or
Commitments outstanding under the Credit Agreement. Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
that constitute part of the Secured Obligations and would be owed by any Grantor
to the Agent or the Lenders under the Credit Agreement, this Agreement, the
Guaranty, the Notes, if any, and the other Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding.
SECTION 3. GRANTORS REMAINS LIABLE. Anything herein to the contrary
-----------------------
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements (including, without limitation, the Assigned Agreements) included in
the Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Agent of any of the rights hereunder shall not
release any Grantor from any of its duties or obligations under the contracts
and agreements (including, without limitation, the Assigned Agreements) included
in the Collateral and (c) neither the Agent nor any Lender shall have any
obligation or liability under the contracts and agreements (including, without
limitation, the Assigned Agreements) included in the Collateral by reason of
this Agreement, nor shall the Agent or any Lender be obligated to perform any of
the obligations or duties of any Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
5
<PAGE>
SECTION 4. DELIVERY OF SECURITY COLLATERAL AND ACCOUNT COLLATERAL.
------------------------------------------------------
All certificates or instruments representing or evidencing Security Collateral
or Account Collateral shall be delivered to and held by or on behalf of the
Agent pursuant hereto and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent. The Agent shall
have the right, upon the occurrence and during the continuance of an Event of
Default, without notice to any Grantor, to transfer to or to register in the
name of the Agent or any of its nominees any or all of the Security Collateral
and Account Collateral, subject only to the revocable rights specified in
Section 12(a). In addition, the Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing Security
Collateral or Account Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 5. MAINTAINING THE L/C CASH COLLATERAL ACCOUNT. If any
-------------------------------------------
Event of Default shall have occurred and shall be continuing:
(A) The Agent may, and upon request of the Agent the Company
shall, open a non-interest bearing cash collateral account (the "L/C CASH
--------
COLLATERAL ACCOUNT") with NationsBank, in the name of the Company but under
------------------
the sole dominion and control of the Agent and subject to the terms of this
Agreement; and
(B) It shall be a term and condition of the L/C Cash
Collateral Account, notwithstanding any term or condition to the contrary
in any other agreement relating to the L/C Cash Collateral Account, and
except as otherwise provided by the provisions of Section 19, that no
amount (including interest on Collateral Investments (as hereinafter
defined)) shall be paid or released to or for the account of, or withdrawn
by or for the account of, the Company or any other Person (other than the
Agent) from the L/C Cash Collateral Account.
The L/C Cash Collateral Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
then or thereafter be in effect.
SECTION 6. INVESTING AND RELEASE OF AMOUNTS IN THE L/C CASH
------------------------------------------------
COLLATERAL ACCOUNT. If requested by the Company, the Agent will, subject to the
- - ------------------
provisions of Section 19, from time to time (a) invest amounts on deposit in the
L/C Cash Collateral Account in such Cash Equivalents in the name of the Agent as
the Company may select and the Agent may approve, and (b) invest interest paid
on the Cash Equivalents referred to in clause (a) above, and reinvest other
proceeds of any such Cash Equivalents that may mature or be sold, in each case
in such Cash Equivalents in the name of the Agent as the Company may select and
the Agent may approve (the Cash Equivalents referred to in clauses (a) and (b)
above being collectively referred to herein as "COLLATERAL INVESTMENTS").
----------------------
Interest and proceeds that are not invested or reinvested in Collateral
Investments as provided above shall be deposited and held in the L/C Cash
Collateral Account. If, at any time after amounts have been deposited in the
L/C Cash Collateral Account, no Event of Default exists, the Agent shall, upon
the written request of the Company, release all amounts on deposit in the L/C
Cash Collateral Account to the Company.
SECTION 7. REPRESENTATIONS AND WARRANTIES. Each Grantor hereby
------------------------------
represents and warrants as follows:
(A) All of the Equipment and Inventory are located at the
places specified in Schedule II hereto, except for (i) Inventory and
Equipment in transit and (ii) other Collateral with an aggregate value that
does not exceed $500,000. The chief place of business and chief executive
office of such Grantor and the office where such Grantor keeps its records
concerning the Receivables, and the original copies of each Assigned
Agreement and all originals of all
6
<PAGE>
chattel paper that evidence Receivables, are located at the address
specified for such Grantor on Schedule III hereto. None of the Receivables
or Agreement Collateral is evidenced by a promissory note or other
instrument. Such Grantor's federal tax identification number is as set
forth on Schedule III.
(B) Such Grantor is the legal and beneficial owner of the
Collateral free and clear of any Lien, except for Liens permitted under
Section 6.02(a) of the Credit Agreement. No effective financing statement
or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office, except such as may have been
filed in favor of the Agent relating to this Agreement or any other Loan
Document and except for liens permitted under Section 6.02(a) of the Credit
Agreement. As of the date of this Agreement, such Grantor currently
conducts business only under its own name and, in certain areas and for
certain operations, the trade names listed on Schedule IV. Neither such
Grantor nor any corporate predecessor has, during the preceding five (5)
years, been known as or used any other corporate or fictitious name, except
such names as are disclosed on Schedule IV.
(C) Such Grantor has exclusive possession and control of the
Equipment and Inventory of such Grantor except for (i) Equipment leased by
such Grantor as a lessee and Equipment in the possession and control of
such Grantor's lessees and licensees under written lease and license
agreements entered into in the ordinary course of business and consistent
with past practice, (ii) Equipment and Inventory in transit with common or
other carriers, and (iii) Equipment and Inventory in the possession of a
bailee, provided that if any bailee is in possession of Equipment and
--------
Inventory with a value in excess of One Million Dollars ($1,000,000), the
bailee has been notified by the Grantor of the security interests created
by this Agreement.
(D) The Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable. The Pledged Debt of such
Grantor, if any, is in all respects what it purports to be and represents
genuine debt owing to such Grantor arising from bona fide transactions
completed in accordance with the terms and provisions contained in the
documents delivered to the Agent with respect thereto.
(E) The pledge of the Pledged Shares and Pledged Debt, if any,
pursuant to this Agreement creates a valid and first priority perfected
security interest in the Pledged Shares and the Pledged Debt, respectively,
subject only to Liens of the type described in clause (a) or (b) of the
definition of "Permitted Liens" contained in the Credit Agreement.
(F) The Pledged Shares constitute, as of the Closing Date, all of
the issued and outstanding shares of stock of the respective issuers
thereof indicated on Schedule I hereto and owned by the Grantors, and, as
of the Closing Date, there is no other class of shares issued and
outstanding of the respective issuers thereof. The Pledged Debt
constitutes, as of the Closing Date, all of the notes and instruments
payable to or owned by such Grantor, except for notes and instruments with
an outstanding principal amount of less than One Million Dollars
($1,000,000) and except for notes and instruments received in the ordinary
course of business and which such Grantor is not required to deliver to the
Agent pursuant to Section 8 hereof or of which the Agent has not at any
time requested possession and which are not a material portion of the
Collateral either singly or in the aggregate, and the security interest of
the Agent therein has been duly perfected with first priority.
(G) Appropriate financing statements have been filed in the
necessary jurisdictions (or have been executed and delivered by the
applicable Grantor in appropriate form for filing in the necessary
jurisdictions) with respect to the Collateral as to which financing
7
<PAGE>
statements are required to be filed, so that the security interests granted
pursuant to this Agreement, to the extent they may be perfected by filing
financing statements in the necessary jurisdictions, constitute (or in the
case of any such financing statements not yet filed, will constitute upon
filing thereof) valid, continuing and perfected security interests in and
liens on the Collateral to the extent a security interest can be created
therein under the Uniform Commercial Code as in effect in the applicable
jurisdictions in the United States, securing the payment of the Secured
Obligations, subject only to Liens of the type described in clause (a) or
(b) of the definition of "Permitted Liens" contained in the Credit
Agreement. All other actions necessary or requested by the Agent to
perfect and protect such security interest in each item of Collateral
(including, without limitation, the actions described in clauses (i) and
(ii) of Section 8(a) to the extent required therein) have been duly taken
to the extent a security interest can be created therein under the Uniform
Commercial Code as in effect in the applicable jurisdictions of the United
States.
(H) No authorization, approval or other action by, and no notice
to or filing with, any Governmental Authority (other than such
authorizations, approvals and other actions as have already been taken or
are in full force and effect) is required (A) for the pledge of the
Security Collateral, for the assignment of the Assigned Agreements, for the
grant of the security interest in the Collateral held by such Grantor
hereby or for the execution, delivery or performance of this Agreement by
such Grantor, or (B) for the exercise by the Agent of the voting rights in
the Pledged Shares or of any other rights or remedies in respect of the
Collateral hereunder except as may be required in connection with any
disposition of Collateral consisting of securities by laws affecting the
offering and sale of securities generally and except as may be required for
the Agent to receive payments directly from the United States government
under the Assignment of Claims Act, 31 U.S.C. (S) 3727 and 41 U.S.C. (S) 15
(the "ASSIGNMENT OF CLAIMS ACT").
------------------------
(I) The Inventory has been produced by such Grantor in compliance
with all requirements of the Fair Labor Standards Act.
(J) To the best of such Grantor's knowledge, each trademark,
copyright and patent material to the operations of the Company and its
Subsidiaries taken as a whole is validly subsisting and is presently in
good standing.
(K) Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, no claim has been made by a third party
that any Intellectual Property is invalid or unenforceable.
(L) Except as has not had and would not reasonably be expected to
have a Material Adverse Effect, no claim has been made that the use of any
Intellectual Property does or may violate the rights of any third party.
(M) In connection with the sale in May 1990 of the business of
Whittaker Technical Products, Inc. and/or its predecessor entities located
in Pawcatuck, Connecticut to Yardney Technical Products, Inc. (the
"BUYER"), (i) a conveyance of all the rights in all of the contracts
-----
associated with such business was made to the Buyer, including those
contracts listed on the Financing Statement dated May 11, 1990, File No.
9012940 as filed with the Secretary of State of California, (ii) such
contracts do not constitute assets of the Company, and (iii) the Company is
not entitled to receive benefit from such contracts.
8
<PAGE>
SECTION 8. FURTHER ASSURANCES.
------------------
(A) Each Grantor agrees that from time to time, at the expense
of such Grantor, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or desirable, or that the Agent may reasonably request, in order
to perfect, protect and maintain the priority of any pledge, assignment or
security interest granted or purported to be granted hereby or to enable
the Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the
foregoing, each Grantor will: (i) at the request of the Agent made at any
time after the occurrence and during the continuation of an Event of
Default, mark conspicuously each document included in the Inventory, each
chattel paper included in the Receivables, each Related Contract, each
Assigned Agreement and each of its records pertaining to the Collateral
with a legend, in form and substance satisfactory to the Agent, indicating
that such document, chattel paper, Related Contract, Assigned Agreement or
Collateral is subject to the security interest granted hereby; (ii) if any
Collateral shall be evidenced by, or if such Grantor shall otherwise be the
payee under, a promissory note or other instrument or chattel paper having
a principal balance in excess of One Million Dollars ($1,000,000), deliver
and pledge to the Agent hereunder such note or instrument or chattel paper
duly indorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Agent; and (iii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Agent may reasonably request, in order to perfect and
preserve, with the required priority, the pledge, assignment and security
interest granted or purported to be granted hereby.
(B) Each Grantor hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral without the signature of such Grantor
where permitted by law. A photocopy or other reproduction of this Agreement
or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(C) Each Grantor will furnish to the Agent, from time to time,
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Agent may
reasonably request, all in reasonable detail.
(D) Each Grantor agrees that, at the request of the Agent,
following the occurrence and during the continuance of an Event of Default,
such Grantor will execute any and all documents, notices or instruments as
may be necessary or desirable, or as the Agent may reasonably request, to
direct the United States government to pay to the Agent, for the account of
the Agent and the Lenders, all amounts otherwise payable to the Grantors
under the Assignment of Claims Act.
(E) Each Grantor shall (i) preserve and maintain all material
rights in the Intellectual Property, and (ii) upon the occurrence and
during the continuation of an Event of Default, use its best efforts to
obtain any consents, waivers or agreements necessary to enable the Agent to
exercise its remedies with respect to the Intellectual Property. No
Grantor shall abandon any material right to file a copyright, patent or
trademark application nor shall any Grantor abandon any material pending
copyright, patent or trademark application, or material Copyright, Patent
or Trademark without the prior written consent of Agent.
9
<PAGE>
SECTION 9. AS TO EQUIPMENT AND INVENTORY.
-----------------------------
(A) Each Grantor shall keep the Equipment and Inventory of
such Grantor (other than (i) Inventory sold in the ordinary course of
business, and (ii) Equipment and Inventory with an aggregate value that
does not exceed $500,000) at the places therefor specified on Schedule II
or, upon prior written notice to the Agent, at such other places in a
jurisdiction where all action required by Section 8 shall have been taken
with respect to the Equipment and Inventory.
(B) Each Grantor shall cause the Equipment material to its
operations to be maintained and preserved in good repair and working order,
ordinary wear and tear and damage due to casualty excepted, and make or
cause to be made all appropriate repairs, renewals and replacements
thereof, to the extent not obsolete, and consistent with past practice of
such Grantor, as quickly as practicable after the occurrence of any loss or
damage thereto, that are necessary or desirable to such end. Each Grantor
shall promptly furnish to the Agent a statement respecting any material
loss or damages to any of the Equipment or Inventory.
SECTION 10. INSURANCE.
---------
(A) Each Grantor (or the Company, on behalf of each Grantor)
shall, at its own expense, maintain insurance with respect to the Equipment
and Inventory of such Grantor with financially sound and reputable insurers
in such amounts, against such risks and in such form as is consistent with
past practice and as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which
such Grantor operates. Each policy for property damage insurance shall
provide for all losses (except for losses of less than $5,000,000 per
occurrence) to be paid directly to the Agent. Each such policy shall in
addition (i) name such Grantor (or the Company) and the Agent as insured
parties thereunder (without any representation or warranty by or obligation
upon the Agent) as their interests may appear, (ii) in the case of property
damage insurance, contain the agreement by the insurer that any loss
thereunder shall be payable to the Agent notwithstanding any action,
inaction or breach of representation or warranty by such Grantor, (iii) not
contain any provision providing for recourse against the Agent for payment
of premiums or other amounts with respect thereto and (iv) provide that at
least 10 days' prior written notice of cancellation or of lapse shall be
given to the Agent by the insurer. Each Grantor (or the Company) shall, if
so requested by the Agent, deliver to the Agent original or duplicate
policies of such insurance and, as often as the Agent may reasonably
request, a report of a reputable insurance broker with respect to such
insurance. Further, each Grantor (or the Company) shall, at the request of
the Agent, duly exercise and deliver instruments of assignment of such
insurance policies to comply with the requirements of this Section 10 and
cause the insurers to acknowledge notice of such assignment.
(B) Reimbursement under any liability insurance maintained by
such Grantor pursuant to this Section 10 may be paid directly to the Person
who shall have incurred liability covered by such insurance. In case of
any loss involving damage to Equipment or Inventory when subsection (c) of
this Section 10 is not applicable, such Grantor shall make or cause to be
made the necessary repairs to or replacements of such Equipment or
Inventory, and any proceeds of insurance maintained by such Grantor
pursuant to this Section 10 and received by the Agent shall be released to
such Grantor as reimbursement for the costs of such repairs or
replacements.
(C) At the request of the Agent, upon the occurrence and
during the continuance of any Event of Default, all insurance payments in
respect of such Equipment or Inventory shall be paid to and applied by the
Agent as specified in Section 19(b) hereof.
10
<PAGE>
SECTION 11. PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES;
--------------------------------------------------------
INTELLECTUAL PROPERTY.
- - ---------------------
(A) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning
the Collateral and all originals of all chattel paper that evidence
Receivables, at the location therefor specified on Schedule II or, upon
prior written notice to the Agent, at such other locations in a
jurisdiction where all actions required by Section 8 shall have been taken
with respect to the Collateral. Each Grantor will hold and preserve such
records, Assigned Agreements and chattel paper and will permit
representatives of the Agent at any time during normal business hours to
inspect and make abstracts from such records and chattel paper.
(B) Except as otherwise provided in this subsection (b), each
Grantor shall continue to collect in accordance with its customary
practice, at its own expense, all amounts due or to become due such Grantor
under the Receivables and, prior to the occurrence of an Event of Default,
such Grantor shall have the right to adjust, settle or compromise the
amount or payment of any Account, or release wholly or partly any account
debtor or obligor thereof, or allow any credit or discount thereon, all in
accordance with its customary practices. In connection with such
collections, each Grantor may take (and, upon the occurrence and during the
continuation of an Event of Default, at the Agent's direction, shall take)
such action as such Grantor or the Agent may deem necessary or advisable to
enforce collection of the Receivables; provided, however, that the Agent
-------- -------
shall have the right, 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 notify the obligors under any Receivables of the assignment of
such Receivables to the Agent and to direct such obligors to make payment
of all amounts due or to become due to such Grantor thereunder directly to
the Agent and, upon such notification and at the expense of such 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 such Grantor might have done. After receipt by such Grantor
or Grantors of the notice from the Agent referred to in the proviso to the
-------
preceding sentence, (i) all amounts and proceeds (including instruments)
received by such Grantor in respect of the Receivables shall be received in
trust for the benefit of the Agent hereunder, shall be segregated from
other funds of such Grantor and shall be forthwith paid over to the Agent
in the same form as so received (with any necessary indorsement) to be
applied as provided by Section 19(b) and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any Receivable,
release wholly or partly any obligor thereof, or allow any credit or
discount thereon.
SECTION 12. VOTING RIGHTS; DIVIDENDS; ETC.
-----------------------------
(A) So long as no Event of Default shall have occurred and be
continuing (and, during the continuance of any Event of Default so long as
no notice has been given pursuant to Section 12(b)):
(i) Each Grantor shall be entitled to exercise any and
all voting and other consensual rights pertaining to the Security
Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the other Loan Documents; provided,
--------
however, that no Grantor shall exercise or refrain from exercising
-------
any such right if such action would have a material adverse effect on
the value of the Security Collateral or the benefits of this Agreement
to the Secured Parties.
11
<PAGE>
(ii) Each Grantor shall be entitled to receive and
retain any and all dividends and interest paid in respect of the
Security Collateral; provided, however, that any and all dividends and
-------- -------
interest paid or payable other than in cash in respect of, and any and
all instruments and other property (other than cash) received,
receivable or otherwise distributed in respect of or in exchange for,
any Security Collateral shall be forthwith delivered to the Agent to
hold as, Security Collateral and shall, if received by such Grantor,
be received in trust for the benefit of the Agent, be segregated from
the other property or funds of such Grantor and be forthwith delivered
to the Agent as Security Collateral in the same form as so received
(with any necessary indorsement).
(iii) The Agent shall execute and deliver (or cause to be
executed and delivered) to any Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it
is entitled to exercise pursuant to clause (i) above and to receive
the dividends or interest payments that it is authorized to receive
and retain pursuant to clause (ii) above.
(B) Upon the occurrence and during the continuance of an
Event of Default and after notice to the Company from the Agent or the
Required Lenders:
(i) All rights of each Grantor (x) to exercise or
refrain from exercising the voting and other consensual rights that it
would otherwise be entitled to exercise pursuant to Section 12(a)(i)
and (y) to receive the dividends and interest payments that it would
otherwise be authorized to receive and retain pursuant to Section
12(a)(ii) shall cease, and all such rights shall thereupon become
vested in the Agent, so long as an Event of Default shall continue,
which shall thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights and to receive and
hold as Security Collateral such dividends and interest payments. Each
Grantor shall execute and deliver such instruments evidencing such
Grantor's right to exercise such voting rights as the Agent may
request.
(ii) All dividends and interest payments that are received by
any Grantor contrary to the provisions of paragraph (i) of this
Section 12(b) shall be received in trust for the benefit of the Agent,
shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Agent as Security Collateral in the same
form as so received (with any necessary indorsement).
SECTION 13. AS TO THE ASSIGNED AGREEMENTS.
-----------------------------
Each Grantor shall at its expense:
(i) except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect, perform and observe all the
terms and provisions of the Assigned Agreements to be performed or observed
by it, maintain the Assigned Agreements in full force and effect, enforce
the Assigned Agreements in accordance with their terms;
(ii) take all such action to such end as may be from time to
time reasonably requested by the Agent; and
(iii) from time to time furnish to the Agent such information
and reports regarding the Assigned Agreements as the Agent may reasonably
request.
12
<PAGE>
SECTION 14. PAYMENTS UNDER THE ASSIGNED AGREEMENTS. Upon the written
--------------------------------------
request of the Agent at any time when an Event of Default has occurred and is
continuing, each Grantor agrees to instruct each other party to each Assigned
Agreement of such Grantor, that so long as any Event of Default shall have
occurred and be continuing, all payments due or to become due under or in
connection with such Assigned Agreement shall be made directly to the Agent.
SECTION 15. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES.
--------------------------------------------
(A) Except as otherwise permitted under the Credit Agreement,
no Grantor shall (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, or (ii) create or suffer to exist any Lien upon or with respect
to any of the Collateral.
(B) Each Grantor shall (i) cause each issuer of the Pledged
Shares not to issue any stock or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer, except to such
Grantor or as otherwise permitted under the Credit Agreement, and (ii)
pledge hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all such additional shares of stock or other securities
issued to such Grantor. Each Grantor hereby authorizes the Agent to modify
this Agreement by amending Schedule I to include such additional shares or
other securities.
SECTION 16. AGENT APPOINTED ATTORNEY-IN-FACT. Each Grantor hereby
--------------------------------
irrevocably appoints the Agent such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Agent's discretion, to take any action
and to execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(A) to obtain and, upon the occurrence and during the
continuance of an Event of Default, adjust insurance required to be paid to
the Agent pursuant to Section 10,
(B) upon the occurrence of an Event of Default and while it is
continuing, to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral including, without limitation,
to receive, endorse and collect all instruments made payable to such
Grantor representing any dividend, interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same,
(C) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) or
(b) above, and
(D) upon the occurrence of an Event of Default and while it is
continuing, to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with
the terms and conditions of any Assigned Agreement or the rights of the
Agent with respect to any of the Collateral.
SECTION 17. AGENT MAY PERFORM. If any Grantor fails to perform any
-----------------
agreement contained herein, the Agent, upon written notice, if practicable, to
such Grantor or the Company, may itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Agent incurred in connection
therewith shall be payable by such Grantor and the Company under Section 21(b).
13
<PAGE>
SECTION 18. THE AGENT'S DUTIES. The powers conferred on the Agent
------------------
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Agent shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Security Collateral, whether or not the Agent or any Lender has or is deemed to
have knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which NationsBank accords its
own property.
SECTION 19. REMEDIES. If any Event of Default shall have occurred
--------
and be continuing:
(A) The Agent may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the Uniform Commercial Code in effect in the State of New
York at such time (the "N.Y. UNIFORM COMMERCIAL CODE") (whether or not the
----------------------------
N.Y. Uniform Commercial Code applies to the affected Collateral) and also
may (i) require each Grantor to, and each Grantor hereby agrees that it
will at its expense and upon request of the Agent forthwith, assemble all
or part of the Collateral as directed by the Agent and make it available to
the Agent at a place to be designated by the Agent that is reasonably
convenient to both parties and (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Agent may deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale shall be required by law, at least 10 days' notice to
such Grantor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(B) All cash proceeds received by the Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Agent, be held by the Agent as
collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Agent pursuant to Section 21) in
whole or in part by the Agent for the ratable benefit of the Lenders
against, all or any part of the Secured Obligations in such order as the
Agent shall elect. Any surplus of such cash or cash proceeds held by the
Agent and remaining after payment in full of all the Secured Obligations
shall be promptly paid over to the Company or to whomsoever may be lawfully
entitled to receive such surplus.
(C) The Agent may exercise any and all rights and remedies of any
Grantor under or in connection with the Assigned Agreements or otherwise in
respect of the Collateral, including, without limitation, any and all
rights of any Grantor to demand or otherwise require payment of any amount
under, or performance of any provision of, any Assigned Agreement.
(d) All payments received by any of the Grantors under or in
connection with any Assigned Agreement or otherwise in respect of the
Collateral shall be received in trust for the benefit of the Agent, shall
be segregated from other funds of such Grantor and shall be
14
<PAGE>
forthwith paid over to the Agent in the same form as so received (with any
necessary indorsement).
(E) The Agent may, without notice to any Grantor except as
required by law and at any time or from time to time, charge, set-off and
otherwise apply all or any part of the Secured Obligations against the L/C
Cash Collateral Account or any part thereof.
SECTION 20. REGISTRATION RIGHTS. If the Agent shall determine to
-------------------
exercise its right to sell all or any of the Pledged Shares pursuant to Section
19, each Grantor agrees that, upon request of the Agent, such Grantor will, at
its own expense:
(A) execute and deliver, and cause each issuer of the Pledged
Shares contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to
be done all such other acts and things, as may be necessary or, in the
opinion of the Agent, advisable to register such Pledged Shares under the
provisions of the Securities Act of 1933, as from time to time amended (the
"SECURITIES ACT"), to cause the registration statement relating thereto to
--------------
become effective and to remain effective for such period as prospectuses
are required by law to be furnished and to make all amendments and
supplements thereto and to the related prospectus that, in the opinion of
the 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;
(B) use its best efforts to qualify the Pledged Shares under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Shares, as requested by
the Agent;
(C) provide the Agent with such other information and projections
as may be necessary or, in the opinion of the Agent, advisable to enable
the Agent to effect the sale of such Pledged Shares; and
(D) do or cause to be done all such other acts and things as may
be necessary to make such sale of the Pledged Shares or any part thereof
valid and binding and in compliance with applicable law.
The Agent is authorized, in connection with any sale of the Pledged Shares
pursuant to Section 19, to deliver or otherwise disclose to any prospective
purchaser of the Pledged Shares (i) any registration statement or prospectus,
and all supplements and amendments thereto, prepared pursuant to clause (a)
above, (ii) subject to the requirements imposed by the securities laws, any
information and projections provided to it pursuant to clause (d) above and
(iii) subject to the requirements imposed by the securities laws, any other
information in its possession relating to the Pledged Shares.
Each Grantor acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Agent or the Lenders by reason of the
failure by any Grantor to perform any of the covenants contained in this Section
and, consequently, agrees that, if any Grantor shall fail to perform any of such
covenants, such Grantor or the Company shall pay, as liquidated damages and not
as a penalty, an amount equal to the value of the Pledged Shares on the date the
Agent shall demand compliance with this Section.
SECTION 21. INDEMNITY AND EXPENSES; TAXES. (A) Each Grantor agrees,
-----------------------------
jointly and severally, to indemnify each Indemnified Party from and against any
and all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this
15
<PAGE>
Agreement), except claims, losses or liabilities resulting from such Indemnified
Party's gross negligence or willful misconduct as determined by a final judgment
of a court of competent jurisdiction.
(B) Each Grantor agrees, jointly and severally, to pay to the Agent,
upon written demand, the amount of any and all reasonable expenses, including
the reasonable fees and expenses of its counsel and of any experts and agents,
that the Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Agent or the Lenders
hereunder or (iv) the failure by such Grantor to perform or observe any of the
provisions hereof.
(C) Each Grantor shall pay (i) all taxes, assessments and other
charges of Governmental Authorities imposed upon any of the Collateral before
any material penalty or interest accrues thereon, and (ii) all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums materially adversely affecting the Collateral, which have
become due and payable and which by law have or may become a Lien (other than a
Permitted Lien) upon any of the Collateral prior to the time when any material
penalty or fine shall be incurred with respect thereto; provided, that no such
--------
taxes, assessments and charges of Governmental Authorities referred to in clause
(i) above or claims referred to in clause (ii) above need to be paid if being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and enforcement thereof is stayed and if a reserve or other
appropriate provision required in conformity with GAAP shall have been made
therefor and if, at the request of the Agent, it posts a bond or other form of
indemnity satisfactory to the Agent in the amount of such contested taxes,
assessments and charges plus any applicable interest and penalties.
SECTION 22. SECURITY INTEREST ABSOLUTE. The obligations of each
--------------------------
Grantor under this Agreement are independent of the Secured Obligations, and a
separate action or actions may be brought and prosecuted against each Grantor to
enforce this Agreement, irrespective of whether any action is brought against
the Company or whether the Company is joined in any such action or actions. All
rights of the Agent and the pledge, assignment and security interest hereunder,
and all obligations of each Grantor hereunder, shall be absolute and
unconditional, irrespective of:
(A) any lack of validity or enforceability of any Loan Document
or any other agreement or instrument relating thereto;
(B) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any other
amendment or waiver of or any consent to any departure from any Loan
Document, including, without limitation, any increase in the Secured
Obligations resulting from the extension of additional credit to the
Company or any of its Subsidiaries or otherwise;
(C) any taking, exchange, release or non-perfection of any
other collateral, or any taking, release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the Secured
Obligations;
(D) any manner of application of collateral, or proceeds
thereof, to all or any of the Secured Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Secured
Obligations or any other assets of the Company or any of its Subsidiaries;
(E) any change, restructuring or termination of the corporate
structure or existence of the Company or any of its Subsidiaries; or
16
<PAGE>
(F) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, such Grantor or a third party
grantor of a security interest.
SECTION 23. AMENDMENTS; WAIVERS; ETC. No amendment or waiver of any
------------------------
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent and each Grantor, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that any amendment to this Agreement that is in
-------- -------
substantially the same form as Exhibit K to the Credit Agreement shall be
effective when signed by only the Agent and the Additional Grantor (as defined
therein). No failure on the part of the Agent to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 24. ADDRESSES FOR NOTICES. All notices and other
---------------------
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and, mailed, telegraphed, telecopied,
telexed, cabled or delivered to each Grantor or to the Agent, as the case may
be, in each case addressed to it at its address specified in the Credit
Agreement or on the signature pages hereof, or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. All such notices
and other communications shall, when mailed, telecopied, telegraphed, telexed or
cabled, respectively, be effective when deposited in the mails, telecopied,
delivered to the telegraph company, confirmed by telex answerback or delivered
to the cable company, respectively, addressed as aforesaid.
SECTION 25. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE
---------------------------------------------------
CREDIT AGREEMENT. This Agreement shall create a continuing security interest in
- - ----------------
the Collateral and shall (a) remain in full force and effect until the later of
the payment in full in cash of the Secured Obligations or the termination of the
Commitments of the Lenders, (b) be binding upon each Grantor, its successors and
assigns and (c) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Agent, the Lenders and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender may assign or otherwise transfer all or any
portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitment, the Advances owing to
it and the Notes, if any, held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Lender herein or otherwise, in each case as provided in Section 9.07 of
the Credit Agreement.
SECTION 26. TERMINATION. Upon the payment in full of the Secured
-----------
Obligations and the termination of the Commitments of the Lenders, the security
interest granted hereby shall terminate and all rights to the Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof shall
revert to the applicable Grantor. Upon the termination of any such security
interest, or upon the Agent's release of any of the Collateral pursuant to
Section 9.01 of the Credit Agreement, the Agent shall promptly return to the
applicable Grantor, at such Grantor's expense, such of the Collateral (and, in
the case of a release, such of the released Collateral) held by the Agent as
shall not have been sold or otherwise applied pursuant to the terms hereof. The
Agent will, at such Grantor's expense, execute and deliver to the Agent such
other documents as the Agent shall reasonably request to evidence such
termination or release, as the case may be.
SECTION 27. GOVERNING LAW; TERMS. This Agreement shall be governed
--------------------
by and construed in accordance with the laws of the State of New York, except
to the extent that the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the State of New York. Unless
otherwise
17
<PAGE>
defined herein or in the Credit Agreement, terms used in Article 9 of the N.Y.
Uniform Commercial Code are used herein as therein defined.
SECTION 28. SEVERABILITY OF PROVISIONS. 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 or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 29. COUNTERPARTS. This Agreement may be executed in any
------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart of a signature page to this Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this
Agreement.
SECTION 30. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GRANTOR WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS
AVAILABLE. EACH GRANTOR IRREVOCABLY DESIGNATES AND APPOINTS THE PRENTICE HALL
CORPORATION SYSTEM, INC., ONE GULF & WESTERN PLAZA,NEW YORK, NEW YORK 10023 AS
ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH COURT,
SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH PERSONS TO BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT. EACH GRANTOR IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE SIGNATURE PAGES HEREOF,
SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. EACH OF THE
GRANTORS, THE AGENT, AND THE LENDERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED UPON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE AGENT TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE
COURTS OF ANY OTHER JURISDICTION.
SECTION 31. WAIVER OF JURY TRIAL. EACH OF THE GRANTORS, THE AGENT
--------------------
AND THE LENDERS IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE ACTIONS OF THE AGENT OR ANY
LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
18
<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
WHITTAKER CORPORATION,
a Delaware corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
BLUE BELL LEASE, INC.,
a California corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
S-1
<PAGE>
METROPOLITAN FINANCIAL SERVICES CORPORATION
a Colorado corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
PARK CHEMICAL COMPANY,
a Michigan corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
WHITTAKER CONTROLS, INC.,
a California corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
S-2
<PAGE>
WHITTAKER CORP.,
a Maine corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
WHITTAKER ORDNANCE, INC.,
a Delaware corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
WHITTAKER PORTA BELLA DEVELOPMENT, INC.,
a California corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
S-3
<PAGE>
WHITTAKER SERVICES CORPORATION,
a California corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
WHITTAKER TECHNICAL PRODUCTS, INC.,
a Colorado corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
WHITTAKER DEVELOPMENT CO.,
a Delaware corporation
By: /s/ JOHN K. OTTO
----------------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
--------------------------------------
LOS ANGELES, CALIFORNIA 90024
--------------------------------------
Attention: TREASURER
---------------------------
S-4
<PAGE>
SCHEDULE I PART I
PLEDGED SHARES AND PLEDGED DEBT
-------------------------------
<TABLE>
<CAPTION>
STOCK NUMBER OF % OF
PAR CERTIFICATES OUTSTANDING OUTSTANDING
STOCK ISSUER CLASS OF STOCK VALUE NO.(S) SHARES SHARES
<S> <C> <C> <C> <C> <C>
Blue Bell Lease, Inc. Common $1.00 2 1000 100
Metropolitan Financial Services Common NONE 1 100 100
Corporation
Park Chemical Company Common $1.00 2 1000 100
Whittaker Controls, Inc. Common $1.00 2 1000 100
Whittaker Corp. Common $1.00 1 1000 100
Whittaker Development Co. Common $1.00 1 1000 100
Whittaker Ordnance, Inc. Common NONE 2 1 100
Whittaker Porta Bella Development, Common $1.00 1 1000 100
Inc.
Whittaker Services Corporation Common NONE 1 1000 100
Whittaker Technical Products, Inc. Common $1.00 1 1000 100
</TABLE>
<PAGE>
SCHEDULE I PART II
WHITTAKER CORPORATION AND SUBSIDIARIES
NOTES RECEIVABLE ($ in 000)/1/
------------------------------------
<TABLE>
<CAPTION>
Grantor Debtor Rate Amount Maturity
======= ====== ======== ========= ========
<S> <C> <C> <C> <C>
Whittaker Corporation Maine Central 15% 2,025 Oct 2, 1998
</TABLE>
- - ------------------------
/1/Estimated as of Closing Date.
<PAGE>
SCHEDULE II
LOCATIONS OF EQUIPMENT AND INVENTORY
------------------------------------
LOCATIONS OF INVENTORY
- - ----------------------
WHITTAKER CORPORATION
1785 Voyager Avenue
Simi Valley, CA 93063
1915 Voyager Avenue
SImi Valley, CA 93063
15275 Southwest Koll Parkway
Beaverton, OR 97006
1955 North Surveyor Avenue
Simi Valley, CA 93063
2731 Systron Drive
Concord, Ca 94518
BLUE BELL LEASE, INC.
None
METROPOLITAN FINANCIAL SERVICES
None
PARK CHEMICAL COMPANY
None
WHITTAKER CONTROLS, INC.
12838 Saticoy Street
North Hollywood, CA 91605
WHITTAKER CORP. (a Maine corporation)
None
WHITTAKER DEVELOPMENT CO.
None
WHITTAKER ORDNANCE, INC.
None
<PAGE>
WHITTAKER SERVICES, INC.
None
WHITTAKER TECHNICAL PRODUCTS, Inc.
3850 Olive Street
Denver, Co 80207
LOCATIONS OF EQUIPMENT
- - ----------------------
WHITTAKER CORPORATION
10880 Wilshire Boulevard
Los Angeles, CA 90024
1785 Voyager Avenue
Simi Valley, CA 93063
1915 Voyager Avenue
Simi Valley, CA 93063
2361 South Jefferson Davis Highway
Suite 1006
Arlington, VA 22202
15275 Southwest Koll Parkway
Beaverton, OR 97006
1955 North Surveyor Avenue
Simi Valley, CA 93063
2731 Systron Drive
Concord, CA 94518
Admiral Gate Tower
221 3rd Street
Newport, RI 02840
BLUE BELL LEASE, INC.
None
METROPOLITAN FINANCIAL SERVICES
None
PARK CHEMICAL COMPANY
None
2
<PAGE>
WHITTAKER CONTROLS, INC.
12838 Saticoy Street
North Hollywood, Ca 91605
WHITTAKER CORP. (a Maine corporation)
None
WHITTAKER DEVELOPMENT CO.
None
WHITTAKER ORDNANCE, INC.
None
WHITTAKER PORTA BELLA DEVELOPMENT, INC.
None
WHITTAKER SERVICES CORPORATION
1955 North Surveyor Avenue
Simi Valley, CA 93603
60 Hammarlund Way
Middleton, RI 02840
1611 Beach Drive
El Paso, Texas 79925
3313 Memorial Parkway
#112
Huntsville, Alabama 35801
WHITTAKER TECHNICAL PRODUCTS, INC.
3850 Olive Street
Denver, CO 80207
3
<PAGE>
SCHEDULE III
PLACE OF BUSINESS AND TAX IDENTIFICATION NUMBER
-----------------------------------------------
<TABLE>
<CAPTION>
Chief Executive Offices and
Federal E.I. Number Name Chief Place of Business
- - ------------------- ---- ---------------------------
<C> <S> <C>
95-4033076 Whittaker Corporation 10880 Wilshire Boulevard, 8th Floor
Los Angeles, California 90024
95-3917177 Blue Bell Lease, Inc. 1785 Voyager Avenue
Simi Valley, California 93063
Metropolitan Financial Services 1785 Voyager Avenue
Corporation Simi Valley, California 93063
38-0907830 Park Chemical Company 1785 Voyager Avenue
Simi Valley, California 93063
95-3917547 Whittaker Controls, Inc. 12838 Saticoy Street
Post Office Box 3951
North Hollywood, California 91605
95-2625099 Whittaker Corp. (A Maine 1785 Voyager Avenue
Corporation) Simi Valley, California 93063
95-3991526 Whittaker Development Co. 1785 Voyager Avenue
Simi Valley, California 93063
94-1715628 Whittaker Ordnance, Inc. 1785 Voyager Avenue
Simi Valley, California 93063
95-4506693 Whittaker Porta Bella 1785 Voyager Avenue
Development, Inc. Simi Valley, California 93063
77-0323260 Whittaker Services Corporation 1955 North Surveyor Avenue
Simi Valley, California 93063
13-5513968 Whittaker Technical Products, 3850 Olive Street
Inc. Denver, Colorado 80207
</TABLE>
<PAGE>
SCHEDULE IV
TRADE NAMES
-----------
WHITTAKER CORPORATION
Electronic Resources, a Division of Whittaker Corporation
Whittaker Electronic Systems
Whittaker Electronic Resources
Whittaker Communications
Whittaker Communications, Inc.
Whittaker Safety Systems, Inc.
Whittaker Systron Donner Safety Systems
BLUE BELL LEASE, INC.
None
METROPOLITAN FINANCIAL SERVICES CORP.
None
PARK CHEMICAL COMPANY
Park Chemical
WHITTAKER CONTROLS, INC.
Whittaker Controls
Controls Division
WHITTAKER CORP. (a Maine corporation)
None
WHITTAKER DEVELOPMENT CO.
None
WHITTAKER ORDNANCE, INC.
None
WHITTAKER PORTA BELLA DEVELOPMENT, INC.
None
<PAGE>
WHITTAKER SERVICES CORPORATION
None
WHITTAKER TECHNICAL PRODUCTS, INC.
Whittaker Power Storage Systems
Power Storage Systems
Power Storage
<PAGE>
GUARANTY
GUARANTY dated as of January 23, 1995 (this "GUARANTY") made by BLUE
--------
BELL LEASE, INC., a California Corporation, METROPOLITAN FINANCIAL SERVICES
CORPORATION, a Colorado corporation, PARK CHEMICAL COMPANY, a Michigan
corporation, WHITTAKER CONTROLS, INC., a California corporation, WHITTAKER
CORP., a Maine corporation, WHITTAKER ORDNANCE, INC., a Delaware corporation,
WHITTAKER PORTA BELLA DEVELOPMENT, INC., a California corporation, WHITTAKER
SERVICES CORPORATION, a California corporation, WHITTAKER TECHNICAL PRODUCTS,
INC., a Colorado corporation, and WHITTAKER DEVELOPMENT CO., a Delaware
corporation (each, together with any future subsidiary, if any, of the Borrower
(as hereinafter defined) that becomes a party to this Agreement, a "GUARANTOR"
---------
and, collectively, the "GUARANTORS"), in favor of the financial institutions
----------
(the "LENDERS") from time to time party to the Credit Agreement (as hereinafter
-------
defined) and NATIONSBANK OF TEXAS, N.A. ("NATIONSBANK") as agent (in such
-----------
capacity, together with any successor appointed pursuant to Article VIII of the
Credit Agreement, the "AGENT") for the Lenders.
-----
PRELIMINARY STATEMENT. The Lenders and the Agent are parties to a
Credit Agreement dated as of January 23, 1995 (said Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT"; the terms defined therein and not otherwise
----------------
defined herein being used herein as therein defined) with Whittaker Corporation,
a Delaware corporation (the "BORROWER"). The Guarantors will derive substantial
--------
direct and indirect benefit from the transactions contemplated by the Credit
Agreement. It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lenders under the Credit Agreement that the
Guarantors shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Advances and issue Letters of Credit under the Credit
Agreement, the Guarantors hereby agree, jointly and severally, as follows:
SECTION 1. GUARANTY. Each Guarantor, jointly and severally, hereby
--------
unconditionally guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations of the Borrower now
or hereafter existing under the Credit Agreement, the Notes, if any, and each
other Loan Document and under each Hedge Agreement to which any Lender is a
party, including in each case any extensions, modifications, substitutions,
amendments and renewals thereof, including in each case whether for principal
(including reimbursement for amounts drawn under Letters of Credit), interest,
fees, expenses, indemnification or otherwise (such Obligations being the
"GUARANTEED OBLIGATIONS"), and agrees to pay any and all expenses (including
- - -----------------------
reasonable counsel fees and expenses) incurred by the Agent or the Lenders in
enforcing any rights under this Guaranty; provided that any Hedge Agreement to
--------
which a Lender is a party shall be a Guaranteed Obligation only so long as there
are any Borrowings or Commitments outstanding under the Credit Agreement; and
provided further, that each Guarantor and, by acceptance hereof, the Agent and
- - -------- -------
each Lender hereby confirms that it is the intention of all such parties that
the guarantee by such Guarantor pursuant to this Guaranty not constitute a
fraudulent transfer or conveyance for purposes of Title 11 of the U.S. Code, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law. To effectuate the foregoing intention, the
obligations of each Guarantor under this guaranty shall be limited to the
maximum amount as will, after giving effect to all other liabilities of such
Guarantor (including, but not limited to, contingent liabilities, but excluding
the liabilities of such Guarantor hereunder) and after giving effect to any
collections from or payments made by or on behalf of any other guarantor in
respect of the obligations of such other Guarantor under this Guaranty or
pursuant to Section
<PAGE>
8 hereof, result in the obligations of such Guarantor under this guaranty not
constituting such fraudulent transfer or conveyance. Without limiting the
generality of the foregoing (but subject to the preceding sentence), each
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Borrower to the Agent and the
Lenders under the Loan Documents but for the fact that they are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving any Loan Party.
SECTION 2. GUARANTY ABSOLUTE. Each Guarantor guarantees that the
-----------------
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or the Lenders with respect thereto. The Obligations of the Guarantors
under this Guaranty are independent of the Guaranteed Obligations, and a
separate action or actions may be brought and prosecuted against the Guarantors
to enforce this Guaranty, irrespective of whether any action is brought against
the Borrower or whether the Borrower is joined in any such action or actions.
The liability of each Guarantor under this Guaranty shall be absolute and
unconditional, and shall not be affected or released in any way, irrespective
of:
(A) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document or any other agreement or instrument
relating thereto for any reason, including, without limitation, the
existence of a bankruptcy, reorganization or similar proceeding involving
any Loan Party;
(B) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations or any of
the Loan Documents, or any other taking, release, amendment or waiver of or
any consent to any departure from the Credit Agreement, any other Loan
Document or any other guaranty of any or all of the Guaranteed Obligations,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Loan Party or
otherwise;
(C) any enforcement of any Loan Document, including the taking,
exchange, holding, sale, additional guarantee or other disposition of any
Collateral, or any amendment, alteration, exchange, substitution, transfer,
enforcement, waiver, subordination, termination or release of any
Collateral or such guaranties, or non-perfection of any Liens created by
any Collateral Document, or any consent to departure from any such guaranty
for all or any of the Guaranteed Obligations;
(D) any refusal of payment by the Agent or any Lender, in whole
or in part, from any obligor or guarantor in connection with any of the
Guaranteed Obligations, whether or not with notice to, or further assent
by, or any reservation of rights against, any Guarantor;
(E) any change, restructuring or termination of the corporate
structure or existence of any Loan Party;
(F) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Loan Party or any other
guarantor of the Guaranteed Obligations;
(G) any manner of application of any Collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale
or other disposition of any Collateral for all or any of the Guaranteed
Obligations or any other assets of any Loan Party; or
2
<PAGE>
(H) any modification, compounding, compromise, settlement,
release by any lender or any other Person (or by operation of the law or
otherwise), collection or other liquidation of the Obligations or the
liability of any Loan Party, or of the Collateral, in whole or in part.
This Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Lender or any other Person upon
the insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all
as though such payment had not been made.
SECTION 3. WAIVERS. Each Guarantor hereby waives, to the extent
-------
permitted by applicable law:
(A) promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations or any other
obligations under the Loan Documents or this Guaranty;
(B) any requirement that the Agent or any Lender or any other
Person protect, secure or insure any Lien or any property subject thereto
or exhaust any right or take any action against any Loan Party or any other
Person or any Collateral;
(C) any defense arising by reason of any claim or defense based
upon an election of remedies by any Lender which in any manner impairs,
reduces, releases or otherwise adversely affects its subrogation,
contribution or reimbursement rights (if any) or other rights (if any) to
proceed against any Loan Party or any other Person or any Collateral; and
(D) any duty on the part of the Agent or any Lender to disclose
to such Guarantor any matter, fact or thing relating to the business,
operation or condition of any Loan Party and its assets now know or
hereafter known by the Agent or such Lender.
SECTION 4. WAIVER OF SUBROGATION; SUBORDINATION.
------------------------------------
(A) Until all the Guaranteed Obligations and all other amounts
payable under this Guaranty shall have been paid in full and the obligation
of the Lenders to make Advances and issue Letters of Credit shall have
expired or terminated (and except as otherwise provided in Section 8), each
Guarantor (i) agrees that it shall not enforce or otherwise exercise any
right of subrogation to any of the rights of the Agent or any Lender
against the Borrower or any right of reimbursement or contribution or
similar right against the Borrower, any endorser or any other guarantor of
all or any part of the Guaranteed Obligations or any guarantor thereof and
(ii) waives the benefit of, and any right to participate in, any security
or collateral given to the Agent or any Lender to secure payment of the
Guaranteed Obligations. If any amount shall be paid to any Guarantor on
account of such subrogation, reimbursement or contribution rights at any
time prior to the later of (x) the payment in full of the Guaranteed
Obligations and all other amounts payable under this Guaranty and (y) the
expiration or termination of the obligation of the Lenders to make Advances
and issue Letters of Credit, such amount shall be held in trust for the
benefit of the Lenders and shall forthwith be paid to the Agent to be
credited and applied against the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement or to be
held by the Agent as collateral security for any Guaranteed Obligations
thereafter existing. Each Guarantor hereby agrees that it shall not, so
long as an Event of Default has occurred and is continuing and until all
the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full and the obligation of the Lenders to
3
<PAGE>
make Advances and issue Letters of Credit shall have expired or terminated,
assert any claim or counterclaim it may have against the Borrower or setoff
any of its obligations to the Borrower against any obligations of the
Borrower to it.
(B) Each Guarantor hereby agrees that any indebtedness of the
Borrower now or hereafter owing to such Guarantor (the "SUBORDINATED DEBT")
-----------------
is hereby subordinated to all of the Guaranteed Obligations and all other
amounts payable under this Guaranty, whether heretofore, now or hereafter
created, and that without the prior consent of the Agent, the Subordinated
Debt shall not be paid in whole or in part until the Guaranteed Obligations
and all other amounts payable under this Guaranty have been paid in full
and the Credit Agreement has been terminated and is of no further force or
effect, except that payments of principal and interest on the Subordinated
Debt shall be permitted (i) so long as no Event of Default shall have
occurred and be continuing and (ii) during the continuance of any Event of
Default so long as the Agent has not provided the Company and each
Guarantor with written notice of default stating that such payment shall no
longer be permitted, but in either of the foregoing events only to the
extent such payments would not render the Borrower incapable of performing
the Guaranteed Obligations. Each Guarantor agrees that it will not accept
any payment of or on account of any Subordinated Debt at any time in
contravention of the foregoing. At the request of the Agent, following the
occurrence and during the continuance of an Event of Default, each
Guarantor hereby agrees to direct the Borrower to pay to the Agent, for the
account of the Agent and the Lenders, all or any part of the Subordinated
Debt and any amount so paid to the Agent shall be applied to payment of the
Guaranteed Obligations and all other amounts payable under this Guaranty.
Each payment on the Subordinated Debt received in violation of any of the
provisions hereof shall be deemed to have been received as trustee for the
Agent and shall be paid over to the Agent immediately on account of the
Guaranteed Obligations, but without otherwise affecting in any manner any
Guarantor's liability under any of the provisions of this Guaranty. Each
Guarantor agrees to file all claims against the Borrower in any bankruptcy
or other proceeding in which the filing of claims is required by law in
respect of any Subordinated Debt, and the Agent shall be entitled to all of
such Guarantor's rights thereunder. If for any reason any Guarantor fails
to file such claim at least 30 days prior to the last date on which such
claim should be filed, the Agent, as such Guarantor's attorney-in-fact, is
hereby authorized to do so in such Guarantor's name or, in the Agent's
discretion, to assign such claim to and cause proof of claim to be filed in
the name of the Agent or its nominee. In all such cases, whether in
reorganization, bankruptcy or otherwise, the Person or Persons authorized
to pay such claim shall pay to the Agent, for the account of the Agent and
the Lenders, the full amount payable on the claim in the proceeding, and,
to the full extent necessary for that purpose, each Guarantor hereby
assigns to the Agent, for the account of the Agent and the Lenders, all of
such Guarantor's rights to any payments or distributions to which such
Guarantor otherwise would be entitled. If the amount so paid is greater
than such Guarantor's liability hereunder, the Agent will pay the excess
amount to the party entitled thereto. In addition, each Guarantor hereby
appoints the Agent as its attorney-in-fact to exercise all of such
Guarantor's voting rights in connection with any bankruptcy proceeding or
any plan for the reorganization of the Borrower.
SECTION 5. PAYMENTS FREE AND CLEAR OF TAXES, ETC.
-------------------------------------
(A) Any and all payments made by the Guarantors hereunder shall
be made, in accordance with Section 2.09 of the Credit Agreement, free and
clear of, and without deduction for, any and all present or future Taxes.
If any Guarantor shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to any Lender or the Agent, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 5) such
4
<PAGE>
Lender or the Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such
Guarantor shall make such deductions and (iii) such Guarantor shall pay the
full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(B) In addition, each Guarantor agrees to pay any present or
future Other Taxes.
(C) Each Guarantor will indemnify each Lender and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section 5) paid by such Lender or the Agent (as the case may be) and
any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto.
(D) Each Guarantor shall indemnify the Agent and each Lender
for the full amount of Taxes and Other Taxes, and for the full amount of
taxes imposed by any jurisdiction on amounts payable under this Section,
paid by the Agent or such Lender and any liability (including penalties,
additions to tax, interest and expenses) arising therefrom or with respect
thereto. Payments pursuant to this indemnification shall be made within 30
days from the date such Lender makes written demand therefor setting forth
in reasonable detail the basis of the Guarantor's obligation to indemnify
such Lender pursuant to this Section; provided, however, that (i) in the
-------- -------
case of any Taxes or Other Taxes not required by law to be deducted by the
applicable Guarantor from or in respect of any sum payable hereunder to the
Agent or any Lender, such Guarantor shall be obligated to make payment to
the Agent or such Lender pursuant to this Section (A) in respect of such
Taxes or Other Taxes only if written demand therefor has been made by the
Lender within 180 days from the date on which the Lender or the Agent, as
the case may be, actually makes payment of the Taxes or Other Taxes to the
relevant taxing authority, and (B) in respect of penalties and additions to
tax attributable to late payment only to the extent that such penalties or
additions to tax are accrued after the written demand therefore has been
made by the Lender and (ii) no Guarantor shall be obligated to pay any
Taxes or Other Taxes to the extent the Taxes or Other Taxes result from a
change in the Lender's Applicable Lending Office.
(E) Within 30 days after the date of any payment of Taxes
pursuant to this Section, the applicable Guarantor shall furnish to the
Agent, at its address referred to in the Credit Agreement, evidence
reasonably satisfactory to the Agent of payment thereof. In the case of
any payment hereunder for the account of the Agent or any Lender which is
made by any Guarantor through an account or branch outside the United
States or on behalf of any Guarantor by a payor that is not a United States
person, if the applicable Guarantor determines that no Taxes are payable in
respect thereof, such Guarantor shall, except where such mode of payment is
at the request of the Agent or such Lender, furnish, or cause such payor to
furnish, to the Agent, at such address, a certificate from the appropriate
taxing authority or authorities or an opinion of counsel acceptable to the
Agent, in either case stating that such payment is exempt from Taxes. For
purposes of this subsection (d), the terms "UNITED STATES" and "UNITED
------------- ------
STATES PERSON" shall have the meanings specified in Section 7701 of the
-------------
Internal Revenue Code.
(F) Without prejudice to the survival of any other agreement of
any Guarantor hereunder, the agreements and obligations of each Guarantor
contained in this Section 5 shall survive the payment in full of the
Guaranteed Obligations and all other amounts payable under this Guaranty.
5
<PAGE>
SECTION 6. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby
------------------------------
represents and warrants as follows:
(A) Such Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, and has made all necessary filings and done all other actions
necessary to permit it (and has all requisite corporate power and
authority) to own and operate its properties, to carry on business
conducted by it, to enter into and perform this Guaranty and to carry out
the transactions contemplated hereby.
(B) Such Guarantor's execution, delivery and performance of
this Guaranty and all instruments executed in connection herewith have been
duly authorized by all necessary corporate action on the part of such
Guarantor. This Guaranty has been duly executed and delivered by such
Guarantor and constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms. No consent, approval
or authorization or other action by any governmental authority is required
to be obtained by such Guarantor in connection with the execution, delivery
or performance of this Guaranty.
(C) The execution, delivery and performance by such Guarantor
of this Guaranty do not and will not (i) constitute a tortious interference
with any Contractual Obligation of such Guarantor, or (ii) conflict with,
result in a breach of or constitute (with or without notice or lapse of
time or both) a default under any material Requirements of Law or material
Contractual Obligation of such Guarantor, or require termination of any
material Contractual Obligation, or (iii) result in or require the creation
or imposition of any Lien whatsoever upon any of the properties or assets
of such Guarantor (other than any Lien securing such Guarantor's
liabilities hereunder), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of such
Guarantor.
(D) There is no action, suit, proceeding, governmental
investigation or arbitration, at law or in equity, before or by any
Governmental Authority pending or, to the knowledge of the Guarantor,
threatened against the Guarantor or any of its property which seeks to
enjoin the consummation of, or which questions the legality, validity or
enforceability of, any of the transactions contemplated by this Guaranty or
any of the other Loan Documents to which such Guarantor is a party.
(E) There are no conditions precedent to the effectiveness of
this Guaranty that have not been satisfied or waived.
(F) Such Guarantor has, independently and without reliance upon
the Agent or any Lender and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter
into this Guaranty.
SECTION 7. COVENANTS. So long as any part of the Guaranteed
---------
Obligations shall remain unpaid or any Lender shall have any Commitment, each
Guarantor agrees that if, under the terms of the Credit Agreement, the Borrower
is required to cause such Guarantor or any of such Guarantor's Subsidiaries to
take, or to refrain from taking, any action, or to comply with any requirements,
obligations, limitations or restrictions contained therein, in each case whether
individually or together with any other Loan Parties, such Guarantor shall, and
shall cause each of its Subsidiaries to, take or refrain from taking (as the
case may be) any such action and comply with all such requirements, obligations,
limitations and restrictions.
6
<PAGE>
SECTION 8. CONTRIBUTION. In order to provide for just and equitable
------------
contribution among the Guarantors, the Guarantors agree, inter se, that in the
----- --
event any payment or distribution is made by any Guarantor (a "FUNDING
-------
GUARANTOR") under this Guaranty, such Funding Guarantor shall be entitled to a
contribution from all other Guarantors in a pro rata amount based on the
--- ----
Adjusted Net Assets (as hereinafter defined) of each Guarantor (including the
Funding Guarantor) for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Guaranteed Obligations or any other
Guarantor's Obligations with respect to this Guaranty. "ADJUSTED NET ASSETS" of
-------------------
any Guarantor at any date means the lesser of (a) the amount by which the fair
value of the property of such Guarantor exceeds the total amount of liabilities
(including, without limitation, contingent liabilities, but excluding
liabilities of such Guarantor under this Guaranty) of such Guarantor at such
date, and (b) the amount by which the present fair salable value of the assets
of such Guarantor at such date exceeds the amount that will be required to pay
the probable liability of such Guarantor on its debts (after giving effect to
all contingent liabilities, but excluding liabilities of such Guarantor under
this Guaranty) as they become absolute and matured.
SECTION 9. INDEMNITY AND EXPENSES.
----------------------
(A) Each Guarantor agrees to defend, protect, indemnify and
hold harmless the Agent and each Lender from and against any and all
claims, losses and liabilities growing out of or resulting from this
Guaranty with respect to such Guarantor (including, without limitation,
enforcement of this guaranty against such Guarantor), except claims, losses
or liabilities resulting from the Agent's or such Lender's own gross
negligence or willful misconduct as determined by a final judgment of a
court of competent jurisdiction.
(B) Each Guarantor further agrees to pay to the Agent upon
written demand, for the account of the Agent and each Lender, the amount of
any and all reasonable expenses, including the reasonable fees and expenses
of the Agent's or such Lender's counsel and other experts and agents, which
the Agent or such Lender may incur in connection with the exercise or
enforcement of any of the rights of the Agent or any Lender under this
Guaranty with respect to such Guarantor.
SECTION 10. AMENDMENTS, ETC. No amendment or waiver of any provision
---------------
of this Guaranty and no consent to any departure by the Guarantor therefrom
shall in any event be effective unless the same shall be in writing and signed
by each Guarantor and the Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that any amendment to this Guaranty that is in
-------- -------
substantially the same form as Exhibit J to the Credit Agreement shall be
effective when signed by only the Agent and the Additional Guarantor (as defined
therein).
SECTION 11. NOTICES, ETC. All notices and other communications
------------
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered to it, if to a Guarantor, addressed to it at its address
specified on the signature pages hereof, if to the Agent or any Lender, at its
address specified in the Credit Agreement, or as to any party at such other
address as shall be designated by such party in a written notice to each other
party. All such notices and other communications shall, when mailed,
telegraphed, telecopied, telexed or cabled, be effective when deposited in the
mails, delivered to the telegraph company, transmitted by telecopier, confirmed
by telex answerback or delivered to the cable company, respectively.
SECTION 12. NO WAIVER; REMEDIES. No failure on the part of the Agent
-------------------
or any Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor
7
<PAGE>
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 13. RIGHT OF SET-OFF. Upon (a) the occurrence and during the
----------------
continuance of any Event of Default and (b) either (i) the making of the request
or the granting of the consent specified by Section 7.01 of the Credit Agreement
to authorize the Agent to declare the Advances due and payable pursuant to the
provisions of said Section 7.01, or (ii) the actual or deemed entry of an order
for relief with respect to any Loan Party or any of its Subsidiaries under the
Federal Bankruptcy Code each Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of any Guarantor against any and all of the
Obligations of such Guarantor now or hereafter existing under this Guaranty,
whether or not such Lender shall have made any demand under this Guaranty and
although such Obligations may be unmatured to the fullest extent permitted by
law. Each Lender agrees promptly to notify the Guarantor after any such set-off
and application made by such Lender; provided, however, that to the fullest
-------- -------
extent permitted by law, the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender may have.
SECTION 14. CONTINUING GUARANTY; ASSIGNMENTS UNDER THE CREDIT
-------------------------------------------------
AGREEMENT. This Guaranty is a continuing guaranty and shall (a) remain in full
- - ---------
force and effect until the later of the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty and the
Termination Date, (b) be jointly and severally binding upon each Guarantor, its
successors and assigns and (c) inure to the benefit of and be enforceable by the
Lenders, the Agent and their successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), any Lender may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and any Notes held by it, to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise, in each
case as provided in Section 9.07 of the Credit Agreement.
SECTION 15. FINANCIAL CONDITION OF LOAN PARTIES. Each Guarantor
-----------------------------------
represents to the Agent and each Lender that such Guarantor is now and will be
completely familiar with the business, operations and condition of the Loan
Parties, and each Guarantor hereby waives and relinquishes any duty on the part
of the Agent or any Lender to disclose any matter, fact or thing relating to the
business, operations or conditions of any Loan Party now known or hereafter
known by the Agent or such Lender.
SECTION 16. JOINT AND SEVERAL LIABILITY. The liability of the
---------------------------
Guarantors hereunder shall be joint and several.
SECTION 17. SEVERABILITY OF PROVISIONS. Any provision of this
--------------------------
Guaranty 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 or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 18. COUNTERPARTS. This Guaranty may be executed in any
------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same
8
<PAGE>
agreement. Delivery of an executed counterpart of a signature page to this
Guaranty by telecopier shall be effective as delivery of a manually executed
counterpart of this Guaranty.
SECTION 19. AMENDMENTS; WAIVERS; ETC. No amendment or waiver of any
-------------------------
provision of this Guaranty, and no consent to any departure by any Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent and each Guarantor, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No failure on the part of the Agent to exercise, and no delay
in exercising any right hereunder, shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 20. GOVERNING LAW. This Guaranty shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
SECTION 21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
----------------------------------------------
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS
AVAILABLE. EACH GUARANTOR IRREVOCABLY DESIGNATES AND APPOINTS THE PRENTICE HALL
CORPORATION SYSTEM, INC., ONE GULF & WESTERN PLAZA, NEW YORK, NEW YORK 10023 AS
ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH COURT,
SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY SUCH PERSONS TO BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT. EACH GUARANTOR IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE SIGNATURE PAGES HEREOF,
SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING. EACH OF THE
GUARANTORS, THE AGENT, AND THE LENDERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED UPON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE AGENT TO BRING PROCEEDINGS AGAINST ANY GUARANTOR IN THE
COURTS OF ANY OTHER JURISDICTION.
SECTION 22. WAIVER OF JURY TRIAL. EACH OF THE GUARANTORS, THE AGENT
--------------------
AND THE LENDERS IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE ACTIONS OF THE AGENT OR ANY
LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
9
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
BLUE BELL LEASE, INC.,
a California corporation
By /s/ JOHN K. OTTO
---------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
------------------------------
LOS ANGELES, CALIFORNIA 90024
------------------------------
Attention: TREASURER
-------------------
METROPOLITAN FINANCIAL SERVICES
CORPORATION,
a Colorado corporation
By /s/ JOHN K. OTTO
---------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
------------------------------
LOS ANGELES, CALIFORNIA 90024
------------------------------
Attention: TREASURER
-------------------
PARK CHEMICAL COMPANY,
a Michigan corporation
By /s/ JOHN K. OTTO
---------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
------------------------------
LOS ANGELES, CALIFORNIA 90024
------------------------------
Attention: TREASURER
-------------------
S-1
<PAGE>
WHITTAKER CONTROLS, INC.,
a California Corporation
By /s/ JOHN K. OTTO
---------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
------------------------------
LOS ANGELES, CALIFORNIA 90024
------------------------------
Attention: TREASURER
-------------------
WHITTAKER CORP.,
a Maine corporation
By /s/ JOHN K. OTTO
---------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
------------------------------
LOS ANGELES, CALIFORNIA 90024
------------------------------
Attention: TREASURER
-------------------
WHITTAKER ORDNANCE, INC.,
a Delaware corporation
By /s/ JOHN K. OTTO
---------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
------------------------------
LOS ANGELES, CALIFORNIA 90024
------------------------------
Attention: TREASURER
-------------------
S-2
<PAGE>
WHITTAKER PORTA BELLA
DEVELOPMENT, INC.,
a California corporation
By /s/ JOHN K. OTTO
---------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
------------------------------
LOS ANGELES, CALIFORNIA 90024
------------------------------
Attention: TREASURER
-------------------
WHITTAKER SERVICES CORPORATION,
a California corporation
By /s/ JOHN K. OTTO
---------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
------------------------------
LOS ANGELES, CALIFORNIA 90024
------------------------------
Attention: TREASURER
-------------------
WHITTAKER TECHNICAL PRODUCTS,
INC.,
a Colorado corporation
By /s/ JOHN K. OTTO
---------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
------------------------------
LOS ANGELES, CALIFORNIA 90024
------------------------------
Attention: TREASURER
-------------------
S-3
<PAGE>
WHITTAKER DEVELOPMENT CO.,
a Delaware corporation
By /s/ JOHN K. OTTO
---------------------------
Title: TREASURER
Notice Address:
10880 WILSHIRE BLVD. SUITE 800
------------------------------
LOS ANGELES, CALIFORNIA 90024
------------------------------
Attention: TREASURER
-------------------
S-4
<PAGE>
EXHIBIT 10.9
AMENDED AND RESTATED
WHITTAKER CORPORATION
LONG-TERM STOCK INCENTIVE PLAN (1989)
SECTION 1. Purpose
The purposes of the Whittaker Corporation Long-Term Incentive Plan
(1989)(the "Plan") are to promote the interests of Whittaker Corporation (the
"Company") and its shareholders by (i) attracting and retaining executive
personnel and other key employees of outstanding ability; (ii) motivating
executive personnel and other key employees, by means of performance-related
incentives, to achieve longer-range performance goals; and (iii) enabling such
employees to participate in the long-term growth and financial success of the
Company.
SECTION 2. Definitions
"Affiliate" shall mean any corporation or other entity which is not a
Subsidiary but as to which the Company possesses a direct or indirect ownership
interest and has representation on the board of directors or any similar
governing body.
"Award" shall mean a grant or award under Sections 6 through 10, inclusive,
of the Plan, as evidenced in a written document delivered to a Participant as
provided in Section 11(b).
"Board of Directors" shall mean the board of directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean the Compensation and Stock Option Committee of the
Board of Directors.
"Common Stock" or "Stock" shall mean the common stock, par value $.01 per
share, of the Company.
"Corporation" shall mean the Company and its Subsidiaries and Affiliates.
"Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the
<PAGE>
Committee, to receive amounts due the Participant in the event of the
Participant's death. In the absence of an effective designation by the
Participant, Designated Beneficiary shall mean the Participant's estate.
"Employee" shall mean any employee of the Corporation.
"Incentive Stock Option" shall mean a stock option granted under Section 6
which is intended to meet the requirements of Section 422(b) of the Code.
"Nonqualified Stock Option" shall mean a stock option granted under Section
6 which is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Nonqualified Stock
Option.
"Participant" shall mean an Employee who is selected by the Committee to
receive an Award under the Plan.
"Payment Value" of an earned Performance Share shall mean the fair market
value of a share of Common Stock on the day of the Committee's determination
under Section 8(c)(2) with respect to the applicable Performance Cycle.
"Performance Cycle" or "Cycle" shall mean the period of years selected by
the Committee during which performance is measured for the purpose of
determining the extent to which an award of Performance Shares has been earned.
"Performance Goals" shall mean the objectives established by the Committee
for a Performance Cycle, for the purpose of determining the extent to which
Performance Shares which have been contingently awarded for such Cycle are
earned.
"Performance Share" shall mean an Award granted pursuant to Section 8 of
the Plan.
"Restricted Period" shall mean the period selected by the Committee during
which a grant of Restricted Stock or Restricted Stock Units may be forfeited to
the Company.
"Restricted Stock" shall mean shares of Common Stock contingently granted
to a Participant under Section 9 of the Plan.
"Restricted Stock Unit" shall mean a fixed or variable dollar denominated
unit contingently awarded under Section 9 of the Plan.
2
<PAGE>
"Stock Appreciation Right" shall mean a right granted under Section 7.
"Stock Unit Award" shall mean an award of Common Stock or units granted
under Section 10.
"Subsidiary" shall mean any corporation or other entity in which the
Company possesses directly or indirectly 50% or more of the total combined
voting power.
"Substitute Awards" shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by
the Company or with which the Company combines.
SECTION 3. Administration
The Plan shall be administered by the Committee. The Committee shall have
sole and complete authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time deem advisable, and to interpret the terms and provisions of
the Plan. The Committee may delegate to one or more executive officers of the
Company the power to make Awards to Participants who are not executive officers
or directors of the Company provided the Committee shall fix the maximum amount
of such Awards for the group and a maximum for any one Participant. The
Committee's decisions, or the decisions of its delegates, shall be binding upon
all persons, including the Company, stockholders, employees, Participants and
Designated Beneficiaries.
SECTION 4. Eligibility
All Employees who, in the opinion of the Committee, have the capacity for
contributing in a substantial measure to the successful performance of the
Company are eligible to be Participants in the Plan.
SECTION 5. Maximum Amount Available for Awards
(a) The maximum number of shares of Stock in respect of which Awards may
be granted under the Plan shall be [2,000,000] shares of Common Stock. No
executive officer of the Company may receive Awards under the Plan in any
calendar year that relate to more than 200,000 shares of Stock. Shares of
Common Stock may be made available from the authorized but unissued shares of
the Company or from shares reacquired by the Company, including shares purchased
in the open market. In the event that (i) an Option or Stock Appreciation Right
expires or is terminated unexercised as to any shares of Common Stock covered
thereby or (ii) any Award in respect of shares of Common Stock is
3
<PAGE>
forfeited or otherwise cancelled for any reason under the Plan, such shares
shall thereafter be again available for award pursuant to the Plan; provided
that if an Option or Stock Appreciation Right is cancelled, the shares covered
by the cancelled Option or Stock Appreciation Right shall continue to be counted
against the maximum number of shares for which Awards may be made under the Plan
to an executive officer of the Company in a calendar year. In the event that
any Option or other Award granted hereunder is exercised through the delivery of
shares of Stock, the number of shares of Stock available for Awards under the
Plan shall be increased by the number of shares of Stock surrendered.
(b) In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, securities or other property),
recapitalization, reorganization, merger, consolidation, split-up, spinoff,
combination, repurchase or exchange of shares, issuance of warrants or other
rights to purchase Common Stock at a price below fair market value or other
similar corporate event affects the Common Stock such that an adjustment is
required in order to preserve the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in its sole discretion,
and in such manner as the Committee may deem equitable, adjust any or all of (1)
the number and kind of shares which may thereafter be made the subject of
Awards, (2) the number and kind of shares (or other securities or assets)
subject to outstanding Awards, and (3) the grant or exercise price with respect
to any Award and/or, if deemed appropriate, make provision for a cash payment to
a Participant or a person who has an outstanding Award; provided that the number
of shares subject to any Award shall always be a whole number.
(c) Any shares of Common Stock underlying Substitute Awards shall not,
except in the case of Substitute Awards granted to Employees who are officers or
directors of the Company for purposes of Section 16 of the Securities Exchange
Act of 1934 or any successor section thereto, be counted against the shares of
Common Stock available for Awards under the Plan.
4
<PAGE>
SECTION 6. Stock Options
(a) Grant. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to whom Options
shall be granted, the number of shares to be covered by each Option, the option
price therefor and the conditions and limitations applicable to the exercise of
the Option. The Committee shall establish the option price at the time each
Option is granted, which price, except in the case of an Option that is a
Substitute Award, shall not be less than 100% of the fair market value of the
Common Stock on the date of grant (determined in accordance with procedures
established by the Committee). The Committee may authorize the grant of
Incentive Stock Options, Nonqualified Stock Options or both. In the case of
Incentive Stock Options, the terms and conditions of such grants shall be
subject to and comply with such rules as may be prescribed by Section 422 of the
Code and any implementing regulations.
(b) Exercise. (1) Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award or thereafter, provided, however,
that in no event may any Option granted hereunder be exercisable after the
expiration of 10 years from the date of such grant. The Committee may impose
such conditions with respect to the exercise of Options, including any relating
to applicable federal or state securities laws, as it may deem necessary or
advisable.
(2) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in cash, or its equivalent, or, if and to the extent
permitted by the Committee, by exchanging shares of Common Stock owned by the
optionee (which are not the subject of any pledge or other security interest),
or by a combination of the foregoing; provided that the combined value of all
cash and cash equivalents and the fair market value of any such Common Stock so
tendered to the Company, valued (in accordance with procedures established by
the Committee) as of the date of such tender, is at least equal to such option
price.
SECTION 7. Stock Appreciation Rights
(a) Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees to whom Stock Appreciation
Rights shall be granted, the number of shares to be covered by each Stock
Appreciation Right, the grant price thereof and the conditions and limitations
applicable to the exercise
5
<PAGE>
thereof. Stock Appreciation Rights may be granted in tandem with an Option, in
addition to an Option or freestanding and unrelated to an Option. Stock
Appreciation Rights granted in tandem with or in addition to an Option may be
granted either at the same time as the Option or at a later time. Stock
Appreciation Rights shall not be exercisable earlier than six months after grant
nor after the expiration of 10 years from the date of grant, and except for
Stock Appreciation Rights which are Substitute Awards, shall have a grant price
of not less than 100% of the fair market value of the Common Stock on the date
of grant or, if granted in tandem with an Option but at a later time, on the
date of grant of such Option (determined in accordance with procedures
established by the Committee).
(b) Each Stock Appreciation Right shall entitle the Participant to receive
from the Company with respect to each share covered thereby an amount equal to
the excess of the fair market value of a share of Common Stock on the date of
exercise of the Stock Appreciation Right over the grant price, provided that the
Committee may for administrative convenience determine that, for any Stock
Appreciation Right, that is not related to an Incentive Stock Option and that
can be exercised only during limited periods of time in order to satisfy the
conditions of certain rules of the Securities and Exchange Commission, the
exercise of any such Stock Appreciation Right for cash during such limited
period shall be deemed to occur for all purposes hereunder on the day during
such limited period on which the fair market value of the Stock is the highest.
Any such determination by the Committee may be changed by the Committee from
time to time and may govern the exercise of Stock Appreciation Rights granted or
exercised prior to such determination as well as Stock Appreciation Rights
granted or exercised thereafter. The Committee shall determine upon the
exercise of a Stock Appreciation Right whether such Stock Appreciation Right
shall be settled in cash, shares of Common Stock or a combination of cash and
shares of Common Stock.
SECTION 8. Performance Shares
(a) Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees who shall be granted
Performance Shares, the number of Performance Shares to be granted to each
Participant for each Performance Cycle, the Performance Goals for each
Performance Cycle, the duration of each Performance Cycle and the value of each
Performance Share. There may be more than one Performance Cycle in existence at
any one time, and the durations of Performance Cycles may differ from each
other.
6
<PAGE>
(b) The Committee shall establish Performance Goals for each Cycle on the
basis of such criteria and to accomplish such objectives as the Committee may
from time to time select. During any Cycle, the Committee may adjust the
Performance Goals for such Cycle as it deems equitable in recognition of unusual
or nonrecurring events affecting the Corporation or changes in applicable tax
laws or accounting principles or such other factors as the Committee may
determine.
(c) (1) The Committee shall, as soon as practicable after the expiration
of each Performance Cycle, determine the number of Performance Shares which have
been earned on the basis of performance in relation to the Performance Goals
established for such Performance Cycle.
(2) Payment Values of earned Performance Shares shall be distributed to
the Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable after the Committee's determination under
paragraph (1) above. The Committee shall determine whether Payment Values are
to be distributed in the form of cash, shares of Common Stock or a combination
of cash and shares of Common Stock.
SECTION 9. Restricted Stock and Restricted Stock Units
(a) Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees to whom shares of Restricted
Stock and Restricted Stock Units shall be granted, the number of shares of
Restricted Stock and the number of Restricted Stock Units to be granted to each
Participant, the duration of the Restricted Period during which, and the
conditions under which, the Restricted Stock and Restricted Stock Units may be
forfeited to the Company, and the other terms and conditions of such Awards.
(b) Shares of Restricted Stock and Restricted Stock Units may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as herein
provided, during the Restricted Period. Certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and deposited by him, together with a stock power endorsed in blank, with the
Company or in escrow with an escrow agent designated by the Company. At the
expiration of the Restricted Period, the Company shall deliver or cause such
certificates to be delivered to the Participant. Payment for Restricted Stock
Units shall be made by the Corporation in cash, shares of Common Stock or a
combination of cash and shares of Common Stock.
SECTION 10. Other Stock Based Awards
7
<PAGE>
(a) In addition to Awards granted pursuant to other provisions of the
Plan, subject to the provisions of the Plan, the Committee shall have sole and
complete discretion to authorize the grant to Participants of Stock Unit Awards
which can be in the form of Common Stock or units, the value of which is based,
in whole or in part, on the value of Common Stock. Subject to the provisions of
the Plan, including Section 10(b) below, Stock Unit Awards shall be subject to
such terms, restrictions, conditions, vesting requirements and payment rules
(all of which are sometimes hereinafter collectively referred to as "rules") as
the Committee may determine in its sole and complete discretion at the time of
grant. The rules need not be identical for each Stock Unit Award.
(b) In the sole and complete discretion of the Committee, a Stock Unit
Award may be granted subject to the following rules:
(1) Any shares of Common Stock which are part of a Stock Unit Award
may not be assigned, sold, transferred, pledged or otherwise encumbered
prior to the date on which the shares are issued or, if later, the date
provided by the Committee at the time of grant of the Stock Unit Award.
(2) Stock Unit Awards may provide for the payment of cash
consideration by the person to whom such Award is granted or provide that
the Award, and any Common Stock to be issued in connection therewith, if
applicable, shall be delivered without the payment of cash consideration;
provided that for any Common Stock to be purchased in connection with a
Stock Unit Award, except in the case of a Stock Unit Award which is a
Substitute Award, the purchase price shall be at least 50% of the fair
market value of such Common Stock on the date such Award is granted
(determined in accordance with procedures established by the Committee).
(3) Stock Unit Awards may be made subject, in whole or in part, to
the achievement of certain performance targets established by the Committee
at the time of grant.
(4) Stock Unit Awards may provide for deferred payment schedules
and/or vesting over a specified period of employment.
(5) In such circumstances as the Committee may deem advisable, the
Committee may waive or otherwise remove, in whole or in part, any
restriction or
8
<PAGE>
limitation to which a Stock Unit Award was made subject at the time of
grant.
(c) In the sole and complete discretion of the Committee, an Award,
whether made as a Stock Unit Award under this Section 10 or as an Award granted
pursuant to Sections 6 through 9, may provide the Participant with (i) dividends
or dividend equivalents (payable on a current or deferred basis) and (ii) cash
payments in lieu of or in addition to an Award.
SECTION 11. General Provisions
(a) Withholding. The Corporation shall have the right to deduct from all
amounts paid in cash to a Participant or Designated Beneficiary (whether under
the Plan or otherwise) any taxes that the Corporation reasonably determined to
be required by law to be withheld in respect of Awards to such Participant or
Designated Beneficiary. In the case of payments of Awards in the form of Common
Stock, at the Committee's discretion the Participant of Designated Beneficiary
may be required by law to pay to the Corporation the amount of any taxes
required to be withheld with respect to such Common Stock, or in lieu thereof,
the Corporation shall have the right to retain (or the Participant or Designated
Beneficiary may be offered the opportunity to elect to tender) the number of
shares of Common Stock whose fair market value, determined in accordance with
procedures established by the Committee, equals the amount that the Corporation
reasonably determined to be required to be withheld.
(b) Awards. Each Award hereunder shall be evidenced by a writing
delivered to the Participant which shall specify the terms and conditions
thereof and any rules applicable thereto, including the effect on such Award of
the death, retirement or other termination of employment of the Participant and
the effect thereon, if any, of a change in control of the Company.
(c) Nontransferability. No Award shall be assignable or transferable, and
no right or interest of any Participant shall be subject to any lien, obligation
or liability of the Participant, except by will or the laws of descent and
distribution, provided, however, that an Award may be transferable, to the
-----------------
extent set forth in the applicable Award agreement, if the Award is not an
Incentive, (i) such Award agreement provisions do not disqualify such Award for
exemption under Rule 16b-3 under the Securities Exchange Act of 1934, or (ii)
such Award is not intended to qualify for exemption under such rule.
9
<PAGE>
(d) No Right to Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Corporation. Further,
the Corporation may at any time dismiss a Participant free from any liability,
or any claim under the Plan, except as provided herein or in any agreement
entered into with respect to an Award.
(e) No Rights as Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she has become the holder thereof. Notwithstanding the
foregoing, in connection with each grant of Restricted Stock hereunder, the
applicable Award shall specify if and to what extent the Participant shall not
be entitled to the rights of a stockholder in respect of such Restricted Stock.
(f) Construction of the Plan. The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely in accordance with the
laws of the State of Delaware.
(g) Effective Date. Subject to the approval of the stockholders of the
Company, the Plan shall be effective on the date of initial stockholder
approval. No Awards may be granted under the Plan after the tenth anniversary
of the date of the initial stockholder approval.
(h) Amendment of Plan. The Board of Directors may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement with which or for
which the Board deems it necessary or desirable for the Plan to comply or
qualify, including for these purposes any approval requirement which is a
prerequisite for exemptive relief from Section 16(b) of the Securities Exchange
Act of 1934. Notwithstanding anything to the contrary contained herein, the
Committee may amend the Plan in such manner as may be necessary so as to have
the Plan conform with local rules and regulations.
(i) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award with the Participant's consent at any time prior to payment or
exercise in any manner not inconsistent with the terms of the Plan, including
(1) to change the date or dates as of which (A) an Option or Stock Appreciation
Right becomes exercisable, (B) a Performance Share is deemed earned or (C)
10
<PAGE>
Restricted Stock or a Restricted Stock Unit becomes nonforfeitable or (2) to
cancel and reissue an Award under such different terms and conditions as it
determines, in its sole and complete discretion.
11
<PAGE>
EXHIBIT 11
<TABLE>
<CAPTION>
WHITTAKER CORPORATION
CALCULATION OF EARNINGS PER SHARE
Stated in Thousands of Dollars
----------------------------------------------------------------
Year Ended October 31,
----------------------------------------------------------------
1994 1993 1992
---------------------- ------------------ ----------------
PRIMARY EARNINGS PER SHARE
- - --------------------------
<S> <C> <C> <C>
Earnings
Income $10,061 $7,256 $15,677
Deduct:
Dividends on preferred stock -
$5.00 convertible preferred series (12) (12) (12)
----------- ---------- -----------
Net income used in primary earnings
per share calculations $10,049 $7,244 $15,665
=========== ========== ===========
Average Common and Common Equivalent Shares in (000)
Weighted average number of common shares
outstanding 8,481 8,281 8,149
Common equivalent shares -
Series D participating convertible
preferred stock 292 316 324
Stock options included under treasury
stock method 729 894 934
----------- ---------- -----------
TOTAL 9,502 9,491 9,407
=========== ========== ===========
Primary Earnings Per Share $1.06 $0.76 $1.66
=========== ========== ===========
</TABLE>
<PAGE>
WHITTAKER CORPORATION
CALCULATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Stated in Thousands of Dollars
----------------------------------------------------------------
Year Ended October 31,
----------------------------------------------------------------
1994 1993 1992
---------------------- ------------------ ----------------
PRIMARY EARNINGS PER SHARE
- - --------------------------
<S> <C> <C> <C>
Earnings
Income used in primary earnings per
share calculation (above) 10,049 7,244 15,665
Adjustments - - -
Net income used in fully diluted earnings ----------- ---------- -----------
per share calculations $10,049 $7,244 $15,665
=========== ========== ===========
Average Shares used to Calculate Fully Diluted
Earnings Per Share in (000)
Average common and common equivelent
shares (above) 9,502 9,491 9,407
Add:
Additional stock options included
under treasury stock method 88 32 30
----------- ---------- -----------
TOTAL 9,590 9,523 9,437
=========== ========== ===========
Fully Diluted Earnings Per Share $1.05 $0.76 $1.66
=========== ========== ===========
</TABLE>
<PAGE>
WHITTAKER CORPORATION
CALCULATION OF EARNINGS PER SHARE
NOTES
(A) In connection with those securities outstanding prior to June 1, 1969 the
Company elected under paragraph 46 of APB Opinion Number 15 to classify as
common stock equivalents only those which were classified as residual
securities under APB Opinion Number 9.
(B) Earnings per share have been computed based on the weighted average number
of common and common equivalent shares outstanding during the periods,
after deducting from net income the dividend requirements on the
outstanding $5.00 cumulative convertible stock. Common stock equivelents
include series D participating convertible preferred stock and dilutive
employee stock options, calculated using the treasury stock method.
<PAGE>
EXHIBIT 21
WHITTAKER CORPORATION
a Delaware corporation
ACTIVE SUBSIDIARIES
<TABLE>
<CAPTION>
Place of % Ownership
Name of Company Incorporation (# Shares)
- - ---------------------------------- ------------- -------------------
<S> <C> <C>
Blue Bell Lease, Inc. California 100% ( 1,000)
Metropolitan Financial
Services Corporation Colorado 100% ( 100)
Park Chemical Company Michigan 100% ( 1,000)
Whittaker Communications Limited England 100% ( 1,000)
Whittaker Controls, Inc. California 100% ( 1,000)
Whittaker Corp. Maine 100% ( 1,000)
Whittaker International, Inc. Barbados 100% ( 1,000)
Whittaker Ordnance, Inc. Delaware 100% ( 1)
Whittaker Political Action
Committee, Inc. California 100% ( 100)
Whittaker Porta Bella
Development, Inc. California 100% ( 1,000)
Whittaker Services Corporation California 100% ( 1,000)
Whittaker Technical Products, Colorado 100% ( 1,000)
Inc.
Division:
Whittaker Power Storage Systems
</TABLE>
12/13/94
<PAGE>
INACTIVE SUBSIDIARIES
---------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Whittaker Development Co. Delaware 100% ( 1,000)
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Post-Effective Amendment
Number 2 to Registration Statement Number 2-74481 on Form S-8 dated January 28,
1983, as amended and supplemented to date, Post-Effective Amendment Number 3 to
Registration Statement Number 2-74481 on Form S-8 dated October 10, 1983, Post-
Effective Amendment Number 1 to Registration Statement Number 2-97149 on Form
S-8 dated September 30, 1985, Post-Effective Amendment Number 3 to Registration
Statement Number 2-76480 on Form S-8 dated April 22, 1985, Post-Effective
Amendment Number 2 to Registration Statement Number 2-70806 on Form S-8 dated
May 20, 1981, Post-Effective Amendment Numbers 2, 1-A and 1-B to Registration
Statement Number 33-04320 on Form S-4 dated March 26, 1986, as supplemented and
amended to date, Post-Effective Amendment Numbers 2-A and 2-B to Registration
Statement Number 33-04320 on Form S-8 to Form S-4 dated June 1, 1987,
Registration Statement Numbers 33-35762 and 33-35763 on Form S-8 dated July 6,
1990, and Registration Statement Number 33-52295 on Form S-8 dated February 16,
1994, of our report dated December 16, 1994, except that for Note 5 the date is
January 24, 1995 with respect to the consolidated financial statements of
Whittaker Corporation in the Annual Report (Form 10-K) for the year ended
October 31, 1994. We also consent to the reference to our firm under the
caption "Experts" in the aforementioned Registration Statements insofar as that
reference relates to our report for the year ended October 31, 1994.
ERNST & YOUNG LLP
Los Angeles, California
January 24, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-1-1993
<PERIOD-END> OCT-31-1994
<CASH> 3,507
<SECURITIES> 0
<RECEIVABLES> 65,292
<ALLOWANCES> 0
<INVENTORY> 32,013
<CURRENT-ASSETS> 118,299
<PP&E> 70,273
<DEPRECIATION> 33,506
<TOTAL-ASSETS> 209,307
<CURRENT-LIABILITIES> 36,765
<BONDS> 11,880
<COMMON> 85
0
3
<OTHER-SE> 93,862
<TOTAL-LIABILITY-AND-EQUITY> 209,307
<SALES> 126,448
<TOTAL-REVENUES> 126,448
<CGS> 73,286
<TOTAL-COSTS> 73,286
<OTHER-EXPENSES> 33,149
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,481
<INCOME-PRETAX> 16,532
<INCOME-TAX> 6,471
<INCOME-CONTINUING> 10,061
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,061
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
