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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OCTOBER 20, 1998
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(Date of earliest event reported)
COMMISSION FILE NUMBER 1-8533
DRS TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-2632319
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 SYLVAN WAY, PARSIPPANY, NEW JERSEY 07054
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(Address of principal executive offices) (Zip Code)
(973) 898-1500
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(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 20, 1998 (the "Closing Date"), DRS Technologies, Inc. ("the
Company") acquired, through certain of its subsidiaries, certain assets of the
Second Generation Ground Based Electro Optics ("Ground EO") and Focal Plane
Array ("FPA") businesses (together, the "EOS Business") of Raytheon Company and
certain of its subsidiaries ("Raytheon") (the "Acquisition"), pursuant to an
Asset Purchase Agreement dated as of July 28, 1998, between DRS and Raytheon
(the "Agreement"), as amended. The Company paid approximately $45 million in
cash for the Acquisition at closing; the purchase price is subject to certain
post-closing adjustments, to be based on audited closing date financial
statements for the EOS Business when available. Any upward adjustment may not
exceed $7 million.
The EOS Business designs, manufactures and markets products that allow
human operators and missiles to detect, recognize, identify and/or reach
military targets based on the targets' infrared ("IR") signatures, regardless of
ambient light conditions.
Ground EO, to be known as DRS Sensor Systems, Inc., designs and
manufactures second generation forward-looking IR systems for use on certain
military ground vehicles, including the M1 Abrams Main Battle Tank, M2 Bradley
Fighting Vehicle and High Mobility Multi Wheel Vehicle scout vehicle. Ground EO
currently operates primarily in El Segundo, California, with certain operations
in LaGrange, Georgia. Certain activities conducted in LaGrange will be relocated
to another Company facility. Ground EO in El Segundo will be physically
partitioned from Raytheon's other operations there and will lease 17,444 square
feet of space from Raytheon. The Company anticipates moving the El Segundo
operation to another location in the same geographic area. Ground EO has 47
employees who accepted offers of employment with the Company after the Closing.
FPA, to be known as DRS Infrared Technologies, LP, produces IR scanning
Focal Plane Arrays ("FPAs"). FPAs are two dimensional assemblies of
electro-optical detecting pixels used to generate night vision capability. FPA
operates primarily in Dallas, Texas. FPAs are also used in heat-seeking missile
guidance systems and missile warning systems, in which no pictorial image is
required. In addition to its scanning and staring arrays business, FPA is the
leading worldwide merchant supplier of cryogenic linear coolers for IR devices.
FPA is subleasing space for its operations from Raytheon at two facilities
in Dallas, Texas: one stand-alone 48,000 square foot research facility and a
partitioned
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portion measuring 61,600 square feet of a neighboring Texas Instruments
building. FPA has 186 employees who accepted offers of employment with the
Company after the Closing.
The Acquisition will be accounted for using the purchase method of
accounting. Reference is made to Item 7 for additional information.
In connection with the Acquisition, the Company and certain of its
subsidiaries entered into a $150 million secured credit facility (the
"Facility") with Mellon Bank, N.A., consisting of two term loans, the first in
the aggregate principal amount of $30 million dollars (the "First Term Loan")
and the second in the aggregate principal amount of $50 million dollars (the
"Second Term Loan") and a $70 million revolving line of credit (the "Line of
Credit"). The maturity dates of the First Term Loan and the Second Term Loan are
October 20, 2003 and October 20, 2005, respectively. The Line of Credit
termination date is October 20, 2003. The Facility amends, restates and replaces
the Company's existing $20 million term loan and $40 million revolving line of
credit. The Second Term Loan was used to finance a portion of the Acquisition.
The First Term Loan and the Line of Credit are available for working capital,
general corporate purposes and acquisitions.
ITEM 7 INFORMATION AND EXHIBITS
(a) Financial Statements:*
As it is impracticable to provide the required financial statements
for the EOS Business with this report on Form 8-K, such financial
statements will be filed by amendment to Form 8-K as soon as
practicable, but not later than 60 days after the filing of this
report.
(b) Pro Forma Financial Information:*
1. Unaudited pro forma condensed consolidated balance sheet of the
Company and subsidiaries and the EOS Business as of September 30,
1998.
2. Unaudited pro forma condensed consolidated statements of earnings
of the Company and subsidiaries and EOS Business for the fiscal
year ended March 31, 1998 and the six-month period ended
September 30, 1998.
(c) Exhibits:
1. Asset Purchase Agreement, dated as of July 28, 1998, between the
Company and Raytheon.
2. Letter Amendment, between the Company and Raytheon amending the
Asset Purchase Agreement, dated as of the Closing date.
* To be filed by amendment
2
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3. Amended and Restated Revolving Credit Loan and Term Loan
Agreement, dated as of the Closing date, by and among the
Company, DRS Technologies Canada Company, DRS Technologies
Canada, Inc., DRS EO, Inc., DRS FPA, L.P. and Mellon Bank, N.A.
3
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SIGNATURES
Pursuant to the requirements 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.
DRS TECHNOLOGIES, INC.
Registrant
Date: November 4, 1998
/s/ NANCY R. PITEK
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Nancy R. Pitek
Vice President, Finance and Treasurer
4
CONFORMED COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of the 28th
day of July, 1998, by and between RAYTHEON TI SYSTEMS, INC., a Delaware
corporation ("RTIS"), RAYTHEON COMPANY, a Delaware corporation ("Raytheon"),
RAYTHEON SYSTEMS GEORGIA, INC. ("RSG" and together with Raytheon and RTIS, the
"Sellers") and DRS TECHNOLOGIES, INC., a Delaware corporation (the "Buyer").
On July 11, 1997, RTIS, a wholly-owned subsidiary of Raytheon, purchased
the second generation and third generation scanning and staring infrared
detector businesses of Texas Instruments Incorporated, a Delaware corporation
("TI"), operated out of the Semiconductor Building and the Research West
Building located at the TI Expressway site in Dallas, Texas, including all dewar
and cryogenic cooler manufacturing and dewar and cryogenic cooler assembly.
These businesses, excluding the uncooled FPA business, is referred to in this
Agreement as the "FPA Business" (collectively, the "FPA Business").
On December 17, 1997, HE Holdings, Inc. merged with Raytheon Company, a
Delaware corporation ("Old Raytheon"), pursuant to the Agreement and Plan of
Merger, dated as of January 16, 1997 (the "Hughes Merger Agreement"), between HE
Holdings, Inc. and Old Raytheon. HE Holdings, Inc. was the surviving corporation
in the merger, and thereafter changed its name to "Raytheon Company" (referred
to herein as "Raytheon"). Raytheon and RSG own and operate the second generation
ground electro-optical business operated out of Raytheon's El Segundo,
California and LaGrange, Georgia facilities that produces A-Kits and B-Kits for
ground vehicles and other applications, including the IBAS, M-1 TIS, LRAS3 and
HTI programs (collectively, the "Ground EO Business");
Pursuant to a Final Judgment filed on October 24, 1997 (the "Final
Judgment") in the United States District Court for the District of Columbia in
Civil Case No. 97-2397 known as United States of America v. Raytheon Company,
General Motors Corp. and HE Holdings, Inc., and a related Hold Separate and
Partition Plan Stipulation and Order entered in the same case on October 24,
1997 (the "Hold Separate Order"), Raytheon has agreed to promptly divest the FPA
Business and the Ground EO Business (collectively, the "Businesses") and,
pending such divestiture, to maintain the Businesses as an independent
competitor held separate from Raytheon; and
The Sellers desire to sell and the Buyer desires to purchase the Businesses
(the "Acquisition"), and this transaction and the resulting business combination
is intended to result in the preservation of competition and a critical
capability that otherwise might be lost to the United States Department of
Defense.
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In connection with the negotiation and preparation of this Agreement, the
Sellers have prepared, and the Buyer has reviewed, a set of disclosure
schedules, dated the date hereof and delivered separately as one or more volumes
(the "Disclosure Schedule", with any reference in this Agreement to a Schedule
being a reference to the Disclosure Schedule).
Capitalized terms used herein and not otherwise defined have the meanings
set forth in Article 17.
In consideration of the mutual agreements and covenants herein contained,
the parties hereto agree as follows:
Article 1
Purchase And Sale
1.1. Acquired Assets. Subject to the terms and conditions set forth in this
Agreement, at the Closing referred to in Article 4 hereof, the Sellers shall
sell, assign, transfer and deliver to the Buyer, and the Buyer shall purchase,
acquire and take assignment and delivery of, all of the following assets of the
Sellers, with the exception of the Excluded Assets (as defined in Section 1.2)
(all of which assets are hereinafter referred to collectively as the "Acquired
Assets"):
(a) All machinery, equipment, installations, fixtures, furniture,
tools, supplies, booths, displays, materials and other personal property
used primarily in connection with either of the Businesses, including
without limitation those items described on Schedule 1.1(a) hereto, with
such additions and deletions thereto as may arise, or may have arisen, from
the date as of which such Schedule was prepared in the ordinary course of
business prior to the Closing consistent with the Sellers' obligations
under Article 8 hereof (the "Equipment");
(b) All of the Sellers' billed and unbilled accounts receivable
relating primarily to either of the Businesses outstanding on the Closing
Date, including the accounts receivable listed on Schedule 1.1(b) to the
extent not collected prior to the Closing Date, in each case to the extent
reflected on the Closing Balance Sheets (as defined in Section 3.2), as
finally adjusted pursuant to Section 3.2;
(c) All of the Sellers' inventories held for use primarily in either
of the Businesses, including raw materials, work in process (subject to the
customers' rights in the case of any government-funded work in process),
supplies, samples, prototypes and finished goods (the "Inventories"),
including the Inventories listed on Schedule 1.1(c) to the extent not
consumed in the operation of the Businesses prior to the Closing, in each
case to the extent reflected on the Closing Balance Sheets (as finally
adjusted pursuant to Section 3.2);
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(d) All of the Sellers' prepaid expenses relating primarily to either
of the Businesses and for which the Buyer will get the benefit after the
Closing, to the extent reflected on the Closing Balance Sheets (as finally
adjusted pursuant to Section 3.2);
(e) All of the Sellers' rights under all leases of personal property
used primarily in connection with either of the Businesses, including
without limitation any leases listed on Schedule 1.1(f) to the extent still
in effect on the Closing Date (the "Personal Property Leases");
(f) All of the Sellers' rights under all contracts and agreements,
including without limitation joint venture agreements, teaming agreements,
distribution agreements, service agreements, supply agreements, license
agreements, sublicense agreements, personal property leases and development
contracts, entered into by a Seller primarily in connection with either of
the Businesses, including without limitation the contracts listed on
Schedule 1.1(f), but excluding any such contracts that have been performed
in full by the Sellers prior to Closing (collectively the "Business
Contracts");
(g) All of the Sellers' rights under purchase orders, including
without limitation the purchase orders listed on Schedule 1.1(g), in each
case to the extent outstanding on the Closing Date and relating primarily
to either of the Businesses (collectively, the "Purchase Orders");
(h) All of the Sellers' rights with respect to those computer software
programs, licenses and sublicenses to be transferred to the Buyer pursuant
to the information technology partition and transition described in Section
12.9 and Schedule 12.9 (collectively, the "Transferred Software Licenses");
(i) to the extent transferable and permitted by applicable laws and
regulations, all of the Sellers' rights with respect to any licenses,
permits, consents, concessions, orders, authorizations, approvals or
registrations from, of or with any Governmental Entity (as defined in
Article 17) and relating primarily to either of the Businesses;
(j) subject to Section 12.3, all records of the Sellers relating
primarily to either of the Businesses, including, without limitation,
property records, shipping records, supplier lists, production records,
purchasing and sales records, customer lists, proposals, credit records,
accounting records and such other records as the Buyer may reasonably
require to conduct the Businesses subsequent to the Closing;
(k) if requested by the Buyer and to the extent such transfer is
permitted by applicable law, photocopies of the payroll and personnel
records (the "Personnel Records") of all the Assumed Employees (as defined
in Section 11.1) and any Optional Employees (as defined in Section 11.1)
accepting Buyer's offers of employment;
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(l) subject to Section 12.4, all sales and promotional literature and
other marketing and sales-related materials owned or used by the Sellers
primarily in connection with either of the Businesses;
(m) all files and documentation relating primarily to the Business
Contracts and programs entered into by the Sellers since the inception of
the Businesses and relating primarily to either of the Businesses; any such
materials subject to third party proprietary restrictions will be addressed
as provided in Section 12.1; and
(n) to the extent transferable, all claims, causes of action, chose in
action, rights of recovery and rights of set off of any kind against any
third parties, other than the Sellers and their Affiliates, and all rights
under and pursuant to all warranties, representations and guaranties made
by suppliers of products, materials or equipment or components thereof,
pertaining to, arising out of, and inuring to the benefit of the Sellers
and relating primarily to either of the Businesses.
1.2. Excluded Assets. Notwithstanding the foregoing, the Sellers are not
selling and the Buyer is not purchasing pursuant to this Agreement, and the term
"Acquired Assets" shall not include, any of the following assets (the "Excluded
Assets"):
(a) any of the Sellers' title to, interest in or rights with respect
to any real property other than to the extent set forth in the Lease
Agreement or Sublease Agreements (as hereinafter defined);
(b) any of the Sellers' cash, marketable or other securities,
commercial paper and cash equivalents or other investments, on hand or in
bank accounts, and all of the Sellers' bank accounts;
(c) (i) any computers not used primarily in either of the Businesses,
and any software embodied in any such computers, any communication or data
network systems not used primarily in either of the Businesses, and any
other equipment used to support either of the Businesses but not located at
the Sellers' EO Facilities or FPA Facilities, (ii) with respect to the
Ground EO Business, the Sellers' Hexagon and Ordas software (except as
provided in Section 12.21) and (iii) with respect to the Ground EO
Business, any computer and related equipment and any software made
available to the Ground EO Business pursuant to the Information Technology
Services Agreement, dated as of December 29, 1994 (the "CSC Agreement"),
among Raytheon Company (as successor to Hughes Aircraft Company), Computer
Sciences Corporation and CSC Outsourcing (with all of the assets referred
to in this clause (iii) hereinafter referred to as the "CSC Assets"); this
paragraph (c) is not meant to exclude the software to be transferred to the
Buyer pursuant to Sections 1.1(h) and 12.9;
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(d) any rights under the Asset Purchase Agreement dated as of January
4, 1997 between Raytheon (as successor to Old Raytheon) and TI, or under
any agreement entered into in connection therewith;
(e) any rights under the Hughes Merger Agreement or under any
agreement entered into in connection therewith;
(f) subject to Section 1.3 below, any other assets of the Sellers not
used primarily in either of the Businesses;
(g) the tangible assets listed on Schedule 1.3(b) hereto, which will
be made available for use by the Buyer pursuant to Section 1.3 hereto;
(h) the Request for Equitable Adjustment of Raytheon on the IBAS NDQS
contract currently pending against RTIS (the "Pending REA");
(i) except as provided in Section 12.25, any rights to any patents,
copyrights, mask works, invention disclosures, know-how, trade secrets,
technical information and other data, operating procedures, technology or
other intellectual property not included in the FPA Business Intellectual
Property and Ground EO Business Intellectual Property (as defined in
Article 17, and the transfer of which is being made pursuant to the FPA
Intellectual Property Agreement and EO Intellectual Property Agreement, as
applicable);
(j) any rights to any tradenames, trademarks or corporate names,
including, without limitation, the tradenames, trademarks or corporate
names "Raytheon", "TI," "Raytheon TI Systems," "Hughes" and any derivations
thereof; certain transitional rights to use certain of these are addressed
in the Intellectual Property Agreements (as defined in Article 9);
(k) subject to Section 12.3, all corporate records of the Sellers, the
original copies of all personnel and payroll records of the Sellers, all
financial and tax records of the Sellers relating in whole or in part to
either of the Businesses and all other records and files not relating
primarily to either of the Businesses;
(l) any insurance policies of the Sellers;
(m) any rights of the Sellers with respect to any ERISA Plans and
Non-ERISA Plans;
(n) any prepaid expenses relating to Retained Liabilities; and
(o) the Teaming and Supply Agreement dated February 27, 1996 between
TI and Societe Francaise de Detecteurs Infrarouge (the "Sofradir
Contract").
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1.3. Determinations as to Mixed-Use Assets. (a) The Sellers and the Buyer
shall cooperate in good faith to resolve any disputes as to whether any specific
assets (including, without limitation, any contracts and agreements) of the
Sellers which relate to one of the Businesses and another business of one of the
Sellers are used primarily in, or relate primarily to either of the Businesses.
Further, without limiting the foregoing, with respect to any asset necessary to
and/or presently used in connection with either Business that is also used by
either Seller in connection with another business, excluding any assets to be
retained by a Seller and used to provide services pursuant to a Master Services
Agreement (as defined in Section 9.11) and excluding these assets specifically
excluded under Section 1.2, the parties shall cooperate in good faith to
determine which business predominantly uses such asset in order that such party
is vested with title thereof.
(b) With respect to any shared use tangible assets, Sellers and the
Buyer will allocate between them the costs of maintenance, upkeep and
repair based on their respective amounts of use. The Sellers and the Buyer
will also agree on time cut-offs for this shared usage, after which the
party owning such tangible assets shall have sole rights to use the
equipment. Unless the parties otherwise agree, in no event will such
cut-off period exceed the earlier of five (5) years after the Closing Date
or the useful life of the equipment or, in the case of the Ground EO
Business, when the Buyer vacates the premises subject to the Lease (as
defined below). A list of the tangible assets subject to these shared use
arrangements is set forth in Schedule 1.3(b). With respect to any contracts
or licenses applicable to one of the Businesses and other businesses of the
Seller, the Seller and the Buyer will cooperate to structure contractual
arrangements providing them both with the relevant economic and other
rights and obligations under such contract or license. These arrangements
may take the form of a subcontract or sublicense or causing the other
parties to such contract or license to agree to split the contract or
license into two separate agreements. To the extent that any contract or
agreement constituting part of the Acquired Assets is not capable of being
assigned because of the failure to obtain any required third party consent
or otherwise, the Seller and the Buyer shall enter into arrangements of the
type contemplated by Section 12.1. With respect to software and other
information technology assets, the Sellers and the Buyer will enter into
the transition and partition arrangements described in Section 12.9.
Article 2
Assumption of Certain Obligations
Anything in this Agreement to the contrary notwithstanding, the Buyer shall
not assume, and shall not be deemed to have assumed, any liability or obligation
of any nature, fixed or contingent or known or unknown, of the Sellers or
relating to the operation of the Businesses prior to the Closing (including
without limitation the Retained Environmental Liabilities referred to below),
except that, at the Closing the Buyer shall assume, and agree to pay, perform,
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fulfill and discharge, the following obligations and liabilities of the Sellers
(collectively, the "Assumed Obligations"):
(i) all obligations and liabilities under the Business Contracts, Purchase
Orders, Personal Property Leases and Transferred Software Licenses
(collectively, the "Assumed Contracts") that relate to the performance
of the Assumed Contracts after the Closing or relate to the operation
of either Business after the Closing;
(ii) all expenses of the Sellers relating to either Business ("Assumed
Expenses") and all trade payables of the Sellers relating to either
Business (the "Assumed Payables"), to the extent, and only to the
extent, that such Assumed Expenses and Assumed Payables are reflected
on the Closing Balance Sheets (as finally adjusted pursuant to Section
3.2); and
(iii) any other liability or obligation of the Sellers relating to either
Business arising with respect to the period prior to the Closing, but
only to the extent of the amount reflected on the Closing Balance
Sheets (as finally adjusted pursuant to Section 3.2) for such
obligation or liability.
All liabilities and obligations of any nature, fixed or contingent or known
or unknown, of the Sellers or relating to the operation of the Businesses prior
to the Closing, other than the Assumed Obligations, are referred to in this
Agreement as the "Retained Liabilities". The Retained Liabilities include
without limitation:
(i) liabilities for Indebtedness (as defined in Article 17) of the
Sellers;
(ii) those liabilities for Taxes (as defined in Article 17) that remain the
responsibility of the Sellers pursuant to Article 14;
(iii) those liabilities of the Sellers under their ERISA Plans and
Non-ERISA Plans retained by them pursuant to Article 11 and under the
Retention Agreements described on Schedule 5.10;
(iv) except for any liability or obligation referred to in clauses (ii) or
(iii) of the preceding paragraph and adequately reflected on the
Closing Balance Sheet, any obligations or liabilities relating to or
arising out of the performance by the Sellers prior to Closing of
contracts (including the Assumed Contracts) in connection with the
Businesses, including (A) any Defective Pricing Claims (as defined in
Article 17) relating to contracts entered into by the Sellers prior to
Closing, (B) compliance with any governmental regulations applicable
to the performance of such contracts prior to Closing and (C)
obligations and liabilities relating to product or service warranties
or product liability or similar claims relating to the quality of
goods and services provided by the Sellers in connection
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with the Businesses prior to the Closing (including any such
liabilities or obligations relating to the pre-Closing performance of
Assumed Contracts);
(v) any alleged or actual liability for the investigation, cleanup or
removal of any Hazardous Substances, or for death or injury to person
or property, as a result of the generation, transportation, disposal,
storage, release, emission or discharge of any Hazardous Substances
onsite or offsite and in, on, under, from or onto any real property
subject to the Lease or Subleases, past or present, solely to the
extent that such liability arises out of any matter or circumstances
that occurred or existed on or before the Closing Date;
(vi) any alleged or actual liability and penalties for violations of or
noncompliance with Environmental Laws, to the extent that such
liability arises out of any matter that occurred or existed on or
before the Closing Date (with the obligations and liabilities referred
to in clause (v) and this clause (vi) collectively referred to as the
"Retained Environmental Liabilities"); and
(vii) any obligations or liabilities under the Sofradir Contract or the PPI
Supply Agreement (as defined in Section 12.16)
Article 3
Purchase Price
3.1. Purchase Price. At the Closing, the Buyer shall pay Forty-Five Million
Dollars ($45,000,000) to the Sellers, as the aggregate purchase price for the
Acquired Assets, subject to adjustment as provided in Section 3.2 hereof (the
"Purchase Price"), by wire transfer of same day funds. The Purchase Price and
the liabilities assumed by the Buyer pursuant to Article 2 shall be allocated in
the manner set forth on Schedule 3.1 hereto. The Buyer and Sellers shall report
the purchase and sale of the Acquired Assets, including, without limitation, in
all federal, foreign, state, local and other Tax Returns (as defined in Article
17) prepared and filed by or for either of the Buyer or the Sellers, in
accordance with the basis of allocation set forth on Schedule 3.1 hereto. The
Buyer and the Sellers further agree that they will prepare and file asset
acquisition statements on Form 8594 reflecting such allocation and any
Adjustment (as defined in Section 3.2(d)) with their Federal income tax returns
for the taxable year that includes the Closing Date.
3.2. Purchase Price Adjustments.
(a) Within sixty (60) days after the Closing Date, the Sellers shall
prepare and deliver to the Buyer audited statements of the Acquired Assets
and Assumed Obligations of the Businesses as of the close of business on
the day immediately preceding the Closing Date (the "Closing Balance
Sheets"). The Closing Balance Sheets
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shall be prepared in accordance with GAAP applied on a basis consistent
with the December Balance Sheets (as defined in Section 5.5), except that
(i) the Closing Balance Sheets will not contain an accrued liability for
any pending purchase order for capital equipment that has not been
delivered and put in use as of the Closing Date and (ii) the Closing
Balance Sheets will not record a book value for any fixed assets that were
recorded on the December Balance Sheets at no book value. In addition,
except as may be otherwise agreed by the Buyer, there shall be no changes
to the methodologies and assumptions used to prepare the reserves and
contract estimates reflected on the Closing Balance Sheets as compared to
the methodologies and assumptions used to prepare the December Balance
Sheets. For those items, if any, where the December Balance Sheets were not
prepared in accordance with GAAP, the Closing Balance Sheets will be
prepared in accordance with GAAP and not on the same basis as the December
Balance Sheets.
(b) When the Sellers deliver the Closing Balance Sheets, the Sellers
shall also deliver a certificate (i) certifying that the Closing Balance
Sheets were prepared in accordance with paragraph (a) above, and (ii)
containing the Sellers' calculations, based on the Closing Balance Sheets
and calculated in a manner consistent with the Model Statement (as defined
below) (the "Sellers' Proposed Calculations"), of the Net Assets as of the
Closing Date. As used in this Agreement "Net Assets" means the difference
of (x) the book value of the total assets of the Businesses constituting
the Acquired Assets less (y) the book value of the total liabilities of the
Businesses constituting the Assumed Obligations, after giving effect to the
adjustments referred to in paragraph (a) above. Attached hereto as Schedule
3.2 is a preliminary statement of Net Assets as of December 31, 1997, based
upon the December Balance Sheets and the procedures for calculating Net
Assets as provided above (the "Model Statement").
(c) Within forty-five (45) days after receipt of the Closing Balance
Sheets and the accompanying certificate, the Buyer shall notify the Sellers
of its agreement or disagreement with the Closing Balance Sheets and the
accuracy of any of the Sellers' Proposed Calculations; provided, that the
Buyer may only dispute the Closing Balance Sheets and the Sellers' Proposed
Calculations to the extent that they deviate from the requirements of
paragraphs (a) and (b) above. During such period, the Sellers shall afford
the Buyer and its representatives reasonable access to any of the Sellers'
books, records and work papers, personnel, facilities and accountants
necessary to enable the Buyer and its representatives to review the Closing
Balance Sheets and the Sellers' Proposed Calculations. If the Buyer
disputes any such aspect of the Closing Balance Sheets or the amount of any
of the Sellers' Proposed Calculations, then the Buyer shall have the right
to direct its independent accountants, at the Buyer's expense, to review
and test the Closing Balance Sheets. The Buyer's representatives or
accountants shall complete their review and test within forty-five (45)
days after the date the Buyer disputes the Sellers' Proposed Calculations.
If the Buyer and its independent accountants, after such review and test,
still disagree with the Sellers' Proposed Calculations, and the Sellers do
not accept the Buyer's proposed alternative calculation
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(the "Buyer's Proposed Calculations"), then, within thirty (30) days after
the date of the Sellers' rejection of the Buyer's Proposed Calculations,
the Sellers and the Buyer shall select a third nationally recognized
independent accounting firm (the "Independent Accounting Firm") to resolve
the remaining disputed items (the "Remaining Disputed Items") by conducting
its own review and test of the Closing Balance Sheets and thereafter
selecting either the Buyer's Proposed Calculation of the Remaining Disputed
Items or the Sellers' Proposed Calculation of the Remaining Disputed Items
or an amount in between the two. The Independent Accounting Firm shall be
instructed (i) that the scope of its review shall be limited solely to the
Remaining Disputed Items, (ii) that it shall accept the Closing Balance
Sheets and the Sellers' Proposed Calculations except to the extent that
they deviate from the requirements of paragraphs (a) and (b) above, and
(iii) that it is to use every reasonable effort to complete such assignment
and deliver copies of such opinion and, if required, revised Closing
Balance Sheets to the Buyer and the Sellers within thirty (30) days
following the date such Remaining Disputed Items are referred to it. The
Buyer and the Sellers agree that they shall be bound by the determination
of the Remaining Disputed Items by the Independent Accounting Firm. The
fees and expenses of the Independent Accounting Firm shall be paid jointly
by the Buyer and the Sellers.
(d) Upon the determination pursuant to paragraph (c) of this Section
3.2 of the definitive Closing Balance Sheets and the Net Assets as of the
Closing Date, the Purchase Price shall be either (i) increased by the
amount, if any, by which the amount of Net Assets is greater than
$28,453,598 or (ii) decreased by the amount, if any, by which the amount of
Net Assets is less than $28,453,598 (the "Adjustment"); provided however in
no event will any upward Adjustment exceed $7 million, unless the Closing
occurs after September 30, 1998 (in which event the maximum upward
Adjustment shall be subject to modification by the parties), in which case
an upward adjustment may exceed $7 million. If the Purchase Price is
increased, the Buyer shall pay such amount to the Sellers, and if the
Purchase Price is decreased, the Sellers shall pay such amount to the
Buyer. Any such payment shall be made in cash or same day funds within ten
(10) days after the determination of the Adjustment pursuant to paragraph
(c). Any such payment shall bear interest from the Closing Date to the date
preceding payment at a rate equal to the "Prime Rate" as set forth from
time to time in The Wall Street Journal "Money Rates" column from the
Closing Date to the date preceding payment.
Article 4
Closing
4.1. Time and Place. The closing of the transfer and delivery of all
documents and instruments necessary to consummate the transactions contemplated
by this Agreement (the "Closing") shall be held at the offices of Bingham Dana
LLP, 150 Federal Street, Boston, Massachusetts, on the third business day
following completion of the regulatory approval referred to in Section 7.1, or
at such other time or such other place as the Buyer and the Sellers
<PAGE>
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may agree. The date on which the Closing is actually held hereunder is sometimes
referred to herein as the "Closing Date". The Closing will be deemed to be
effective for purposes of this Agreement as of the close of business on the
Closing Date.
4.2. Transactions at Closing. At the Closing (except as provided in
paragraphs (a), (c) and (e) below):
(a) The Sellers shall duly execute and deliver to the Buyer or its
nominee or nominees such bills of sale, certificates of title and other
instruments of assignment or transfer with respect to the Acquired Assets
as the Buyer may reasonably request and as may be necessary to vest in the
Buyer all of the Sellers' title to the Acquired Assets, including a Bill of
Sale and Conveyance in the form of Exhibit A1 hereto and Patent Assignments
in the form of Exhibit A2 hereto; certain ancillary transfer instruments,
such as vehicle certificates of title, may be delivered promptly after the
Closing Date.
(b) The Buyer shall deliver the Purchase Price by wire transfer to the
Sellers.
(c) The Buyer shall duly execute and deliver to the Sellers such
instruments of assumption with respect to the Assumed Obligations as the
Sellers may reasonably request, including an Assumption Agreement in the
form of Exhibit A3 hereto; certain ancillary instruments of assumption may
be delivered promptly after the Closing Date.
(d) The Buyer and the Sellers, as applicable, shall each duly execute
and deliver the Intellectual Property Agreements, the Master Services
Agreements, the Supply Agreements, the Lease Agreement, the Sublease
Agreements and the Non-Disclosure Agreement (as such terms are defined in
Article 9 hereof and referred to collectively with this Agreement as the
"Transaction Documents").
(e) At the Closing or as promptly as practicable thereafter and
subject to the Buyer having met applicable security requirements under
applicable law, the Sellers shall deliver all such keys, locks, safe
combinations, security system codes and other similar items as the Sellers
possess for the Buyer to obtain full occupation and control of the Acquired
Assets and access to the premises subject to the Subleases and Lease
Agreement.
(f) The Buyer and TI shall enter into the TI Manufacturing Agreement
(as defined in Section 9.15).
(g) The Sellers and the Buyer, as applicable, shall deliver a
certificate of its Secretary or Assistant Secretary certifying as to (i)
the resolutions of its Board of Directors and shareholders (if applicable)
authorizing and approving the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, (ii) the incumbency of
its officers, and (iii) its By-Laws.
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(h) The Sellers and the Buyer, as applicable, shall deliver a copy of
its charter certified by the Secretary of State of the State of Delaware.
(i) The Sellers and the Buyer, as applicable, shall deliver a
certificate as to its good standing certified by the Secretary of State of
the State of Delaware.
(j) To the extent obtained in accordance with Section 12.17, the Buyer
shall receive nondisturbance agreements and estoppel certificates from TI
relating to the Subleases.
Article 5
Representations And Warranties Of Sellers
The Sellers represent and warrant jointly and severally to the Buyer as
follows:
5.1. Incorporation; Authority. Each of the Sellers is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on the
relevant Business as now conducted.
5.2. Rights to Sell Acquired Assets; Approvals; Binding Effect. Each Seller
has all requisite corporate power and authority to enter into this Agreement and
each of the other Transaction Documents, to perform all of its agreements and
obligations hereunder and thereunder in accordance with their terms, and to sell
and transfer to the Buyer all of the Acquired Assets owned by it. The execution,
delivery and performance of this Agreement and each of the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby has been duly authorized by all necessary corporate action on the part
of the Sellers. This Agreement has been duly executed and delivered by each
Seller and constitutes, and each of the other Transaction Documents will at or
prior to the Closing be duly executed and delivered by the applicable Seller(s)
and will constitute, the legal, valid and binding obligation of such Seller
party thereto, enforceable against such Seller party thereto in accordance with
its terms, except as such validity, binding effect or enforcement may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights generally
or by equitable principles relating to the availability of remedies.
5.3. No Defaults. Except for (i) consents to transfer with respect to any
agreement or license that is part of the Acquired Assets, (ii) the consents
referred to in Section 7.1 hereof and (iii) as set forth on Schedules 9.5 or
10.5 hereto, the entering into of this Agreement, the performance and compliance
by the Sellers with the terms hereof, and the consummation of all the
transactions contemplated hereby, will not either currently, or after notice or
lapse of time or both:
(a) result in a violation of any provision of the charter, bylaws or
other organizational documents of either Seller; or
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(b) result in a violation by either Seller of any statute, regulation,
order, law, ordinance or restriction applicable to such Seller or by which
such Seller or any of the Acquired Assets is bound or subject, other than
any violation which would not have a Material Adverse Effect (as defined in
Article 17);
(c) result in a violation by either Seller of any judgment, order or
decree of any court or judicial or quasi-judicial tribunal applicable to
such Seller, other than any violation which would not have a Material
Adverse Effect;
(d) conflict with, violate, result in the breach or termination of, or
constitute a default under any contract, order, or permit to which any of
the Sellers is a party or by which any of them or any of the Acquired
Assets are bound or subject, except for any conflicts, violations,
breaches, terminations or defaults which would not have a Material Adverse
Effect; or
(e) result in the creation of any Encumbrance (as defined in Article
17) upon any of the Acquired Assets, except, in each case, for Permitted
Encumbrances (as defined in Article 17) and for Encumbrances which would
not materially hinder or impair the transactions contemplated hereby or
have a Material Adverse Effect.
5.4. Title to Assets. RTIS owns or has the right to transfer all of the
Acquired Assets relating to the FPA Business and Raytheon and RSG collectively
own or have the right to transfer all of the Acquired Assets relating to the
Ground EO Business. The Sellers have, and at and as of the Closing the Sellers
will convey to the Buyer, good and marketable title to the respective Acquired
Assets owned by them, free and clear of all Encumbrances except for Permitted
Encumbrances.
5.5. Financial Statements. The Sellers have furnished to the Buyer, and
attached as Schedule 5.5 hereto are, copies of the audited balance sheets (in
draft form) of the Ground EO Business and the FPA Business as of December 31,
1997 (the "December Balance Sheets"). Each of the December Balance Sheets has
been prepared in accordance with GAAP (subject to a lack of footnotes) and
fairly presents in all material respects the financial condition of the
applicable Business as of December 31, 1997, except as otherwise disclosed in
the notes to the December Balance Sheets.
5.6. Absence of Certain Changes. Except as set forth on Schedule 5.6, from
December 31, 1997 to the date of this Agreement the Businesses have operated
only in the ordinary course and there has not been:
(a) any change in the condition (financial or otherwise), results of
operations, assets, liabilities or business of the Businesses other than
changes arising in the ordinary course of business, none of which,
individually or in the aggregate, has had a Material Adverse Effect;
<PAGE>
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(b) any acquisition or disposition by the Sellers outside the ordinary
course of business of any asset or property used primarily in either of the
Businesses or any disposition of any asset necessary to the performance by
the Sellers of any contracts included in the Acquired Assets;
(c) any damage, destruction or casualty loss to any asset of the
Sellers and relating to either of the Businesses, whether or not covered by
insurance, which has had a Material Adverse Effect;
(d) any increase in (or commitment to increase) the compensation,
pension or other benefits payable or to become payable to any of the
officers, employees, agents or representatives of either of the Businesses
or any bonus payments or arrangements made to or with any of them, that
will constitute an Assumed Obligation, other than (i) increases amounting
to less than $25,000 individually and effected on a basis consistent with
the past practice of the Sellers and (ii) any increase required under the
terms of any of the benefit plans listed on Schedule 5.10 hereto;
(e) any voluntary forgiveness or cancellation of any debt or material
claim of either of the Businesses or any voluntary waiver of any right of
material value other than compromises of accounts receivable in the
ordinary course of business;
(f) the imposition of any Encumbrance on any of the assets of either
of the Businesses except for Permitted Encumbrances;
(g) any sale, assignment, transfer or other disposition of or lapse of
any intellectual property right or termination of any agreement under which
the Sellers (insofar as it relates to either of the Businesses) has any
right or license, the sale, assignment, transfer or other disposition,
lapse or termination of which would have a Material Adverse Effect;
(h) any lapse, termination, expiration, amendment, modification or
waiver of any contract or agreement, including any joint venture agreement,
teaming agreement, distribution agreement, supply agreement, license
agreement, personal property lease or development contract, to which the
Sellers (insofar as it relates to either of the Businesses) had been a
party, the lapse, termination, expiration, amendment, modification or
waiver of which would have a Material Adverse Effect;
(i) any intercompany transactions relating to either of the Businesses
with any Affiliate (as defined in Article 17) of the Sellers, except (i) in
the ordinary course operation of either of the Businesses or (ii) involving
consideration or transfers in any one transaction of not more than $25,000
and not more than $100,000 in the aggregate;
<PAGE>
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(j) any labor dispute (other than routine individual grievances) or
activity or proceeding by a labor union or representative thereof to
organize any employees of the Sellers involved in the Businesses who were
not subject to a collective bargaining agreement at December 31, 1997, or
any lockouts, strikes, slowdowns, work stoppages or to Sellers' knowledge,
written threats thereof by or with respect to any such employee;
(k) any investigation, institution, settlement or agreement to settle
any litigation, action or proceeding before any Governmental Entity in
connection with the Businesses including, without limitation, under the
Foreign Corrupt Practices Act;
(l) any change in any method of accounting or accounting practice or
policy used by the Sellers and relating to the Businesses including,
without limitation, with respect to the reserves for certain Ground EO
Business contracts as set forth on Schedule 5.6(l); or
(m) in connection with the Businesses, any agreement to incur, assume
or become subject to, any liabilities or obligations for returns or
allowances, other than in the ordinary course of business and consistent
with past practice, or any increase, or any change in any assumption
underlying, or methods of calculating, any bad debt, contingency or other
reserve.
5.7. Litigation, Etc. As of the date of this Agreement, no proceeding,
arbitration, action or suit is pending or, to the knowledge of the Sellers,
threatened against either Seller (insofar as it relates to either of the
Businesses, the Acquired Assets, the Assumed Obligations or the transactions
contemplated hereby), except as set forth on Schedule 5.7 hereto and except for
any such proceeding, arbitration, action, or suit that, singly or in the
aggregate, would not have a Material Adverse Effect. As of the date of this
Agreement, neither Seller (insofar as it relates to either of the Businesses)
has received any written notice from any Governmental Entity of any pending or
threatened governmental investigation relating to either of the Businesses
which, if concluded with a determination adverse to either of the Businesses,
would have a Material Adverse Effect. Except as set forth on Schedule 5.7
hereof, as of the date of this Agreement, there are no outstanding orders,
writs, judgments, injunctions, awards or decrees of any Governmental Entity
involving or affecting the Sellers relating to the Acquired Assets, the Assumed
Liabilities or the Businesses or the transactions contemplated hereby. As of the
date of this Agreement, the Sellers are not in default with respect to any writ,
injunction, decree known to or served upon it from any Governmental Entity,
except for any such defaults which would not have a Material Adverse Effect.
5.8. Labor Relations. (a) Except as set forth in Schedule 5.8 attached
hereto, as of the date of this Agreement the Sellers are in compliance with all
federal, state and local labor employment laws, except for any noncompliance
which would not have a Material Adverse Effect. Except as set forth on Schedule
5.8, as of the date of this Agreement there is no charge pending or, to the
knowledge of the Sellers, threatened against either Seller alleging, with
respect to any employee or employees of either of the Businesses, any breach of
contract, any
<PAGE>
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violation of any statute or regulation relating to employment and employment
practices, or any violation of any collective bargaining agreement, any unlawful
discrimination in employment practices or any unfair labor practices before any
court, agency, or other judicial or arbitral body, except for any such violation
that would not have a Material Adverse Effect. As of the date of this Agreement,
there is no labor strike, dispute, slow-down or work stoppage actually pending
or, to the Sellers' knowledge, threatened against the Sellers (with respect to
employees of the Businesses). Except as set forth on Schedule 5.8, no employees
of either of the Businesses are covered by any collective bargaining agreement,
and no collective bargaining agreement or other labor union agreement or
agreement with organized labor for employees of either of the Businesses is
currently being negotiated or pending negotiation. Except as set forth on
Schedule 5.8 hereto, there has been no material concerted work stoppage with
respect to either of the Businesses during the last three years.
(b) All individuals who are performing services for the Businesses as
of the date of this Agreement and are treated by the Sellers as
"independent contractors" for purposes of tax withholding and related
compensation issues qualify for such treatment, except for such instances
which are not, in the aggregate, material.
5.9. Contracts. Except for contracts, commitments, plans, agreements and
licenses listed on Schedule 1.1(f), Schedule 1.1(g), Schedule 5.9 or Schedule
5.10, as of the date of this Agreement, no Seller (insofar as it relates
primarily to either of the Businesses) is a party to or otherwise bound by:
(a) any contract or purchase order to sell products or provide
services to any customer (i) providing for payments in excess of $25,000 or
(ii) not cancelable within sixty (60) days;
(b) except for any contract or agreement that is terminable upon less
than 90 days' notice by either Seller or that will not constitute an
Assumed Obligation, any contract or agreement with any director, officer or
employee of either of the Businesses;
(c) (i) any contract for the lease or sublease as lessee, lessor,
sublessee or sublessor of real or personal property of either of the
Businesses, or (ii) except for the CSC Agreement, any license of computer
software used primarily in either of the Businesses, in the case of this
clause (ii) requiring payments in excess of $25,000 per year;
(d) except for purchase orders issued in the ordinary course of
business, any contract requiring payments in excess of $25,000 for the
purchase or sale of any personal property used primarily in the Businesses;
(e) any contract or agreement containing non-competition covenants
limiting the freedom of either of the Sellers to operate the Businesses or
to compete in any line of business with any Person in any geographic area
or during any period of time, or, except
<PAGE>
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as set forth on Attachment 3 or Attachment 5 to the FPA Intellectual
Property Agreement or Attachment 2 or Attachment 4 to the EO Intellectual
Property Agreement, any agreement granting a license or other right with
respect to the FPA Business Intellectual Property or RTIS Intellectual
Property (each as defined in the FPA Intellectual Property Agreement)
material to the conduct of the FPA Business or any agreement granting a
license or other right with respect to the Ground EO Business Intellectual
Property or Raytheon Intellectual Property (each as defined in the EO
Business Intellectual Property Agreement) material to the conduct of the
Ground EO Business;
(f) any partnership, joint venture, teaming, consortium, or other
similar contract, arrangement or agreement;
(g) any development contracts relating primarily to either of the
Businesses and requiring estimated or actual annual expenditures by Sellers
in 1997 in excess of $100,000;
(h) any contract or agreement for guaranty, indemnity or suretyship of
Indebtedness of either of the Businesses in excess of $100,000;
(i) any contract, purchase order or purchase commitment which contains
pricing of a contingent nature; or
(j) any broker, distributor, dealer, manufacturer's representative,
franchise, agency, sales promotion, market research, marketing consulting
and advertising contracts and similar agreements to which the Sellers are a
party which are not cancelable by the Sellers on not more than 30 days
notice or without penalty or further payment in excess of $25,000.
Neither the Sellers nor, to the knowledge of the Sellers, any other party
to any contract, agreement, lease or instrument listed on Schedule 1.1(f),
Schedule 1.1(g), Schedule 5.9 or Schedule 5.10 (collectively, the "Contracts")
is, as of the date of this Agreement, in default in complying with any
provisions thereof, except for any such default that would not have a Material
Adverse Effect. The Sellers have delivered or made available to the Buyer true
and correct copies of the Contracts. Without limiting the foregoing, as of the
date of this Agreement the Sellers are neither in default with respect to any
intercompany deliveries to customers nor anticipate being in default between now
and the Closing Date with respect to such customer deliveries, except for any
such defaults which would not have a Material Adverse Effect. To the Sellers'
knowledge, as of the date of this Agreement, there is no pending written claim
or request for equitable adjustment under any Government Contract (as defined in
Article 17) either by the Sellers or any Governmental Entity that would
reasonably be expected to have a Material Adverse Effect. As of the date of this
Agreement, except where the same would not, individually or in the aggregate,
have a Material Adverse Effect, neither Seller has (i) received any written
notice of the termination or the intention of any party to terminate any
Contract,
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whether as a termination for convenience or for default of the applicable Seller
thereunder, or (ii) received any written cure notice or show cause notice (as
defined in the Federal Acquisition Regulations Part 49, P. 49.607(a) and (b),
respectively) in respect of any Government Contract. Insofar as it relates to
the Businesses, none of the Sellers has been notified of any violation of, and
to the Sellers' knowledge none of the Sellers has engaged in any violation of,
the Truth in Negotiations Act in the negotiation of any Government Contract (as
defined in Article 17). Insofar as it relates to the Businesses, as of the date
of this Agreement none of the Sellers has been notified of, and to the Sellers'
knowledge they have not engaged in, any accounting practices that does not
comply with the applicable regulations and standards of the Cost Accounting
Standard Board, except as set forth on Schedule 5.9 and except for any such
practices which would not have a Material Adverse Effect. The Businesses are in
compliance with all obligations relating to any equipment or fixtures owned by
any Governmental Entity and loaned, bailed or otherwise furnished to or held by
any part of either of the Businesses, except where the failure to so comply
would not, individually or in the aggregate, have a Material Adverse Effect.
5.10. Pensions and Benefits.
(a) Except as set forth on Schedule 5.10(a) hereto, as of the date of
this Agreement, no Seller maintains or has any obligation to make
contributions to, any employee benefit plan (an "ERISA Plan") within the
meaning of Section 3(3) of the United States Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or any other retirement, profit
sharing, stock option, stock bonus or other benefit program (a "Non-ERISA
Plan"), in either case, for the benefit of any officers, employees or
consultants of either of the Businesses. The Sellers have heretofore
delivered or made available to the Buyer copies or summaries of each such
ERISA Plan and Non-ERISA Plan and any associated funding instruments and,
with respect to any such ERISA Plan, the most recently completed annual
report (with any required attachments), the most recent IRS determination
letter, and any other advisory opinions or rulings applicable to such Plan.
(b) To the Sellers' knowledge, except as set forth on Schedule
5.10(b), all of the Sellers' ERISA Plans and Non-ERISA Plans have been
maintained and operated in all material respects in accordance with all
federal, state, provincial and local laws applicable to such plans, and the
terms and conditions of the respective plan documents.
(c) Each of the Savings Plans (within the meaning of Section 11.3) is
intended to constitute a qualified plan within the meaning of Section
401(a) of the Code, Sellers' intend to submit each such Savings Plan to the
Internal Revenue Service for a determination of its qualified status in a
timely manner, and to the knowledge of the Sellers' there is no reason to
believe that favorable determination letters will not be issued in due
course.
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(d) No collective bargaining agreements are currently in effect which
obligate Sellers to make contributions on behalf of any of the Assumed
Employees to any "employee pension benefit plan", or "employee welfare
benefit plan", as such terms are defined in Sections 3(2) and 3(1) of
ERISA, respectively, nor to any multiemployer plan, as defined in Section
3(37) of ERISA.
(e) Other than as described in this Agreement, no agreement,
commitment or obligation exists on the part of any of the Sellers which
would increase benefits available under any ERISA Plan or any Non-ERISA
Plan or which require the adoption of any new plan or program by any Seller
with respect to employees of the Businesses.
5.11. Intellectual Property. (a) The Sellers own or have the right to use
all EO/FPA Business Intellectual Property necessary to operate the Businesses on
the date hereof and as of the Closing Date, except where the failure to own or
have the right to use such EO/FPA Business Intellectual Property would not
individually or in the aggregate have a Material Adverse Effect. Pursuant to the
Intellectual Property Agreements (as defined in Article 9 hereof), and subject
to the terms, conditions and restrictions set forth therein, the Buyer shall, as
of the Closing Date, have the right to use, hold for use or otherwise exploit
(to the extent set forth in the Intellectual Property Agreements) all the EO/FPA
Business Intellectual Property in the same manner in all material respects that
such EO/FPA Business Intellectual Property is used, held for use or is otherwise
exploited by the Sellers in the applicable Business as of the date hereof and as
of the Closing Date. The EO/FPA Business Intellectual Property and the Assigned
Intellectual Property are sufficient (except for any requirements of Buyer for
commercial off the shelf software) in all material respects for the fulfillment
by the Buyer of its obligations under the Supply Agreements as they exist as of
the Closing Date and to conduct the operations of the Businesses immediately
after the Closing Date in the same manner in all material respects as such
operations were conducted prior to the Closing Date. The provisions of this
Section 5.11(a) are not intended to be and shall not be considered as any
warranty or representation that Buyer's use of such EO/FPA Business Intellectual
Property shall be free from claims of infringement which may be made by third
parties. The obligations of Sellers and the remedies of Buyer with respect to
claims of infringement are solely as set forth in Section 13.1(v) below.
(b) The EO/FPA Business Intellectual Property (other than the TI
Licensed Intellectual Property (as defined in the FPA Intellectual Property
Agreement)) is not subject to any material Encumbrances, other than
Permitted Encumbrances, and is not subject to any obligations inconsistent
with the terms of the Intellectual Property Agreements. The Sellers have
used commercially reasonable measures to protect the secrecy,
confidentiality and value of the EO/FPA Business Intellectual Property
(other than the TI Licensed Intellectual Property) material to the
operation of the Businesses. Subject to Section 5.11(e) below, no EO/FPA
Business Intellectual Property (other than the TI Licensed Intellectual
Property and any copyrighted material) material to the operation of the
Businesses has been used, divulged or appropriated for the benefit of any
Person other than the Sellers, except where such use, divulgence or
appropriation
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would not, individually or in the aggregate, have a Material Adverse Effect
and except in the ordinary course of business in connection with the
performance of contracts.
(c) Subject to Section 5.11(e) below, as of the date hereof, no Seller
has made any claim in writing of a violation, infringement, misuse or
misappropriation by others of rights of a Seller to or in connection with
any EO/FPA Business Intellectual Property.
(d) As of the date hereof, there is no pending or, to the knowledge of
Sellers, threatened claim by any third Person of a violation, infringement,
misuse or misappropriation by the Seller in connection with either of the
Businesses of any patents, trademarks, copyrights, or trade secrets owned
by any third Person, or of the invalidity of any patent included in the
EO/FPA Business Intellectual Property (other than TI Licensed Intellectual
Property), that would, individually or in the aggregate, have a Material
Adverse Effect. To the knowledge of the Sellers, except for any matters
previously disclosed to the Buyer in a letter agreement referring to this
Section, the conduct of the Businesses by the Buyer following the Closing
in the manner currently conducted by the applicable Seller will not result
in the infringement of any patent, trademark, copyright or trade secret
owned by any third Person that would, individually or in the aggregate,
have a Material Adverse Effect. There are no interferences or other
contested inter parties proceedings, either pending or, to the knowledge of
the Sellers, threatened, in any domestic or foreign copyright office,
patent and trademark office or any other Governmental Entity relating to
any pending application with respect to any material EO/FPA Business
Intellectual Property (other than TI Licensed Intellectual Property).
(e) As to the representations and warranties set forth above which
have been made expressly subject to this paragraph, it is understood that
with respect to the activities of HE Holdings, Inc., any predecessor in
interest of HE Holdings, Inc. and any affiliates thereof prior to December
17, 1997 such representation and warranties are made only to the extent of
the knowledge of Sellers.
5.12. Governmental Consent. Except for (i) the approvals required with
respect to the DOJ and DOD (as such terms are defined in Section 7.1), (ii)
consents to transfer or novations required with respect to contracts with
governments or governmental agencies, (iii) consents and approvals required
under U.S. export control laws and regulations and laws and regulations designed
to protect the national security of the United States, and (iv) for those items
set forth on Schedule 5.12, no consent, approval or authorization of or
registration, designation, declaration or filing with any Governmental Entity,
on the part of any Seller, is required in connection with the consummation of
any of the transactions contemplated hereby, except for any approval,
authorization, registration, designation, declaration or filing that, if not
obtained or made, would not have a Material Adverse Effect, and would not
materially adversely affect the ability of the Sellers to perform their
respective obligations under this Agreement.
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5.13. Compliance with Laws, Etc. Except as set forth on Schedule 5.13
hereto, each of the Sellers (insofar as it relates to the operation of either of
the Businesses) is in compliance with all laws, statutes, governmental
regulations and all judicial or administrative tribunal orders, judgments, writs
and injunctions and Permits (as defined in Section 5.20) applicable to it,
except for any noncompliance that would not have a Material Adverse Effect.
Except as set forth on Schedule 5.13, as of the date of this Agreement the
Sellers have neither received nor know of the issuance of, any written notice
from any Governmental Entity of any such violation or alleged violation.
5.14. Status and Sufficiency of Tangible Assets. (a) Schedule 5.14(a)
contains a true and complete list of all tangible personal property owned by or
leased to the Sellers primarily in connection with the Businesses (the "Tangible
Personal Property") having an original cost equal to or greater than $25,000.
With respect to Tangible Personal Property leased by the Sellers as lessee, all
leases, conditional sale contracts, franchises or licenses pursuant to which the
Sellers may hold or use (or permit others to hold or use) such Tangible Personal
Property are as of the date of this Agreement valid and in full force and effect
in all material respects, and there is not under any of such instruments any
existing default of the Sellers or, to Sellers' knowledge, of any other party
thereto, or event of default of the Sellers or, to Sellers' knowledge, of any
other party thereto or event which with notice or lapse of time or both would
constitute such a default, except for any defaults that would not have a
Material Adverse Effect. Except as disclosed in Schedule 5.14(a), the Sellers
own, lease or have the legal right to use in all material respects all Tangible
Personal Property used in the conduct of the Businesses. The Sellers have valid
and subsisting leasehold interests in all the leased Tangible Personal Property,
free and clear of all claims except as specifically set forth in Schedule
5.14(a), Permitted Encumbrances and claims which, individually or in the
aggregate, do not have or are not reasonably likely to have a Material Adverse
Effect.
(b) Except as set forth on Schedule 5.14(b), the Acquired Assets, the
Subleases and the Lease, when utilized by a labor force substantially
similar to that utilized by the Sellers for the Businesses as of the date
of this Agreement, and taken together with the services to be provided by
the Sellers pursuant to the Master Services Agreements, the partitioning
and transition efforts to be completed pursuant to Section 12.9, the Lease
and the Subleases, and the other assets to be made available to the Buyer
as provided in Section 1.3, are sufficient in all material respects for the
fulfillment by the Buyer of its obligations under the Supply Agreements as
they exist as of the Closing Date and are adequate to conduct the
operations of the Businesses immediately after the Closing Date in the same
manner in all material respects as such operations were conducted
immediately prior to the Closing Date. The preceding sentence shall not be
construed as a representation as to the adequacy or scope of the
intellectual property to be conveyed, licensed or sublicensed pursuant to
the Intellectual Property Agreements, with respect to which the Sellers are
making representations and warranties as provided in Section 5.11.
<PAGE>
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(c) The Acquired Assets constituting tangible personal property are in
good working condition, ordinary wear and tear excepted, have been properly
maintained in all material respects, are suitable in all material respects
for the purposes for which they are used, and conform in all material
respects to the requirements of all laws, ordinances and regulations
applicable to their use and ownership or lease by the Sellers; and the
buildings and structures containing the space to be subleased to the Buyer
pursuant to the Subleases and leased to the Buyer pursuant to the Lease are
suitable in all material respects and properly zoned for the purpose for
which they are currently used, have been properly maintained in all
material respects to the extent the applicable Seller is required to do so,
and there are no material outstanding work orders with respect to any
maintenance, repair or alterations to be performed by the applicable Seller
thereon.
5.15. Location of Inventories. Except for the EO Facilities and FPA
Facilities, Schedule 5.15 hereto specifies all locations at which Inventories
having an aggregate value in excess of $100,000 are located as of the date of
this Agreement.
5.16. Customers. Schedule 5.16 hereto sets forth a list of each paying
account that represented more than $50,000 of gross sales in 1997 of either of
the Businesses and the amount of sales attributable to such customers during
such period. Except as set forth in Schedule 5.16, as of the date of this
Agreement no customer listed on Schedule 5.16 has terminated or materially
reduced its purchases of merchandise or services from the Sellers.
5.17. Environmental Matters. Except as referenced on Schedule 5.17:
(a) (i) Each of the Businesses has been and currently is in compliance
with all applicable Environmental Laws except where the failure to be in
compliance would not, individually or in the aggregate, have a Material
Adverse Effect.
(ii) Each of the Businesses has all licenses, permits and
governmental consents required under Environmental Laws for the
operation of the Businesses as presently conducted (the "Environmental
Permits") and there are no violations, investigations or proceedings
nor, to the knowledge of the Sellers, are any investigations or
proceedings pending or threatened, with respect to the Environmental
Permits except where the failure to have such Environmental Permits or
where the violation, investigation or proceeding relating thereto
would not, individually or in the aggregate, have a Material Adverse
Effect. Such Environmental Permits are listed on Schedule 5.20 hereto.
(iii) Since January 1, 1997 and to the Sellers' knowledge prior
to January 1, 1997, no notice, notification, demand, request for
information, citation, summons, complaint or order has been received
by any Seller or, to the knowledge of the Sellers, is pending or
threatened by any Person against, any part of the Businesses nor has
any material penalty been assessed against any part
<PAGE>
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of the Businesses with respect to any alleged violation of any
Environmental Law or liability thereunder, other than where such
notice, notification, demand, request for information, citation,
summons, complaint or order has been fully resolved, or where
resolution would not, individually or in the aggregate, have a
Material Adverse Effect.
(iv) To the Sellers' knowledge, as of the date of this Agreement,
no Hazardous Substance has been discharged, generated, treated,
manufactured, handled, stored, transported, emitted, released or is
present at any property now or previously owned, leased or operated by
any part of the Businesses in violation of any Environmental Law,
which circumstance, individually or in the aggregate, would have a
Material Adverse Effect.
(b) Since January 1, 1997 and to the Sellers' knowledge prior to
January 1, 1997, there has been no environmental investigation conducted of
which the Sellers have knowledge in relation to the Businesses or any
property or facility now or previously owned or leased with respect to the
Businesses with respect to any matter which has had or would, individually
or in the aggregate, have a Material Adverse Effect.
(c) Insofar as it relates primarily to either of the Businesses, to
the knowledge of the Sellers no event, condition, circumstance, activity,
practice, action or plan of the Sellers has occurred or exists or is likely
to occur or exist, in each case which may interfere with or prevent
continued compliance, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, suit,
proceeding, hearing, or investigation, based on or related to the disposal,
storage, handling, manufacture, processing, distribution, use, treatment,
or transport, or the emission, discharge, release or threatened release
into the environment, of any Hazardous Substances, except for any of the
foregoing which would not have a Material Adverse Effect. To the knowledge
of the Sellers, no part of the premises occupied or used by the Sellers in
connection with the Businesses has been listed or proposed for listing on
the National Priorities List of the United States Environmental Protection
Agency or comparable state or local governmental list.
(d) Insofar as it relates to the Businesses, to the knowledge of the
Sellers no event has occurred or condition exists or operating practice is
being employed that could give rise to liability on the part of the
Sellers, either at the present time or in the future, for any losses,
liabilities, damages (whether consequential or otherwise), settlements,
penalties, interest, expenses and costs of responses (including any such
liability on account of the right of any Governmental Entity or Person, and
including closure expenses, costs of assessment, containment, removal or
response (other than monitoring transportation or disposal of materials
required to be transported or disposed of in the ordinary course of
business consistent with past practice)), other than any of the foregoing
which would not have a Material Adverse Effect, arising under any presently
<PAGE>
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effective rule or federal, state, or local statute, or any regulation that
has been promulgated pursuant thereto, or common law, as a result of or in
connection with, or alleged to be as a result of or in connection with the
following:
(i) the handling, storage, use, transportation or disposal of any
Hazardous Substances in, or, under or near or from the facilities
used by the Sellers or its predecessors;
(ii) the handling, storage, use, transportation or disposal of any
Hazardous Substances by the Sellers or its predecessors which
Hazardous Substances were a product, by-product or otherwise
resulted from the operations conducted by or on behalf of the
Sellers or its predecessors;
(iii) any intentional or unintentional emission, discharge or release
of any Hazardous Substances in or near or from facilities of the
Sellers into or upon the air, surface water, ground water or land
or any disposal, handling, manufacturing, processing,
distribution, use, treatment, or transport of such Hazardous
Substances in or near or from facilities by or on behalf of the
Sellers or its predecessors; or
(iv) the presence of any toxic or hazardous building materials
(including but not limited to asbestos or similar substances) in
any facilities of the Sellers, including but not limited to the
inclusion of such materials in the exterior and interior walls,
floors, ceilings, tile, insulation or any other portion of
building structures.
5.18. Significant Suppliers. Set forth on Schedule 5.18 is a list of the
ten largest suppliers for each of the Businesses for 1997, together with the
amount of purchases attributable to such suppliers expressed in dollars. Except
as set forth on Schedule 5.18, no supplier listed on Schedule 5.18 during the
past year has terminated, materially reduced or threatened to terminate or
materially reduce its provision of merchandise or services to, the Sellers.
Copies of the Sellers' standard terms and conditions for purchase orders for the
Businesses are set forth in Schedule 5.18.
5.19. Transactions with Affiliates. Except for any obligations under the
Transaction Documents and as set forth on Schedule 5.19, none of the Assumed
Obligations under the Assumed Contracts will be owed to any Seller or its
Affiliate.
5.20. Licenses and Permits. Schedule 5.20 contains a complete and accurate
list of all licenses, permits and governmental authorizations ("Permits") held
by the Sellers as of the date of this Agreement primarily in connection with the
operation of the Businesses, other than any Permits that are not material to the
operation of the Businesses. The Sellers have complied with
<PAGE>
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all conditions and requirements imposed by the Permits, except for any
noncompliances which would not have a Material Adverse Effect, and as of the
date of this Agreement the Sellers have not received any written notice that any
appropriate authority intends to cancel or terminate any of the Permits listed
on Schedule 5.20. The Sellers own or have the right to use in all material
respects the Permits in accordance with the terms thereof without any material
conflict or alleged conflict or infringement with the rights of others and
subject to no material claims of others, and each Permit is valid and in full
force and effect in all material respects.
5.21. Brokers. Except for JP Morgan & Co. Incorporated, whose fees and
expenses will be paid by the Sellers, no finder, broker, agent or other
intermediary has worked for or on behalf of the Sellers in connection with the
negotiation or consummation of the transactions contemplated hereby.
Article 6
Representations and Warranties of the Buyer
The Buyer represents and warrants to the Sellers as follows:
6.1. Organization and Standing of the Buyer. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Buyer has all required corporate power and authority to
enter into this Agreement and the other Transaction Documents, to perform all of
its agreements and obligations hereunder and thereunder in accordance with their
terms and to purchase the Acquired Assets from the Sellers.
6.2. Corporate Approval; Binding Effect. The Buyer has obtained all
necessary authorizations and approvals from its Board of Directors and
shareholders required for the execution and delivery of this Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by the Buyer and constitutes, and each of the other Transaction
Documents will at or prior to the Closing be duly executed and delivered by the
Buyer and will constitute, the legal, valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms, except as such
validity, binding effect or enforcement may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally or by equitable principles
relating to the availability of remedies.
6.3. Non-Contravention. The execution, delivery and performance by the
Buyer of this Agreement and the other Transaction Documents will not result in
any violation of or be in conflict with its Certificate of Incorporation or
By-Laws, or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to it, or be in conflict with or constitute a
default under any of the foregoing.
6.4. Government Consents, Etc. Except for the approvals referred to in
clauses (i)(iv) of Section 5.12, no consent, approval or authorization of or
registration,
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designation, declaration or filing with any Governmental Entity, Federal or
other, on the part of the Buyer is required in connection with the purchase of
the Acquired Assets pursuant to this Agreement or the consummation of any other
transaction contemplated hereby.
6.5. Buyer's Capabilities. The Buyer intends to use the Acquired Assets as
part of a viable, ongoing business or businesses engaged in the development,
production and sale of FPAs and ground EO systems. The Buyer has the managerial,
operational and financial capability to compete effectively in the development,
production and sale of FPAs and ground EO systems and is eligible to receive the
applicable National Industrial Security Program security clearances necessary
for such activities. The Buyer has adequate financing or financial resources
available to consummate the transactions contemplated by this Agreement.
6.6. Brokers. Except for Bear, Stearns & Co. Inc., whose fees and expenses
will be paid by the Buyer, no finder, broker, agent or other intermediary has
worked for or on behalf of the Buyer in connection with the negotiation or
consummation of the transactions contemplated hereby.
Article 7
Certain Regulatory Approvals
7.1. Department of Justice and Department of Defense. As promptly as
practicable, and in any event within two (2) business days following the
execution of this Agreement by the parties, the Sellers shall notify the U.S.
Department of Justice (the "DOJ") and the U.S. Department of Defense ("DOD") of
the proposed transaction, in accordance with the terms of Section VII of the
Final Judgment; the Sellers and the Buyer shall respond with reasonable
diligence and dispatch to any request for additional information made in
response to such notice; and the Sellers shall promptly inform the Buyer of any
written notice of objection or non-objection or other material written
communications received from the DOJ or the DOD.
7.2. Other Governmental Approvals. The Sellers and Buyer shall use
commercially reasonable efforts to obtain the governmental approvals referred to
in Sections 9.5 and 10.5 as promptly as practicable after the date of this
Agreement.
Article 8
Conduct Of Business Pending Closing
The Sellers covenant and agree that, from and after the date of this
Agreement and until the Closing, and to the extent the Sellers are permitted
under the Final Judgment and Hold Separate Order to monitor or affect the
actions of the Businesses, except as otherwise specifically consented to or
approved by the Buyer in writing:
<PAGE>
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8.1. Full Access. To the extent permitted under U.S. export control laws
and regulations, other applicable law, the Sellers' security clearances and any
third party requirements or restrictions, the Sellers shall afford to the Buyer
and its authorized representatives such access during normal business hours to
all properties, books, records, contracts and documents of the Businesses as the
Buyer shall reasonably request in connection with its review of the Businesses,
and the Sellers shall furnish or cause to be furnished to the Buyer and its
authorized representatives all such information with respect to the Businesses
as the Buyer may reasonably request. Any such investigation shall be on
reasonable prior notice and shall be carried out in such a manner as to minimize
any disruption of the Businesses.
8.2. Carry on in Regular Course. Except as may be otherwise contemplated by
this Agreement or required by any of the documents listed in any Schedule to
this Agreement and except for the transition of most of the operations of the
Ground EO Business in LaGrange, Georgia to the facility in El Segundo, the
Sellers shall carry on the Businesses in the ordinary course substantially in
the same manner as heretofore.
8.3. No General Increases. Except for any increase required under the terms
of any employment agreement or benefit plan referred to in Section 5.10 and any
increase in compensation that will not constitute an Assumed Obligation, the
Sellers shall not (i) grant any general or uniform increase in the rates of pay
of employees of either of the Businesses, except for increases in salary or
wages in the ordinary course operation of the applicable Business consistent
with past practice, or (ii) grant any general, uniform or individual increase in
the benefits under any bonus or pension plan or other contract or commitment for
the benefit of any employee of either of the Businesses, or to increase the
compensation payable or to become payable to officers, key salaried employees or
representatives of either of the Businesses, or (iii) increase any bonus,
insurance, pension or other benefit plan, payment or arrangement made to, for or
with any such officers, key salaried employees or representatives.
8.4. Sale or Acquisition of Capital Assets. Except as may be otherwise
contemplated by this Agreement, the Sellers shall not sell or otherwise dispose
of or acquire any capital assets of either of the Businesses with a historical
cost in excess of $25,000.
8.5. Insurance. The Sellers shall maintain insurance coverage for the
Businesses comparable to the insurance coverage currently in effect.
8.6. Preservation of Organization. Except as may be otherwise contemplated
by this Agreement, the Sellers shall use reasonable efforts under the applicable
circumstances to keep the organization and material business relationships of
the Businesses intact in all material respects.
8.7. Compliance with Final Judgment. Except as may be otherwise permitted
by the DOJ or the DOD, the Sellers shall use their reasonable efforts to comply
in all material respects with the terms of the Final Judgment and the Hold
Separate Order.
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8.8. Advice of Change. The Sellers shall advise the Buyer in writing,
promptly after becoming aware thereof, of any material adverse change in the
condition (financial or otherwise), operations or assets of the Businesses.
8.9. Maintenance of Obligations. Insofar as it relates to the Businesses,
the Sellers shall perform all of their material obligations under agreements
relating to or affecting their assets, properties, equipment or rights.
8.10. Compliance with Law. The Sellers shall maintain compliance in all
material respects with all applicable laws, rules, regulations, permits and
orders with respect to the Businesses.
8.11. Maintenance of Records. Insofar as it relates to the Businesses, the
Sellers shall keep adequate records and books of account in accordance with
their past practices.
8.12. Retention of Employees. The Sellers shall use commercially reasonable
efforts to retain the employees of the Businesses during the period between the
execution of this Agreement and the Closing Date and to encourage all such
employees to accept offers of employment from the Buyer, including, but not
limited to, the following:
(a) maintaining all current compensation programs or benefits programs
that are intended to assist in retaining employees;
(b) assisting the Buyer in communicating with the Sellers' employees
regarding offers of employment by the Buyer; and
(c) advising the Buyer whenever any Seller has knowledge that any "key
employee" has received an offer of employment from another employer or is
contemplating terminating employment with the Sellers; provided, however,
that the Sellers have no obligation to make any inquiries as to those
matters. For these purposes, "key employee" will be determined jointly by
the Buyer and the Sellers as soon as is reasonably practicable following
execution of this Agreement.
Nothing contained in this Section 8.12 shall prohibit the Sellers from
terminating or disciplining any individual who the Sellers believe, in their
sole discretion, should be terminated or disciplined in a manner consistent with
past practices, policies and procedures.
8.13. Disclosure of Information. Immediately upon execution of this
Agreement, the Sellers agree to provide to the Buyer a list of all employees who
are on the Sellers' payroll with respect to the Businesses regardless of whether
such individuals are actively at work, identifying each individual by title,
location, and supervisor, and further agree that they will update such list
periodically through the Closing Date as reasonably requested by the Buyer. The
Sellers will also provide the Buyer with a list of employees currently actively
working on the programs constituting part of the Businesses who are not on the
list defined by the DOJ in the Final
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Judgment. The provision of the foregoing information is not intended to give the
Buyer any right to make employment offers to such persons except as provided in
Section 11.1.
8.14. Retained Liabilities. The Sellers will discharge the Retained
Liabilities when due in accordance with past practice.
8.15. Intellectual Property. The Sellers shall not, nor shall they agree in
writing or otherwise to, (i) transfer or license to any Person or otherwise
extend, amend or modify in any material respect any rights to the EO/FPA
Intellectual Property, or enter into grants to future patent rights, other than
non-exclusive licenses in the ordinary course of business and consistent with
past practice with respect to the EO/FPA Intellectual Property and other than
the grant of any rights with respect to the Raytheon Intellectual Property (as
defined in the EO Intellectual Property Agreement) that are not inconsistent
with and do not limit any of the rights to be granted to the Buyer pursuant to
the EO Intellectual Property Agreement, or (ii) disclose any of the EO/FPA
Intellectual Property or Assigned Intellectual Property except pursuant to
confidentiality agreements consistent with past practice.
8.16. No Shopping. Prior to any termination of this Agreement pursuant to
Article 15 hereof, the Sellers shall not solicit or enter into any agreement
with respect to the sale of any substantial portion of the Businesses or of the
Acquired Assets, or any merger or other business combination of the Sellers
(solely as it relates to either of the Businesses), to or with any Person other
than the Buyer.
8.17. Interim Financials. As promptly as practicable and in no event later
than August 7, 1998, the Sellers will deliver to the Buyer internal unaudited
balance sheets of the Businesses as of June 30, 1998, which except as may be
noted in any footnotes thereto will be prepared on a basis consistent with the
December Balance Sheets and fairly present in all material respects the
financial condition of the Businesses as of such date.
Article 9
Conditions Precedent To Buyer's Obligations
The obligation of the Buyer to consummate the Closing is subject to the
satisfaction prior to or at the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Buyer):
9.1. Representations and Warranties. The representations and warranties
made by the Sellers in this Agreement shall have been correct in all material
respects when made and shall be correct in all material respects at and as of
the Closing (in each case without giving duplicative effect to any materiality
qualification contained in such representation or warranty), except to the
extent that such representations and warranties are no longer correct due to the
consummation prior to the Closing of transactions not prohibited hereby.
<PAGE>
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9.2. Compliance with Agreement. The Sellers shall have performed and
complied in all material respects with all of their obligations under this
Agreement to be performed or complied with by them prior to or at the Closing
(in each case without giving duplicative effect to any materiality qualification
contained in such obligation).
9.3. No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body in which
it will be or is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
9.4. DOJ and DOD Clearance. The DOJ and DOD shall have provided written
notice as contemplated by Section VII of the Final Judgment that they do not
object to the divestiture of the Businesses pursuant to this Agreement.
9.5. Other Government Approvals. The Buyer shall have received the required
preClosing approvals listed on Schedule 9.5.
9.6. EO Intellectual Property Agreement. Raytheon shall have entered into
the EO Intellectual Property License Agreement in the form of Exhibit B-1
attached hereto (the "EO Intellectual Property Agreement"), and the EO
Intellectual Property Agreement shall be in full force and effect. In connection
therewith, Raytheon shall have obtained the agreement of Hughes Electronics
Corporation or its Affiliates permitting Raytheon and RSG to grant the rights
set forth in Section 2.6 of the EO Intellectual Property Agreement. In the event
Hughes Electronics Corporation or its Affiliates requires changes affecting
Section 2.6 of the EO Intellectual Property Agreement, the Buyer agrees to
accept changes that do not add any additional material limitations on the
operation of the Ground EO Business.
9.7. FPA Intellectual Property Agreement. Raytheon and RSG shall have
entered into the FPA Intellectual Property Assignment, License and Sublicense
Agreement in the form of Exhibit B-2 attached hereto (the "FPA Intellectual
Property Agreement" and together with the EO Intellectual Property Agreement,
the "Intellectual Property Agreements"), and the FPA Intellectual Property
Agreement shall be in full force and effect. In connection therewith, Raytheon
shall have obtained the agreement of TI permitting RTIS to grant the rights set
forth in Section 2.6 of the FPA Intellectual Property Agreement. In the event TI
requires changes affecting Section 2.6 of the FPA Intellectual Property
Agreement, the Buyer agrees to accept changes that do not add any additional
material limitations on the operations of the FPA Business.
9.8. RTIS Supply Agreements. RTIS shall have entered into the Supply
Agreements in the form of Exhibits C-1 and C-2 attached hereto (the "RTIS Supply
Agreements"), and the RTIS Supply Agreements shall be in full force and effect.
<PAGE>
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9.9. Raytheon Supply Agreements. Raytheon or one of its Affiliates shall
have entered into the Supply Agreements in the form of Exhibits D-1, D-2 and D3
attached hereto (the Raytheon Supply Agreements" and together with the RTIS
Supply Agreements, the "Supply Agreements"), and the Raytheon Supply Agreements
shall be in full force and effect.
9.10. RTIS Master Services Agreement. RTIS shall have entered into the
Master Services Agreement in the form of Exhibit E attached hereto (the "RTIS
Master Services Agreement"), and the RTIS Master Services Agreement shall be in
full force and effect.
9.11. Raytheon Master Services Agreement. Raytheon shall have entered into
the Master Services Agreement in the form of Exhibit F attached hereto (the
"Raytheon Master Services Agreement" and together with the RTIS Master Services
Agreement, the "Master Services Agreements"), and the Raytheon Master Services
Agreements shall be in full force and effect.
9.12. Lease Agreement. Raytheon shall have entered into the Lease Agreement
in the form of Exhibit G attached hereto with respect to that portion of the EO
Facilities in El Segundo, California specified therein (the "Lease Agreement"),
and the Lease Agreement shall be in full force and effect.
9.13. Sublease Agreements. RTIS shall have entered into the Sublease
Agreements in the form of Exhibits H-1 and H-2 attached hereto with respect to
that portion of the FPA Facilities specified therein (the "Sublease
Agreements"), the consent of TI, as lessor, shall have been obtained, and the
Sublease Agreements shall be in full force and effect.
9.14. Non-Disclosure Agreement. The Sellers shall have entered into the
Non-Disclosure Agreement in the form of Exhibit I attached hereto (the
"Non-Disclosure Agreement"), and the Non-Disclosure Agreement shall be in full
force and effect.
9.15. TI Manufacturing Agreement. TI shall have entered into a
Manufacturing Agreement with the Buyer in the form of Exhibit J hereto (the "TI
Manufacturing Agreement"), and the TI Manufacturing Agreement shall be in full
force and effect.
9.16. TI Amendments. TI shall have entered into amendments with RTIS
relating to the current services agreements between RTIS and TI and the services
of TI to be passed through to Buyer pursuant to the RTIS Master Services
Agreement (the "TI Amendments"), and the TI Amendments shall be in full force
and effect.
<PAGE>
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Article 10
Conditions Precedent To Sellers' Obligations
The obligation of the Sellers to consummate the Closing is subject to the
satisfaction at or prior to the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Sellers):
10.1. Representations and Warranties. The representations and warranties
made by the Buyer in this Agreement shall have been correct in all material
respects when made and shall be correct in all material respects at and as of
the Closing (in each case without giving duplicative effect to any materiality
qualification contained in such representation or warranty).
10.2. Compliance with Agreement. The Buyer shall have performed and
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it prior to or at the Closing (in
each case without giving duplicative effect to any materiality qualification
contained in such obligation).
10.3. No Litigation. No restraining order or injunction shall prevent the
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body in which
it will be or is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
10.4. DOJ and DOD Clearance. The DOJ and DOD shall have provided written
notice as contemplated by Section VII of the Final Judgment that they do not
object to the divestiture of the Businesses pursuant to this Agreement.
10.5. Other Government Approvals. The Sellers shall have received the
required preClosing approvals listed on Schedule 10.5.
10.6. Other Agreements. The Buyer shall have entered into each of the
following, and such agreement shall be in full force and effect:
(i) the Intellectual Property Agreements (including the agreements of
Hughes Electronics Corporation and its applicable Affiliates and TI
required under Sections 9.6 and 9.7);
(ii) the RTIS Supply Agreements;
(iii) the Raytheon Supply Agreements;
(iv) the RTIS Master Service Agreement;
(v) the Raytheon Master Service Agreement;
(vi) the Lease Agreement;
(vii) the Sublease Agreements (including the consent of TI required under
Section 9.13); and
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(viii) the Non-Disclosure Agreement.
10.7. TI Amendments. TI shall have entered into the TI Amendments and the
TI Amendments shall be in full force and effect.
10.8. Prior Sale Agreement. The Sellers shall have terminated the Amended
and Restated Asset Purchase Agreement, dated as of March 25, 1998, with
Kollsman, Inc. relating to the sale of the Ground EO Business (the "Prior Sale
Agreement").
Article 11
Employees and Employee Benefits
11.1. Hiring Employees.
(a) At the Closing, unless the Sellers and the Buyer otherwise agree
the Buyer will offer employment to the persons listed on Schedule 11.1(a)
unless otherwise indicated on that Schedule. In addition, the Buyer will be
permitted to make offers of employment to the employees listed on Schedule
11.1(b) (the "Optional Employees"). The Sellers will cooperate with the
Buyer to arrange interviews with the Optional Employees. All such offers
for Assumed Employees (as defined below) shall be for the same pay as in
effect at Closing and benefits meeting the requirements of Section 11.2.
Such offers and the benefits to be provided to the Assumed Employees shall
recognize the date of hire and time of service with or as recognized by the
Sellers for eligibility and vesting purposes under Buyer's benefit plans
and policies, and in the case only of vacation for purposes of determining
the amount of vacation allowed under Buyer's benefit plans and policies.
All employees listed on Schedule 11.1(a) accepting such offers, but none of
the Optional Employees accepting such offers, are referred to in this
Agreement as "Assumed Employees" and their employment with the Buyer will
be deemed to have commenced immediately after 11:59 p.m., applicable local
time, on the Closing Date.
(b) The Buyer agrees that, for a period of 60 days after the Closing
Date, it will not cause any of the Assumed Employees hired by it to suffer
"employment loss" for purposes of the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. ss.ss.2101-2109, and related regulations (the
"WARN Act") if such employment loss could create any liability for the
Sellers, unless the Buyer delivers notices under the WARN Act in such a
manner and at such a time that the Sellers bear no liability with respect
thereto.
11.2. Benefit Plans - General.
(a) Liabilities Generally. Except as expressly provided in this
Agreement, Sellers shall retain exclusive liability and responsibility for
providing any and all
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benefits due and payable to or in respect of Assumed Employees and related
participants and beneficiaries under any ERISA Plan or Non-ERISA Plan in
accordance with the terms of such plans and applicable law.
(b) Benefits Maintenance. Commencing as of the Closing Date and
continuing through the end of the sixth full calendar month after the
Closing Date (the "Benefits Maintenance Period"), with respect to the
Assumed Employees, spouses and dependents and beneficiaries thereof (the
"Eligible Individuals"), Buyer shall provide under its existing benefit
plans compensation, employee welfare plans and other employee benefits
which are substantially comparable in the aggregate to the compensation
paid by the Sellers, and the plans and other benefits provided by the
Sellers' applicable ERISA and Non-ERISA Plans, immediately prior to the
Closing Date. In determining whether benefits are substantially comparable
in the aggregate there shall be disregarded the benefits of Sellers' and
Buyer's defined benefit pension plans and retiree medical programs and the
benefits of Sellers' stock options. Nothing herein shall be construed to
require the Buyer to provide Assumed Employees with any retiree medical
benefits or stock options. Nothing contained herein shall be construed to
require Buyer to continue the employment of any Assumed Employee for a
specified period of time subsequent to Closing.
(c) Welfare Coverages. Any employee welfare plans established or
maintained by Buyer in satisfaction of Section 11.2(b) which cover or
reimburse Eligible Individuals for medical or dental expenses ("Buyer's
Medical Plans") shall not exclude from payment or reimbursements expenses
attributable to any condition of an Eligible Individual on the basis that
it is a pre-existing condition. The Buyer shall use its reasonable best
efforts to secure from its insurers an agreement, without the Buyer
incurring a substantial cost, to credit the dollar amount of all expenses
incurred by the Eligible Individuals during the applicable plan year of
Buyer's Medical Plans in which the Closing Date occurs for purposes of
satisfying any deductible and co-payment requirements applicable for such
year under Buyer's Medical Plans. During the Benefits Maintenance Period,
the Buyer shall maintain severance, reduction-in-force and
pay-in-lieu-of-notice benefits for the Assumed Employees no less favorable
than the severance, reduction-in-force and pay-in-lieu-of-notice benefits
provided to such Assumed Employees by Sellers immediately prior to the
Closing Date and disclosed on Schedule 5.10.
(d) COBRA Continuation Coverage. Sellers shall retain responsibility
for providing healthcare coverage to all beneficiaries of current or former
employees of Sellers (without regard to whether such employees become
Assumed Employees) who are receiving (or become entitled to receive)
continuation healthcare coverage pursuant to an election made under Section
4980A of the Code or Sections 601-608 of ERISA ("COBRA")(such an election
to be called a "COBRA election") arising as a result of a qualifying event
(as defined in COBRA) occurring prior to or on the Closing Date. Buyer
shall be responsible for providing COBRA coverage attributable to a COBRA
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election made by an Assumed Employee (or any individual who constitutes a
qualified beneficiary under COBRA with respect to an Assumed Employee)
which relates to a qualifying event (as defined in COBRA) which occurs
after the Closing Date.
(e) Retiree Medical Benefits. Sellers shall be solely responsible for,
and Buyer is specifically not assuming any pre- or post-Closing liability
or obligation for, any post-termination or retiree medical or dental
benefits ("Retiree Benefits") for which any Assumed Employee (or dependent)
may have been eligible under Sellers' Welfare Plans prior to the Closing
Date. Assumed Employees may be eligible to participate in a health plan
offering Retiree Benefits to Buyer's employees after the Closing Date, to
the extent that such benefits are made available under the terms of any of
Buyer's Welfare Plans; provided, that notwithstanding any other provision
of this Agreement to the contrary, an Assumed Employee's length of service
with Sellers shall only be counted under such plans, if at all, for
purposes of eligibility and shall not, in any event, be counted for
purposes of benefit accrual under such plan or plans.
(f) Tuition Aid. Buyer shall pay, and Sellers shall promptly reimburse
Buyer for, any tuition aid reimbursements in respect to Assumed Employees'
course work approved by Sellers and commenced prior to the Closing Date
which become payable after the Closing in accordance with and to the extent
provided by Sellers' tuition aid program. Sellers shall provide Buyer with
such information as Buyer may reasonably request to determine which and to
what extent any such reimbursements to Assumed Employees are or may become
due. From and after the Closing Date, Assumed Employees will be eligible to
participate in Buyer's tuition assistance program in accordance with
Buyer's policies then in effect.
(g) Vacation. On or before the Closing Date, Sellers shall pay to each
Assumed Employee the cash equivalent of his or her accumulated but unused
time under the Sellers' Paid Time Off Policy. From and after the Closing
Date, Assumed Employees shall receive annual vacation benefits pursuant to
Buyer's vacation policy with credit for purposes of determining the amount
of any entitlement for service with or recognized by Sellers as of the
Closing Date.
(h) Workers Compensation. Sellers shall remain responsible and liable
for all worker's compensation claims relating to occupational illnesses and
injuries of Assumed Employees that occurred or were incurred on or prior to
the Closing Date. Buyer shall be responsible and liable for Assumed
Employees' worker's compensation claims relating to all occupational
illnesses and injuries that occurred or are incurred subsequent to the
Closing Date.
11.3. Savings Plan. The Sellers will retain all liability and
responsibility for the disposition of interests under the Raytheon TI Systems
Savings Plan (the "RTIS Savings Plan") and the Raytheon Salaried Savings and
Investment Plan (10011) (the "Hughes Savings Plan" and collectively, the
"Savings Plans"), with respect to those employees (or their beneficiaries) of
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the Businesses who, as of the Closing Date, are participants in one of the
Savings Plans. The Sellers agree that they will cause the accounts in the
Savings Plans of all such participants to be fully vested as of the Closing
Date. Effective as of the Closing Date, Sellers shall take such action, if any,
as may be necessary (i) to cause the active participation of the Assumed
Employees therein to cease as of the Closing Date, and (ii) to permit Assumed
Employees to elect to take distributions (subject to and if and to the extent
permitted by applicable law) of their accounts thereunder and, if such Assumed
Employees so elect, to roll them over, directly or otherwise, in accordance with
applicable law and regulations, to an individual retirement account or to one or
more defined contribution retirement plans qualified under Section 401(a) of the
Code (the "Buyer Defined Contribution Plans") and maintained by Buyer or one of
its subsidiaries, and the Buyer Defined Contribution Plans shall accept such
rollovers (including to the extent applicable any plan loans). The parties
acknowledge and agree that the Buyer Defined Contribution Plans are not required
in any case to accept "after-tax" contributions as part of any such rollover.
Sellers agree to provide Buyer with copies of the initial IRS favorable
determination letters with respect to the Savings Plans reasonably promptly
following their receipt of the same.
11.4. Pension Plans. The Sellers will retain all liability and
responsibility for the disposition of interests under the Raytheon TI Systems
Employees Pension Plan and the Raytheon TI Systems Supplemental Pension Plan and
Hughes Non-Bargaining Retirement Plan and Hughes Subsidiary Retirement Plan
(collectively, the "Pension Plans"), with respect to those employees (or their
beneficiaries) of the Ground EO Business or FPA Business who, as of the Closing
Date, are participants in any of the Pension Plans. Effective as of the Closing
Date, Sellers shall amend the Pension Plans so that, subject to the proviso set
forth below,
(i) the service of the Assumed Employees with the Buyer, if any, in
the Benefits Maintenance Period shall be recognized as service with the
Sellers for all plan purposes,
(ii) any compensation paid the Assumed Employees by the Buyer for
services rendered in the Benefits Maintenance Period shall be recognized as
compensation paid by the Sellers for all plan purposes,
(iii) those Assumed Employees in the FPA Business participating in the
Raytheon TI Systems Employees Pension Plan and the Raytheon TI Systems
Employees Supplemental Pension Plan who have at least 15 years of service
as of the Closing Date, are at least age 50 as of the Closing Date, and do
not terminate their employment with Buyer voluntarily, nor are terminated
for cause, within two years of the Closing Date, will be treated as on a
"Bridge to Retirement Leave of Absence" from their cessation of benefit
accruals under such Plan until first eligible for early retirement under
the relevant Plan,
(iv) those Assumed Employees in the Ground EO Business participating
in the contributory portion of the Hughes Non-Bargaining Retirement Plan
who have at least 15 years of service "Continuous Service" (as defined in
that Plan) as of the later of (x) March 1,
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1999 and (y) the earlier of the end of the Benefits Maintenance Period and
March 31, 1999 (the "Determination Date"), are at least age 50 as of the
Determination Date, are within 5 years of satisfying the Rule of 75
contained in said Plan as of the Determination Date, and who execute an
agreement to arbitrate claims as required by such Plan will be entitled to
receive following their cessation of benefit accruals under such Plan the
reduced Rule of 75 benefit otherwise provided to Participants laid off in
such circumstances, and
(v) those Assumed Employees in the Ground EO Business participating in
the contributory portion of the Hughes Non-Bargaining Retirement Plan who
have at least 15 years of "Continuous Service" (as defined in that Plan) as
of the Determination Date, are at least age 50 as of the Determination
Date, are within 5 years of satisfying the Rule of 75 contained in said
Plan as of the Determination Date, execute an agreement to arbitrate claims
as required by such Plan as well as a release and agreement to refund the
amounts paid pursuant to this clause (v) in the event of rehire by the
Sellers or their Affiliates and do not (x) terminate their employment with
Buyer voluntarily, nor (y) are terminated for cause (any termination other
than (x) and (y) to be deemed a "Qualified Termination"), within two years
of the Closing Date, shall be paid in cash by Sellers at the date of the
Assumed Employee's Qualified Termination or, if earlier, at the second
anniversary of the Closing Date, the value (determined as of each such
Employee's cessation of benefit accruals under such Plan), as reasonably
estimated by Sellers, of the difference between such reduced Rule of 75
benefit and the full Rule of 75 benefit such Assumed Employees might
otherwise have qualified for,
provided the Buyer shall have timely complied with any information request the
Sellers shall reasonably make to effect all such recognitions and otherwise
cooperated as reasonably requested by Sellers (including in collecting during
the Benefits Maintenance Period applicable employee contributions in respect of
Assumed Employees in the Ground EO Business who participate in the contributory
portion of the applicable Pension Plan) to effectuate the provision of such
benefit enhancements. The Sellers further agree that they will cause the accrued
benefit of each such employee under the Pension Plans as of the Closing Date to
be fully vested as of the Closing Date.
11.5. Incentive Plans. Attached as Schedule 11.5 is a description of the
Sellers' internal sales and marketing and other incentive plans relating to the
Businesses (the "Incentive Plans"). Sellers shall timely pay the Assumed
Employees all amounts accrued to the Closing Date in accordance with the terms
of the Incentive Plans. From and after the Closing Date, Assumed Employees shall
receive incentive plan amounts in accordance with and to the extent provided by
Buyers' incentive compensation arrangements.
11.6. Stock Options. One or more of the Assumed Employees hold options to
acquire shares of stock issued by the Sellers or one or more of their affiliates
("Outstanding Options"), which may not become exercisable in full as of the
Closing Date. In this paragraph, any Outstanding Option, or portion thereof,
which is not exercisable as of the Closing Date is referred to as an "Unvested
Outstanding Option". As and when each Unvested Outstanding Option expires in
accordance with its terms, Sellers shall pay the holder thereof an amount equal
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to the difference between the aggregate value as of the Closing Date of the
stock subject to such Unvested Outstanding Option, as reasonably determined by
Sellers in accordance with the terms of the relevant plans, and the aggregate
amount the holder of such Unvested Outstanding Option would have been required
to pay in order to exercise such Option.
Article 12
Certain Covenants
12.1. Third Party Consents.
(a) To the extent that any agreement constituting part of the Acquired
Assets is not capable of being transferred by the Sellers to the Buyer
pursuant to this Agreement without the consent, approval or waiver of a
third Person, and such consent is not obtained prior to the Closing, or if
such transfer or attempted transfer would constitute a breach thereof or a
violation of any law, rule or regulation in the absence of obtaining such
an approval, nothing in this Agreement will constitute a transfer or an
attempted transfer thereof. Each of the Buyer and the Sellers shall use
reasonable efforts at its own expense to obtain any such approvals.
(b) In the event that such consents, approvals and waivers referred to
in paragraph (a) are not obtained then the Sellers and the Buyer will each
use reasonable efforts, each at its own expense and in compliance with
applicable laws and regulations, to (i) provide to the Buyer the benefits
and burdens of any such agreement, (ii) cooperate in any reasonable and
lawful arrangement, including subcontracting, designed to provide such
benefits and burdens to the Buyer without incurring any obligation to any
other Person other than to provide such benefits to the Buyer, including
without limitation the appointment of the Buyer as the agent of the Sellers
for purposes of such agreement, and (iii) enforce, at the request of the
Buyer for the account of the Buyer, any rights of the Sellers arising from
any such agreement. With respect to any files and documentation relating to
any such contracts that are subject to third party proprietary
restrictions, the Sellers and Buyer will enter into arrangements as
described above to transition these materials to the Buyer.
12.2 Novation of Government Contracts.
(a) As soon as practicable following the Closing, the Buyer shall
prepare (with the Sellers' assistance), in accordance with Federal
Acquisition Regulations Part 42, (P) 42.12 and any applicable agency
regulations or policies, a written request meeting the requirements of the
Federal Acquisition Regulations Part 42, as reasonably interpreted by the
Responsible Contracting Officer (as such term is defined in Federal
Acquisition Regulations Part 42, (P) 42.1202(a)), which shall be submitted
by Sellers to each Responsible Contracting Officer, for the United States
Government (i) to recognize the Buyer as the Sellers' successor in interest
to all the Acquired Assets constituting a
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Government Contract; and (ii) to enter into a novation agreement (a
"Novation Agreement") in form and substance reasonably satisfactory to the
Buyer and the Sellers and their respective counsel, pursuant to which,
subject to the requirements of the Federal Acquisition Regulations Part 42,
all of Sellers' right, title and interest in and to, and all of the
Sellers' obligations and liabilities under, each such Government Contract
shall be validly conveyed, transferred and assigned and novated to the
Buyer by all parties thereto. The Sellers shall provide to the Buyer
promptly any information regarding the Sellers required in connection with
such request. The Sellers and the Buyer shall each use all reasonable
efforts to obtain all consents, approvals and waivers required for the
purpose of processing, entering into and completing the Novation Agreements
with regard to any of the Government Contracts, including responding to any
requests for information by the United States Government with regard to
such Novation Agreements. Until such time as the Novation Agreements are
completed, the Buyer and the applicable Seller will operate with respect to
the applicable Government Contract pursuant to the terms of an Agency
Designation in the form of Exhibit K hereto and the Buyer agrees that
pending novation it will perform the terms of such Government Contracts as
the Sellers' agent.
(b) In connection with obtaining the consents contemplated in Section
12.2(a) hereof, the Sellers shall not consent to any modification of any
Government Contract included in the Acquired Assets without the prior
written consent of the Buyer, not to be unreasonably withheld or delayed.
The parties agree that until all Government Contracts have been novated in
accordance with paragraphs (a) and (b) above, the Sellers shall wire to the
Buyer all payments received by them with respect to any Government Contract
performed by the Buyer and any of the billed and unbilled accounts receivables
included as part of the Acquired Assets as provided above by wire transfer on a
weekly basis, with interest at the prime rate less 1.5% for each day the Sellers
hold the funds more than one (1) business day, and the Sellers and Buyer will
operate with respect to such Government Contract as provided in Section 12.1(b).
12.3. Access to Books and Records.
(a) The Buyer agrees to cooperate with and to make available to the
Sellers such documents, books, records or information relating to the
operation of either of the Businesses prior to the Closing Date as the
Sellers may reasonably require after the Closing.
(b) The Buyer agrees to preserve and protect all books, records, files
and data referred to in paragraph (a) above for a period of six (6) years
after the Closing Date.
(c) The Buyer agrees not to destroy any files or records which are
subject to this Section 12.3 (i) for the period described in clause (b) of
this Section 12.3, and (ii) thereafter, without giving at least thirty (30)
days' notice to the Sellers. Upon receipt
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of such notice, the Sellers may (A) cause to be delivered to it the files
or records intended to be destroyed, at the Sellers' expense, or (B) notify
the Buyer that the Sellers will pay the cost of storing and maintaining
such files or records (including any necessary costs of moving such files
or records to a location under control of the Sellers).
12.4. Use of Certain Names. The Buyer agrees that promptly after the
Closing Date it will cease using any references to the Sellers, TI, Hughes or
any of their respective Affiliates, except to the extent permitted under
Sections 2.6 or 2.7 of the EO Intellectual Property Agreement or Sections 2.6 or
2.7 of the FPA Intellectual Property Agreement.
12.5 Compliance With Final Judgment. After the Closing, the Buyer agrees to
be bound by the provisions of the Final Judgment. The Sellers acknowledge that
after the Closing Date they will continue to be bound by the Final Judgment.
12.6 Certain FPA Test Equipment. With respect to the test equipment used
occasionally in the FPA Business and described in Schedule 12.6, the Buyer shall
continue to have access to such equipment as contemplated by Section 1.3. In
addition, RTIS shall at its expense build equivalent test equipment for the
Buyer's sole use and ownership at no charge to Buyer.
12.7. Extension of HTI Teaming Agreement and Associate Contractor
Agreement.
(a) With respect to the Teaming Agreement, dated as of February 26,
1994 between Raytheon Company (as successor to Hughes Aircraft Company
("HAC")) and RTIS (as assignee of Texas Instruments Incorporated) (the "HTI
Teaming Agreement") and the Associate Contractor Agreement, dated as of
June 18, 1997 between Raytheon (as successor to HAC) and RTIS (as assignee
of TI) (the "HTI ACA"), Raytheon is transferring its interest in the HTI
Teaming Agreement and the HTI ACA to the Buyer as part of the Acquired
Assets relating to the Ground EO Business. RTIS and the Buyer shall extend
the stated terms of the HTI Teaming Agreement and the HTI ACA to December
31, 2004 on terms similar in scope to the existing arrangements except as
contemplated by paragraph (b) below. The Buyer and Sellers also acknowledge
that such an extension would require approval of the DOJ, DOD and the U.S.
Government customer.
(b) The Sellers and the Buyer expect that the extensions of the
relationship contemplated by paragraph (a) above would continue in the form
of an associate contractor arrangement, but that continuing to satisfy
their customer on the HTI program through an associate contractor
arrangement will require the parties to maintain the performance and
cooperation shown to date by the HAC and TI (now Raytheon and RTIS) teams
working on the HTI program. If their customer on the HTI program wishes to
transition to a single contract environment, then the parties will convert
their relationship to a prime/subcontractor relationship, with the prime
contractor to be
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designated by RTIS and the Buyer by mutual agreement, with RTIS as the
preferred prime contractor. To the extent practicable, in connection with
this conversion, the parties will structure the work share balance to be
similar to the current arrangements.
(c) The Sellers and the Buyer acknowledge that the foregoing are
necessary for a successful business transition but additional activities
such as an aggressive cost reduction program and forward production pricing
commitments will be required.
(d) The Sellers and the Buyer agree to proceed expeditiously to
complete the extension contemplated by this Section 12.7 prior to Closing,
but completion of such extension is not a condition to Closing.
12.8. New LRAS3 Teaming Agreement and Extension of Associate Contractor
Arrangement.
(a) With respect to the LRAS3 program, and the existing EMD Associate
Contractor Agreement (the "LRAS3 ACA"), subject to the approval of DOJ, DOD
and the U.S. government customer, Raytheon will enter into a Teaming
Agreement for the LRAS3 EMD program (the "LRAS3 Teaming Agreement") and
extend the LRAS3 ACA. The LRAS3 Teaming Agreement and the LRAS3 ACA as
extended will have terms expiring December 31, 2004, and the LRAS3 Teaming
Agreement will have terms generally comparable to the HTI Teaming
Agreement.
(b) The Sellers and the Buyer expect that the extensions of the
relationship contemplated by paragraph (a) above would continue in the form
of an associate contractor arrangement, but that continuing to satisfy
their customer on the LRAS3 program through an associate contractor
arrangement will require the parties to maintain the performance and
cooperation shown to date by the HAC and TI (now Raytheon and RTIS) teams
working on the LRAS3 program. If their customers on the LRAS3 program wish
to transition to a single contract environment, then the parties will
convert their relationship to a prime/subcontractor relationship, with the
prime contractor to be designated by RTIS and the Buyer by mutual
agreement, with RTIS as the preferred prime contractor. To the extent
practicable, in connection with this conversion, the parties will structure
the work share balance to be similar to the current arrangements.
(c) The Sellers and the Buyer acknowledge that the foregoing are
necessary for a successful business transition but additional activities
such as an aggressive cost reduction program and forward production pricing
commitments will be required.
12.9. Information Technology Transition. The Sellers agree that, in
connection with the delivery of Acquired Assets and the treatment of shareduse
assets contemplated by Section 1.3, they will take the steps required to obtain
consents from software vendors or obtain new software licenses so that the Buyer
will have access to the software and information technology described in
Schedule 12.9. A description of the scope of the transitioning work and
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a budget and timetable is set forth in Schedule 12.9. The costs of completing
this transaction as contemplated will be borne by the Sellers, but only up to
the budgeted amounts in Schedule 12.9. At the Buyer's request, in connection
with this transitioning work the Sellers will purchase or furnish software for
the Buyer other than the software described in Schedule 12.9 and not including
any software that is proprietary to the Sellers, subject to the maximum budgets
set forth in Schedule 12.9. In the event that the Sellers and the Buyer are able
to mutually agree upon and implement changes to the partition plan described in
Schedule 12.9 which result in cost savings to the budgets described in Schedule
12.9, the Buyer will be entitled to payment of half of the saved amount, to be
paid by Sellers to the Buyer to be used by the Buyer to establish its
operational capability to compete effectively in the Businesses.
12.10 Pending REA. The Buyer acknowledges that the Pending REA is not being
transferred to the Buyer as part of the Acquired Assets. The Buyer agrees that
it will not, at any time, assert or otherwise pursue the Pending REA against
RTIS or any of its Affiliates. RTIS, both on its behalf and for its assignees
and Affiliates, agrees that it will not pursue the Pending REA Claim against the
customer.
12.11. Non-Solicitation.
(a) Prior to the third anniversary of the Closing Date, (i) the Sellers
shall not solicit to hire any individual who, on October 16, 1997, was an
employee of either of the Businesses and (ii) the Sellers shall not hire
any individual who, on October 16, 1997, was an employee of either of the
Businesses. Notwithstanding the foregoing, the Sellers may solicit to hire
and hire any individual referred to above if such individual's employment
with the Buyer had previously been terminated by the Buyer.
(b) Prior to the third anniversary of the Closing Date, (i) the Buyer shall
not solicit to hire any individual listed on Schedule 12.11 and (ii) the
Buyer shall not hire any individual listed on Schedule 12.11.
Notwithstanding the foregoing, the Buyer may solicit to hire and hire any
individual referred to above if such individual's employment with the
Sellers or any subsidiaries of the Sellers had previously been terminated
by a Seller or such other subsidiary of a Seller.
12.12. Mail and Other Communications Received After the Closing Date. The
Buyer and the Sellers will appoint representatives to discuss and agree upon
procedures, for each of the locations subject to the Subleases and Lease
Agreement, for the prompt receipt and delivery of mail or funds received by the
Sellers but relating to the Businesses or received by the Buyer but relating to
one of the Seller's other businesses.
12.13. Warranty Work. In the event any third party asserts a warranty or
similar claim in connection with the pre-Closing operation of the Businesses
that constitutes a Retained Liability, then at the request of the Sellers the
Buyer agrees to perform any required warranty repair or rework. The Sellers
agree to reimburse the Buyer for its cost plus 5% fee incurred in connection
with the foregoing.
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12.14. Interim Operating.
(a) With respect to the export licenses referred to in Schedule 9.5
and 10.5, the Sellers and the Buyer will meet the appropriate government
officials as promptly as practicable in order to assure a rapid transition
process and the Sellers will cooperate with and provide reasonable
assistance to the Buyer in connection with such transition process. During
a reasonable transition period but in any event only so long as it is
permitted by applicable law, at Buyer's request the Sellers will export
products of the Buyer under the Sellers' export licenses.
(b) With respect to the environmental permits set forth on Schedule
12.14, the Sellers agree to permit the Buyer to operate under these permits
for a reasonable transition period. The Buyer agrees to operate in
accordance with such permits. In addition, the Sellers will provide
reasonable assistance to the Buyer in connection with the Buyer obtaining
other required permits.
(c) The Buyer agrees to reimburse the Sellers for any outofpocket
costs incurred in connection with the arrangements described in (a) and (b)
above and to indemnify the Sellers against any claims or damages arising
out of the arrangements described in (a) and (b) above except to the extent
such claims or damages are caused by Sellers' gross negligence and willful.
12.15. Asbestos. In the event that the Buyer tears down walls or makes
other structural changes to any of the facilities subject to the Lease Agreement
or Subleases, it will be responsible for, and the Retained Liabilities will not
include, any costs associated with remediating or removing asbestos in the areas
affected by such structural changes triggered by such structural changes.
12.16. Palomar Products.
(a) With respect to Raytheon's EOS Supply Agreement dated October 6,
1995 (the PPI Supply Agreement") with Palomar Products Inc. ("PPI"),
Raytheon will provide reasonable cooperation to assist the Buyer in
obtaining a separate supply agreement with PPI. In connection therewith,
Raytheon will prior to the Closing provide its consent for PPI to utilize
know-how and/or proprietary data provided to PPI by Raytheon in connection
with proposals for or in the manufacturing of product for the Buyer.
(b) In the event that the Buyer is unable to obtain a separate supply
arrangement with PPI, Raytheon will cooperate to buy products from PPI
under its EOS Supply
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Agreement on behalf of the Buyer and sell to the Buyer at the PPI price,
plus an administrative fee in the amount of 1.5%.
12.17. TI Lessor Documents. The Sellers agree to use commercially
reasonable efforts (not requiring the payment of a consent fee or other amounts)
to obtain from TI nondisturbance agreements and landlord estoppel certificates
relating to the Subleases, in a form reasonably acceptable to the Buyer.
12.18. Physical Partitioning. In connection with the physical partitioning
provided for by the Transition Agreements to be entered into by the Sellers and
the Buyer pursuant to the Lease Agreement and Subleases, in the event the
Sellers and the Buyer are able to mutually agree upon and implement changes to
the partition plans which result in cost savings to the Sellers as compared to
their budgets (which are $14.2 million for Texas and $550,000 for El Segundo),
the Buyer will be entitled to payment of half of the saved amount, to be paid by
the Sellers to the Buyer to be used by the Buyer to establish its operational
capability to compete effectively in the Businesses.
12.19. TI Trademarks. If the VIP, HDVIP and/or SLICE PROCESSING trademarks
are owned by one of the Sellers or one of their Affiliates, then such trademarks
shall be conveyed to Buyer for no consideration. If such trademarks are owned by
TI, the Sellers agree to use their reasonable best efforts, which will not
require the payment by the Sellers of a transfer fee or other amount, to obtain
these trademarks from TI, unless the Buyer agrees to reimburse Sellers therefor.
In the event the Sellers ever obtain these trademarks from TI, they will
promptly transfer them to the Buyer for no consideration.
12.20. Hughes Trademarks. In connection with the transition of tradenames
and trademarks contemplated by Sections 2.6 and 2.7 of the EO Intellectual
Property Agreement, the Sellers and the Buyer agree that they will share 50/50
the costs of such transition.
12.21. Ordas and Hexagon Software. At or promptly after the Closing, the
Sellers will furnish to the Buyer a copy of the Sellers' Ordas and Hexagon
software. The Buyer shall be responsible for all subsequent software
maintenance. Raytheon hereby grants to Buyer, effective as of the Closing Date,
a non-exclusive, perpetual, fully paid-up, royalty-free license to use the Ordas
and the Hexagon software.
12.22. Georgia Space.
(a) With respect to RSG's facility in LaGrange, Georgia (the "Georgia
Facility"), RSG agrees to provide space for one or more employees of the
Ground EO Business working on printed circuit board fabrication on the HTI
program. RSG and the Buyer estimate that this employee or employees will
require approximately 150 square feet of space. RSG will provide this space
so long as it is manufacturing circuit cards for the Ground EO Business for
the HTI program, which it expects to complete by September 30, 1998. The
Buyer agrees that it will cause this employee or employees to comply
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with RSG's rules and regulations. RSG will provide this space at no charge;
however, the Buyer will reimburse RSG for any costs incurred in furnishing
the space, with such reimbursement to be made promptly after reasonable
supporting documentation.
(b) With respect to the access described in paragraph (a) above, each
of Raytheon and the Buyer agrees to indemnify and hold harmless the other
with respect to:
(1) such party's breach of or noncompliance with any
Environmental Law relating to such party's occupancy or use of the
Georgia Facility during such access period; and
(2) any act, omission, event or circumstance resulting in any
release, discharge, disposal or emission on or adjacent to the Georgia
Facility, or release, discharge, disposal or emission from or adjacent
to the Georgia Facility, of any Hazardous Substance, regardless of
whether the act, omission, event or circumstance constituted a
violation of any Environmental Law at the time of the existence or
occurrence, to the extent caused by the acts or omissions of such
party, its employees, contractors or other invitees, agents, officers
or directors, occurring during such access period.
12.23. Termination of Agreement. The Sellers agree that, in the event the
condition referred to in Sections 9.4 and 10.4 is met, the Sellers will
terminate the Prior Sale Agreement.
12.24. Provision of Financial Information. Sellers shall provide reasonable
cooperation in providing information and documentation as (i) may be reasonably
required by the Buyer in connection with its financing arrangements and (ii) may
be reasonably necessary for Buyer to comply with applicable securities laws. The
Buyer will reimburse the Sellers for any out-of-pocket expenses incurred in
connection with the foregoing, including the fees of its outside accountants.
12.25. License Grants.
(a) RTIS hereby grants to the Buyer, effective upon the Closing, (i) a
non-exclusive, irrevocable, non-transferable (except an assignment
permitted under Section 18.3), world-wide, royalty free, fully paid up
license to use the patents described on Schedule 12.25 to make, have made,
use, develop, have developed, sell, offer for sale, distribute, export and
import A-Kits and B-Kits and components thereof for use in connection with
and for purposes of ground-based applications only and (ii) an option to
acquire a non-exclusive, irrevocable, non-transferable (except an
assignment permitted under Section 18.3), world-wide, royalty-bearing
license to use the patents described on Schedule 12.25 to make, have made,
use, develop, have developed, sell, offer for sale, distribute, export and
import electro-optical products, future generations thereof and components
thereof.
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(b) As a condition to the exercise of the option referred to in
paragraph (a)(ii) above, RTIS and the Buyer will agree on the terms of a
reasonable royalty to be paid with respect to such license.
12.26. Other Cooperation.
(a) To the extent that the Businesses as conducted by the Sellers have
benefited from volume discounts for germanium available to Sellers for
purchases made for the Businesses' and the Sellers' other operations
("volume discounts") and so long as the Sellers' are able to obtain
germanium at prices more favorable than those available to Buyer, the
Sellers agree to provide reasonable cooperation to the Buyer after the
Closing Date to combine orders for germanium (or use other similar
commercially reasonable methods) to ensure the availability of such volume
discounts for purchases made for the Businesses after the Closing Date.
Article 13
Indemnity
13.1. Indemnification by the Sellers.
The Sellers, jointly and severally and subject to the applicable
limits of liability hereinafter set forth, agree to defend, indemnify and
hold the Buyer (and its directors, officers, employees and Affiliates)
harmless from and with respect to any and all claims, liabilities, losses,
damages, costs and expenses (including without limitation the reasonable
fees and disbursements of counsel), net of insurance proceeds received
(collectively, "Losses"), incurred by the Buyer or any of its directors,
officers, employees or Affiliates, in connection with or arising out of:
(i) any breach by the Sellers of any representation or warranty
contained in Article 5 hereof;
(ii) any breach by the Sellers of any covenant, obligation or
undertaking made by the Sellers in this Agreement;
(iii) any of the Retained Liabilities, including without
limitation any Retained Environmental Liabilities and the Sellers'
failure to timely discharge any of the Retained Liabilities; and
(iv) any Defective Pricing Claims relating to proposals submitted
by Sellers prior to the Closing Date and relating to the Businesses
which have not resulted in definitive contracts as of the Closing
Date, and any failure of such proposals to comply as of the Closing
with government regulations applicable to the making of such
proposals, but in each case only if the Buyer does not subsequently
amend or modify the costs or pricing data forming a part of such
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proposals after the Closing Date (other than any amendment or
modification relating solely to the transfer of such proposal to the
Buyer pursuant to this Agreement) ("Open Bid Claims")
(v) any claim made or suit brought against Buyer prior to the
fifth anniversary of the Closing Date alleging that the Buyer's
making, having made, using, selling, offering for sale, distributing,
exporting or importing EO/FPA Products (as defined below) or
practicing EO/FPA Processes (as defined below) in connection with the
FPA Business and/or Ground EO Business (a "Covered Activity")
infringes any intellectual property right of any third party;
provided, however, that (1) Sellers shall be given exclusive control
of the defense of such claim or suit and all negotiations relative to
the settlement thereof, but Buyer shall have the right to be
represented in any such claim or suit by advisory counsel of its own
selection at is own expense and Sellers shall consult with any such
advisory counsel regarding the defense of any such claim or suit and
advise any such advisory counsel with respect to the settlement of
such claim or suit, (2) Buyer assists Sellers by providing all
information in Buyer's possession relevant to the defense or
settlement of any such claim or suit, which is reasonably requested by
Sellers, (3) Buyer promptly informs Sellers in writing of any such
claim of infringement or threat of any such claim (provided, however,
that the failure to provide such notice shall not relieve Sellers of
their obligations hereunder except to the extent Sellers are
prejudiced by such failure), (4) the claimed infringement arises as
the result of Covered Activities related to the EO/FPA Products or
EO/FPA Processes and not as a result of any modifications thereto made
by Buyer or as a result of combinations of any EO/FPA Product with
other components or any combination of any EO/FPA Process with any
other process, (5) if the claimed infringement can be avoided by
modifications to the EO/FPA Products requested by Sellers, Buyer
agrees to make such modifications at Sellers' expense, provided that
the form, fit and function of the EO/FPA Product and the manufacturing
cost (including capital costs) for such EO/FPA Product is not
adversely affected in any material way, (6) if the claimed
infringement can be avoided by modifications to the applicable EO/FPA
Process requested by Sellers, Buyer agrees to make such modification
at Sellers' expense, provided that the utility of the EO/FPA Process
and any related manufacturing cost (including capital costs) is not
adversely affected in any material way, and (7) the Covered Activity
is authorized by and within the scope of any applicable license grant,
the claimed infringement is not the result of Buyer's loss of any
intellectual property rights arising out of Buyer's breach of any
contractual obligations and the claimed infringement is not a claim of
infringement of TI Licensed Intellectual Property made by TI based on
Buyer's activities outside the scope of the sublicense grant to Buyer
of TI Licensed Intellectual Property. Sellers' liability under this
paragraph (v) is subject to the applicable provisions of Section 13.4
below. The Sellers will not make a settlement without the Buyer's
prior written consent, which consent shall not be unreasonably
withheld, if as a
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result of such settlement the Buyer would incur any obligation,
including if the Buyer would incur an obligation under the terms of
the proposed settlement not covered by the Sellers' indemnity, or if
such settlement would otherwise result in any detriment to the Buyer.
Sellers' obligations under this paragraph (v) shall not apply with
respect to infringement claims (x) arising out of patents issued after
the date of this Agreement or (y) with respect to claims arising out
of performance of contracts or supply of goods or services to
government agencies where the Covered Activities are subject to the
provisions of 28 U.S.C. 1498 or equivalent United States or foreign
law or regulation. For purposes of this paragraph (v) "EO/FPA
Product(s)" shall mean any EO Products or Transferred FPA Products
which have either been manufactured and offered for sale by Sellers
immediately prior to the Closing Date in connection with either the
FPA Business or the Ground EO Business or which are described in pages
70 to 78 of the Raytheon Electro-Optical Systems Descriptive
Memorandum of November, 1997 ("Offering Memorandum") and an "EO/FPA
Process" shall mean any process being practiced by Sellers for the
manufacture of EO/FPA Products in connection with the operation of the
Ground EO Business or the FPA Business prior to the Closing Date, or
which are described in pages 70 to 78 of the Offering Memorandum.
13.2. Indemnification by the Buyer. Subject to the applicable limits of
liability hereinafter set forth, the Buyer agrees to defend, indemnify and hold
the Sellers (and their directors, officers, employees and Affiliates) harmless
from and with respect to any and all Losses incurred by the Sellers or any of
their directors, officers, employees or Affiliates arising out of:
(i) any breach by the Buyer of any representation or warranty
contained in Article 6;
(ii) any breach by the Buyer of any covenant, obligation or
undertaking made by the Buyer in this Agreement (including the assumption
referred to in Article 2);
(iii) the transfer to or use by the Buyer of the Personnel Records; or
(iv) except for the Retained Liabilities, the operation of the
Businesses or the use of the Acquired Assets in the operation thereof after
the Closing Date.
13.3. Time Limitations. Neither the Sellers nor the Buyer shall be liable
to the other under this Article 13 for any claim relating to a breach of any
representation or warranty referred to in Section 13.1(i) or Section 13.2(i) (a
"Representation Claim") unless in the case of any Representation Claim, other
than under Section 5.4 ("Title Claims"), Section 5.10 ("ERISA Claims"), Sections
5.13 ("NonCompliance Claims") or Section 5.17 ("Enviro Claims"), the claim is
asserted in writing prior to the second anniversary of the Closing Date. Any
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NonCompliance Claim must be asserted in writing prior to the third anniversary
of the Closing Date. An Title Claim, ERISA Claim, Enviro Claim, Open Bid Claim
and any claim under Sections 13.1(ii) or 13.1(iii) or 13.2(ii) or 13.2(iii) or
13.2(iv) may be made at any time in the future, subject to any applicable
statute of limitations.
13.4. Dollar Thresholds.
(a) Neither the Sellers nor the Buyer shall be liable to the other for
any Representation Claim (i) if the total Losses with respect to such
Representation Claim, including any Representation Claims arising out of
the same event or series of related events, do not exceed $10,000 (a "Minor
Claim") or (ii) except to the extent that the cumulative amount of Losses
with respect to all Representation Claims asserted against the Buyer or the
Sellers, as applicable, excluding Minor Claims, exceeds $500,000, and then
only to the extent of such excess. Indemnification claims under Sections
13.1(ii) or 13.1(iii) or 13.1(iv) or 13.1(v) or 13.2(ii), 13.2(iii) or
13.2(iv) shall not be subject to any threshold or deductible amount.
(b) The total amount payable by the Sellers under Section 13.1(i) with
respect to all Representation Claims, other than Title Claims, ERISA Claims
and Enviro Claims and Representation Claims that also fall within the scope
of Section 13.1(iv), together with all claims under Section 13.1(v)
("Infringement Claims"), shall not exceed $18,000,000, the total amount
payable with respect to Open Bid Claims shall not exceed $22,190,000 and
the total amount payable under Section 13.1(ii) or Section 13.1(iii) shall
not be subject to any cap on liability. The total amount payable by the
Sellers with respect to Title Claims, ERISA Claims and Enviro Claims shall
not exceed the Purchase Price (as finally adjusted pursuant to Section 3.2)
less any amounts paid with respect to other Representation Claims and with
respect to Infringement Claims. All Representation Claims that also fall
within the scope of Section 13.1(iv) shall be treated as Open Bid Claims
for purposes of this Article 13. The total amount payable by the Buyer
under Section 13.2(i) with respect to all Representation Claims shall not
exceed $18,000,000 and the total amount payable by the Buyer under Sections
13.2(ii), 13.2(iii) or Section 13.2(iv) shall not be subject to any cap on
liability.
13.5. Indemnification Procedures.
(a) In the event that any party hereto (an "Indemnified Party")
desires to make a claim against another party hereto other than pursuant to
Section 13.1(v) (the "Indemnifying Party", which term shall include all
Indemnifying Parties if there be more than one) in connection with any
action, suit, proceeding or demand at any time instituted against or made
upon it for which it may seek indemnification hereunder (a "Third-Party
Claim"), the Indemnified Party shall promptly notify the Indemnifying Party
in writing of such Third-Party Claim and of its claims of indemnification
with respect thereto; provided, however, that the failure to provide such
notice shall not release the Indemnifying Party from any obligation under
this Article 13 except to the
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extent such Indemnifying Party is prejudiced by such failure. Upon receipt
of such notice from the Indemnified Party, the Indemnifying Party shall be
entitled to participate in the defense of such Third-Party Claim, and
assume the defense of such Third-Party Claim, and in the case of such an
assumption the Indemnifying Party shall have the authority to negotiate,
compromise and settle such Third-Party Claim; provided, that (i) the
Indemnifying Party shall not be entitled to settle any such Third-Party
Claim without the consent of the Indemnified Party unless as part of such
settlement the Indemnified Party is released from all liability with
respect to such Third-Party Claim and (ii) the Indemnified Party shall
cooperate with the Indemnifying Party in connection with the defense of
such Third Party Claim, and provide all information possessed by the
Indemnified Party relevant to the defense or settlement of such Third Party
Claim.
(b) The Indemnified Party shall retain the right to employ its own
counsel and to participate in the defense of any Third-Party Claim, the
defense of which has been assumed by an Indemnifying Party pursuant hereto,
but the claimant shall bear and shall be solely responsible for its own
costs and expenses in connection with such participation.
13.6. Election of Remedies. In the event the Buyer has a claim which falls
within the scope of more than one subparagraph of Section 13.1, the Buyer shall
be free to elect the subparagraph pursuant to which it asserts its claim (or to
assert its claim in the alternative under more than one subparagraph), except as
provided in the third sentence of Section 13.4(b). In the event the Sellers have
a claim which falls within the scope of more than one subparagraph of Section
13.2, the Sellers shall be free to elect the subparagraph pursuant to which they
asserts their claim (or to assert their claim in the alternative under more than
one subparagraph). Any claim which falls within the scope of Retained
Liabilities shall not be subject to the time and monetary limitations set forth
in Sections 13.3 and 13.4 even if such claim may also arise under any other
provisions of this Agreement under which recovery may otherwise be subject to
such limitations.
13.7. Environmental Matters. Section 4(g) of the Sublease relating to the
S/C Building and Section 3(f) of the Sublease relating to the Research West
Building provide that, with respect to indemnification for certain environmental
matters, RTIS will have the burden of proof to establish that such matter for
which indemnity is claimed was caused in part or entirely by Buyer, or in part
or entirely by a third party (other than TI under certain circumstances). That
burden of proof will also apply to any claim under this Article 13 relating to
Retained Environmental Liabilities and the facilities subject to the Subleases.
13.8. Scope of Indemnity. Except as provided in Article 14, each of the
Sellers and the Buyer acknowledges that, except for equitable relief, including
specific performance, its sole and exclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement shall be pursuant to the
indemnification provisions of this Article 13.
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Article 14
Tax Matters
14.1. General. The Sellers shall remain responsible for all Taxes (as
defined in Article 17) of the Sellers payable in connection with the operation
of either of the Businesses through the closing of business on the business day
immediately preceding the Closing Date, except for any Taxes that constitute
Assumed Obligations. The Sellers shall also remain responsible for the filing of
all related Tax Returns (as defined in Article 17).
14.2. Cooperation on Tax Matters; Conduct of Proceedings.
(a) The Buyer and the Sellers shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
preparation and filing of Tax Returns pursuant to this Article 14 and any
audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably
relevant to such preparation and filing and to any audit, litigation or
other proceeding relating thereto and making employees available on a
mutually convenient basis to provide additional information and explanation
of any material provided hereunder.
(b) The Sellers shall be responsible for defending any audit,
litigation or other proceeding with respect to any Taxes of the Sellers for
which the Sellers are wholly or partially responsible for payment pursuant
to this Article 14 and shall have the authority to negotiate, compromise
and settle any such audit, litigation or other proceeding.
14.3. Allocation of Transfer and Property Taxes.
(a) All excise, sales, use, value added, registration stamp,
recording, documentary, conveyancing, franchise, property, transfer, gains
and similar Taxes, levies, charges and fees including any deficiencies,
interest, penalties, additions to Tax or additional amounts excluding any
Income Taxes (collectively, "Transfer Taxes") incurred in connection with
the transactions contemplated by this Agreement (including the Intellectual
Property Agreements) shall be shared equally by the Buyer and the Sellers.
Buyer and Sellers shall use reasonable efforts to minimize the amount of
all Transfer Taxes and shall cooperate in providing each other with any
appropriate resale exemption certifications and other similar
documentation. The party that is required by applicable law to make the
filings, reports or returns and to handle any audits or controversies with
respect to any applicable Transfer Taxes shall do so, and the other party
shall cooperate with respect thereto as necessary.
(b) All real property taxes, personal property taxes and similar ad
valorem obligations levied with respect to the Acquired Assets for a
taxable period which
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includes (but does not end on) the Closing Date (collectively, the
"Apportioned Obligations") shall be apportioned between Sellers and Buyer
based on the number of days of such taxable period which fall on or before
the Closing Date (this and any other tax period which includes one or more
days falling on or before the Closing Date, a "Pre-Closing Tax Period") and
the number of days of such taxable period after the Closing Date (a
"Post-Closing Tax Period"). Except to the extent reflected on the Closing
Balance Sheets as an Assumed Obligation, Sellers shall be liable for the
proportionate amount of such taxes that is attributable to the Pre-Closing
Tax Period. Buyer shall be liable for any such taxes attributable to a
Pre-Closing Tax Period to the extent reflected on the Closing Balance
Sheets as an Assumed Obligation and Buyer shall be liable for the
proportionate amount of such taxes that is attributable to the Post-Closing
Tax Period. Upon receipt of any bill for real or personal property taxes
relating to the Acquired Assets, each of Sellers and Buyer shall present a
statement to the other setting forth the amount of reimbursement to which
each is entitled under this Section together with such supporting evidence
as is reasonably necessary to calculate the proration amount. The proration
amount shall be paid by the party owing it to the other within 30 days
after delivery of such statement. In the event that either Sellers or Buyer
shall make any payments for which it is entitled to reimbursement under
this Section, the other party shall make such reimbursement promptly but in
no event later than ten (10) days after the presentation of a statement
setting forth the amount of reimbursement to which the presenting party is
entitled along with such supporting evidence as is reasonably necessary to
calculate the amount of reimbursement.
14.4. Allowable Taxes.
(a) For purposes of this Section, "Allowable Tax" shall mean the
allocable share of any Tax of any Seller or any of its Affiliates which is
an allowable cost under the Federal Acquisition Regulation, 48 CFR Chapter
1, and associated regulations and agreements between any Seller and any
U.S. governmental entity, allocated based on the Sellers' existing finance
policy (as it is in effect on the date hereof).
(b) If Sellers have paid or reimbursed Buyer for any Allowable Tax
which is attributable to a Pre-Closing Tax Period, Buyer agrees to repay to
Sellers promptly upon receipt any portion of such Allowable Tax that Buyer
or any of its Affiliates is ultimately able to recover from the United
States government.
(c) If Buyer or any of its Affiliates receives a refund with respect
to an Allowable Tax that is attributable to a Pre-Closing Tax Period, Buyer
shall pay to Sellers the amount of such refund reduced by the amount, if
any, that Buyer will be required to pay to the United States government or
suffer by reason of offset in accordance with the Federal Acquisition
Regulation, 48 CFR Chapter 1, and associated regulations and agreements
between Seller and any U.S. governmental entity. If Sellers receive a
refund after the Closing Date with respect to an Allowable Tax that is
attributable to a Pre-Closing Tax Period, Sellers will pay to Buyer the
amount, if any, which Buyer will be
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required to pay to the U.S. government, or suffers by reason of an offset,
in accordance with the foregoing regulations.
(d) Sellers and Buyer agree to cooperate with respect to the
calculation of any amounts payable pursuant to this Section and to give
each other written notice of events reasonably likely to result in the
increase or decrease of any Allowable Tax attributable to a Pre-Closing Tax
Period.
14.5. Scope of Article 14.
(a) Notwithstanding the provisions of Article 13, the provisions of
this Article 14 (and not Article 13) shall govern the allocation of
responsibility between the Sellers and the Buyer for Taxes of the
Businesses.
(b) Claims under this Article 14 may be made by the Buyer and the
Seller at any time prior to the expiration of the statute of limitations
applicable to the Tax matter to which the Claim relates.
14.6. Payroll Taxes. To the extent such treatment is permitted by
applicable law, for purposes of computing payroll taxes since December 31, 1997,
the Sellers will be treated as a predecessor employer and Buyer agrees to treat
the Sellers as such.
Article 15
Termination, Amendment and Waiver
15.1. Termination. This Agreement may be terminated and abandoned at any
time prior to the Closing: (a) by either the Buyer or the Sellers in writing,
without liability to the non-terminating party on account of such termination,
if: (i) the Closing shall not have occurred on or before September 30, 1998 or,
in the event the DOJ provides an extension as contemplated by Section IV of the
Final Judgment, until the end of such extension, other than as a consequence of
the material breach or the material default of this Agreement by the terminating
party, (ii) there shall be a final nonappealable order of a federal or state
court in effect preventing consummation of the Acquisition; (iii) there shall be
any statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Acquisition by any Governmental Entity that would make
consummation of the Acquisition illegal or (iv) the DOJ or DOD object in
writing, pursuant to the Final Judgment, to the divestiture contemplated by this
Agreement, or notify the Sellers that it intends to so object; or (b) by mutual
written consent of the Sellers and the Buyer. In the event of the termination
and abandonment of this Agreement by the Sellers or the Buyer, as herein
provided, written notice thereof shall be given to the other party and this
Agreement shall terminate without any further action of the parties hereto.
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15.2. Effect of Termination. If this Agreement is terminated as provided
herein: (i) each party will redeliver all documents, work papers and other
material of the other party or parties relating to the transactions contemplated
hereby including such memoranda, notes, lists, records or other documents
compiled or derived from such material, whether so obtained before or after the
execution hereof, to the party furnishing the same; (ii) all information
received by any party hereto with respect to the business of the other parties
or their affiliated companies shall remain subject to the terms of the
Confidentiality Agreement (as defined in Article 16); and (iii) no party shall
have any liability or further obligation to any other party to this Agreement
except as provided by this Article 15, and except that any termination of this
Agreement shall not relieve a defaulting or breaching party from any liability
to the other party hereto. In addition, the provisions of Article 18 shall
remain in full force and effect and survive any termination of this Agreement.
Article 16
Confidentiality
16.1 Confidentiality Agreement. Any and all information disclosed by the
Buyer to the Sellers or by the Sellers to the Buyer as a result of the
negotiations leading to the execution of this Agreement, or in furtherance
thereof, which information was not already known to the Sellers or to the Buyer,
as the case may be, shall be subject to the Confidentiality Agreement, dated as
of November 20, 1997, between the Buyer and J.P. Morgan & Co. Incorporated (the
"Confidentiality Agreement"), all of the provisions of which are incorporated
into this Section 16.1 by this reference. Notwithstanding the foregoing, the
Confidentiality Agreement shall terminate upon the Closing.
16.2. Classified Information. Buyer acknowledges that Know-How (as defined
in the Intellectual Property Agreements) and other intellectual property to be
disclosed to Buyer pursuant to this Agreement and/or the Intellectual Property
Agreements may be considered as classified information by the United States
Government and nothing in this Agreement or the Intellectual Property Agreements
shall require Sellers to disclose classified information to Buyer until such
time as Buyer has received necessary clearances from the United States
Government to receive same.
Article 17
Definitions
As used herein the following terms not otherwise defined have the following
respective meanings:
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. As used
in this definition the term "control" (including the
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terms "controlled by" and "under common control with") means, with respect to
the relationship between or among two or more Persons, the possession, directly
or indirectly or as trustee or executor, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise, including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of directors or
similar body governing the affairs of such Person. The term "control" (including
the terms "controlled by" and "under common control with") also includes
ownership of fifty percent (50%) or more of the voting securities of a Person.
"A-Kit" means all components necessary to fit a B-Kit into a particular
ground vehicle, including the optics, electronics, software, visual display,
stabilization, and fire control as required.
"Assigned Intellectual Property" means any intellectual property (other
than software, trademarks or trade names) provided to the Businesses pursuant to
licenses or sublicenses and transferred to the Buyer as part of the Business
Contracts.
"B-Kit" means the common components for second generation Forward Looking
Infrared Systems ("FLIRs") designed under the HTI program, including SADA II
integrated cooler/dewar detector assemblies, afocal assemblies, and associated
electronics.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Defective Pricing Claims" means any claims arising under the Truth in
Negotiations Act (10 USC ss. 2306(a)) because Sellers furnished cost or pricing
data that were not complete, accurate and current as certified in Certificates
of Current Cost or Pricing Data submitted by Sellers.
"DOD" means the Department of Defense.
"DOJ" means the Antitrust Division of the Department of Justice.
"Encumbrance" means all liens, security interests, pledges, charges,
mortgages, conditional sales agreements, title retention agreements and other
encumbrances.
"Environmental Law" means any applicable Federal, state, local or foreign
law, treaty, judicial decision, regulation, rule, judgment, order, decree,
injunction, permit, approval, agreement or governmental restriction, each as in
effect on or prior to the Closing Date, relating to the environment, human
health, human safety or to any Hazardous Substance.
"EO/FPA Business Intellectual Property" means the "Raytheon Intellectual
Property", "Ground EO Business Intellectual Property", "FPA Business
Intellectual Property", "RTIS
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Intellectual Property" and "TI Licensed Intellectual Property" as defined in the
applicable Intellectual Property Agreement.
"EO Facilities" means that portion of the facilities located at 2000 and
2006 East El Segundo Blvd., El Segundo, California and at 1302 Orchard Hill
Road, LaGrange, Georgia, LaGrange, Georgia where the Ground EO Business is
currently conducted.
"EO Product" means electro-optical products.
"FPA" means a matrix of detectors or pixels made of material that is
sensitive to infrared ("IR") radiation, which is used to detect and analyze IR
radiation.
"FPA Business Intellectual Property" has the same meaning set forth in the
FPA Intellectual Property Agreement.
"FPA Facilities" means that portion of the S/C Building and the Research
West Building on the North Central Expressway in Dallas, Texas where the FPA
Business is currently conducted.
"GAAP" means generally accepted accounting principles which are consistent
with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, in effect for the applicable fiscal year.
"Government Contract" means (i) any contract, agreement, lease or
instrument relating to the Businesses between a Seller and any Governmental
Entity and (ii) any contract, agreement, lease or instrument relating to either
of the Businesses entered into by a Seller as subcontractor (at any tier) in
connection with a contract between another Person and any Governmental Entity.
"Governmental Entity" means any government or any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, Federal, state, local, transnational or foreign.
"Ground EO Business Intellectual Property" has the meaning set forth in the
EO Business Intellectual Property Agreement.
"Hazardous Substance" means any substance, pollutant, contaminant,
chemical, waste or material, including petroleum, its derivatives, by-products,
and other hydrocarbons, that is listed, identified in, or regulated under any
applicable Environmental Laws, including without limitation polychlorinated
biphenyls and asbestos.
"HTI" means the Horizontal Technology Integration program to develop a
common B-Kit to be used on different ground vehicle platforms.
<PAGE>
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"IBAS" means the Improved Bradley Acquisition System, a program to upgrade
the sights on a Bradley Fighting Vehicle.
"Income Taxes" means any Taxes based upon or related to income, including
any Taxes calculated in whole or in part based upon net revenues.
"Indebtedness" as applied to any Person, means all indebtedness of such
Person to any other Person for borrowed money, whether current or funded, or
secured or unsecured and all such Indebtedness of any other Person which is
directly or indirectly guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured against loss, but not including the endorsement
of checks and similar instruments.
"Knowledge of the Sellers" or "to the Sellers' knowledge" means and is
limited to the actual knowledge of any of the following persons: Charles
Mueller, Jim Majors, Bobette Brasfield, Michael Tinker, Mike Leake, James Baird,
James Robinson, Cynthia Pettitt, Lynn Mears, Thomas Joyce, John Schluckebier,
Owen Bennett, Guy Hatlie, Claudia Lampe, Carlotta Spears, Robert Duval, Steve
Board, Robert Darling, Scott Aiboshi and Joseph Hall.
"LRAS3" means the Long-Range Advanced Scout Surveillance System, a future
surveillance system to be mounted on light ground vehicles.
"M1-TIS" means the Thermal Imaging System for the M1 Abrams tank.
"Material Adverse Effect" means any material adverse effect on the
operations, assets or financial condition of the Businesses taken as a whole.
"Non-Income Taxes" means any Taxes other than Income Taxes.
"Permitted Encumbrances" means Encumbrances that (i) arise out of Taxes not
in default and payable without penalty or interest or the validity of which is
being contested in good faith by appropriate proceedings, (ii) are mechanics',
carriers', workers', repairmen's, or other similar liens that do not,
individually or in the aggregate, have a Material Adverse Effect, (iii) in
connection with any agreement or instrument constituting part of the Acquired
Assets, relate to restrictions on transfer embodied in the terms of such
agreement or instrument, (iv) represent the rights of customers, suppliers and
subcontractors in the ordinary course of business under contracts or under
general principles of commercial law, (v) are referred to in Section 2.4 of the
FPA Intellectual Property Agreement and Section 2.4 of the EO Intellectual
Property Agreement or (vi) that individually and in the aggregate could not
reasonably be expected to interfere with the use of the Acquired Assets in the
conduct of the normal business operations of the Businesses.
<PAGE>
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"Person" means any corporation, association, partnership, limited liability
company, organization, business, individual, government or political subdivision
thereof or governmental agency.
"SADA" means the Standardized Advanced Dewar Assembly and consists of a
scanning FPA mounted in an evacuated dewar. The SADA program is an effort by the
United States Army to develop a family of IR detectors that can be used in a
variety of battlefield systems.
"Tax" means any federal, state, provincial, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
"Tax Return" Any return, declaration, report, claim for refund, information
return, or other document (including any related or supporting estimates,
elections, schedules, statements, or information) filed or required to be filed
in connection with the determination, assessment, or collection of any Tax or
the administration of any laws, regulations, or administrative requirements
relating to any Tax.
"Transferred FPA Product" means scanning and staring cooled IR detectors,
including all dewar and cryogenic cooler manufacturing and dewar and cryogenic
cooler assembly, but excluding uncooled FPAs and first generation cooled IR
detectors.
Article 18
General
18.1 Survival of Representations and Warranties. Each of the
representations and warranties of the parties hereto contained in this Agreement
shall survive the Closing and shall expire on the last day, if any, a claim for
breach of representation may be made under Section 13.3 with respect thereto.
18.2. Expenses. Except as expressly provided otherwise in this Agreement,
each party shall pay its own expenses and costs incidental to the preparation of
this Agreement and to the consummation of the transactions contemplated hereby.
18.3. Assigns. This Agreement may not be assigned in whole or in part by
either party hereto without the prior written consent of the other party.
otwithstanding the foregoing:
(i) at the Closing, subject to approval of the DOJ and DoD, the Buyer
may, pursuant to written notice to the Sellers, assign its rights hereunder
to
<PAGE>
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acquire the Acquired Assets relating to the Ground EO Business or the FPA
Business, to assume the Assumed Obligations and to enter into the
applicable Transaction Documents to a whollyowned domestic subsidiary of
the Buyer (provided that (x) no such assignment shall relieve the Buyer of
any of its obligations hereunder, (y) both the Buyer and such assignee
shall be parties to the NonDisclosure Agreement and (z) at the Closing, the
Buyer shall execute and deliver to the Sellers a Guaranty Agreement in the
form of Exhibit L attached hereto); and
(ii) after the Closing, the Buyer may, pursuant to written notice to
the Sellers, assign its rights hereunder, insofar as they relate to either
the Ground EO Business or the FPA Business, and the applicable Transaction
Documents to any Affiliate of the Buyer (provided that (w) no such
assignment shall relieve the Buyer of any of its obligations hereunder, (x)
both the Buyer and such assignee shall be parties to the NonDisclosure
Agreement, (y) at the time of such assignment, the Buyer shall execute and
deliver to the Sellers a Guaranty Agreement in the form of Exhibit L
attached hereto) and (z) unless such assignment is to a whollyowned
domestic subsidiary of the Buyer, at the request of the Sellers the Buyer
will install at its cost information technology and security safeguards to
the extent required to eliminate any remaining contact between the
applicable portions of the Sellers' and Buyer's businesses; and
(iii) either party may assign this Agreement and the applicable
Transaction Documents to any successor in interest (whether by sale,
merger, consolidation or otherwise) to all or substantially all of such
party's business, and, in addition, any of the Sellers may assign this
Agreement to any successor in interest (whether by sale, merger,
consolidation or otherwise) to all or substantially all of Sellers' defense
business.
Any assignment of any rights under this Agreement by the Sellers or
the Buyer will be subject, in addition to any other requirements set forth
in this Agreement, (i) to compliance with applicable U.S. laws and
regulations governing control or export of products, technology and
technical data, including without limitation the U.S. International Traffic
in Arms Regulations, and other laws and regulations designed to protect the
national security of the United States and (ii) to the consent of TI as
provided in the FPA Intellectual Property Agreement, the FPA Master
Services Agreement and the TI Manufacturing Agreement. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and permitted assigns.
18.4. Entire Agreement, Etc. This Agreement (including the Schedules and
Exhibits and the Confidentiality Agreement) contains the entire understanding of
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and shall not be amended except by a written instrument
hereafter signed by each of the parties hereto.
<PAGE>
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EXCEPT AS SET FORTH IN ARTICLE 5, SELLERS MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY REPRESENTATION
OR WARRANTY WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
WITH RESPECT TO THE SALE OF THE ACQUIRED ASSETS HEREUNDER OR THE BUSINESSES.
18.5. Waiver of Certain Damages. EACH OF THE SELLERS AND THE BUYER TO THE
FULLEST EXTENT PERMITTED BY LAW, IRREVOCABLY WAIVES ANY RIGHTS THAT THEY MAY
HAVE TO INCIDENTAL, CONSEQUENTIAL OR SPECIAL (INCLUDING PUNITIVE OR MULTIPLE)
DAMAGES BASED UPON, OR ARISING OUT OF, THIS AGREEMENT OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS OR ACTIONS OF ANY OF THEM RELATING THERETO.
18.6. Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party.
18.7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE CHOICE-OF-LAW RULES)
OF THE COMMONWEALTH OF MASSACHUSETTS.
18.8. Notices. All notices, requests, payments, instructions or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if delivered
personally or if mailed by certified mail, return receipt requested, postage
prepaid, or sent by written telecommunication, as follows:
If to the Sellers, to:
Raytheon Company
141 Spring Street
Lexington, MA 02173
Facsimile: (781) 860-2822
Attention: Christoph L. Hoffmann
with a copy sent contemporaneously to:
John R. Utzschneider, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Facsimile: (617) 951-8736
<PAGE>
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If to the Buyer, to:
DRS Technologies, Inc.
5 Sylvan Way
Parsippany, New Jersey 07054
Facsimile: (973) 539-7562
Attention: Nina Laserson Dunn
with a copy sent contemporaneously to:
Arnold & Porter
399 Park Avenue
New York, New York 10022
Facsimile: 212-715-1399
Attention: Vijay S. Tata
18.9. Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
18.10. Section Headings. All enumerated subdivisions of this Agreement are
herein referred to as "section" or "subsection." The headings of sections or
subsections are for reference only and shall not limit or control the meaning
thereof.
18.11. Public Statements or Releases. The parties hereto each agree that
prior to the Closing no party to this Agreement shall make, issue or release any
public announcement, statement or acknowledgment of the existence of, or reveal
the status of, this Agreement or the transactions provided for herein, without
first obtaining the consent of the other party hereto. Nothing contained in this
Section 18.11 shall prevent any party from making such public announcements as
such party may consider necessary in order to satisfy such party's legal
obligations, provided that such disclosing party shall to the extent practicable
give prior notice to the other party of the contents of, and requirement for,
such disclosure.
18.12. No Third Party Beneficiaries. No Assumed Employee, Optional Employee
or other current or former employee of the Sellers or any of their Affiliates
(or respective spouses or beneficiaries of such persons), or any other person
not a named party to this Agreement, shall be entitled to assert any claim
hereunder. This Agreement shall be binding upon and inure to and benefit only
the named parties hereto and their respective successors. Notwithstanding any
other provisions to the contrary, except with respect to such successors, this
Agreement is not intended and shall not be construed for the benefit of any
thirdparty or person not a signatory hereto. In no event shall this Agreement
constitute a third party beneficiary contract.
<PAGE>
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18.13. Disclosure in Schedules. For purposes of this Agreement, with
respect to any matter that is clearly disclosed in any portion of the Disclosure
Schedule in such a way as to make its relevance to the information called for by
another Section of this Agreement readily apparent, such matter shall be deemed
to have been included in the Disclosure Schedule in response to such other
Section, notwithstanding the omission of any appropriate crossreference thereto.
18.14. Arbitration.
(a) All disputes or claims arising under or in any way relating to
this Agreement or the Transaction Documents or to the acquisition of the
Businesses by the Buyer shall be settled by arbitration before a panel of
three (3) arbitrators (with one designated by the Sellers and one
designated by the Buyer, and the third arbitrator designated by the first
two) pursuant to the rules of the American Arbitration Association. Any
arbitrator designated by the Sellers or the Buyer must be an "Independent
Person". For the purposes of this Section 18.14, an "Independent Person"
shall be an individual who is not and has not been (i) a director, officer,
employee, agent or shareholder of either party hereto, (ii) a consultant to
either party hereto, (iii) a person with a direct or indirect financial
interest in any contract with either party hereto, (iv) a director, officer
or key employee of a company at a time when such company was party to a
contract with either party hereto, or (v) a relative of any person referred
to in clauses (i), (ii), (iii) or (iv) above. As used in the immediately
preceding sentence, the term "either party hereto" shall be deemed to
include any Affiliates of the parties hereto. Any such arbitration shall
take place in Boston, Massachusetts. Arbitration may be commenced at any
time by any party hereto giving written notice to the other party or
parties hereto that such dispute has been referred to arbitration under
this Section 18.14. The third arbitrator shall be selected as prescribed
above, but if the first two (2) arbitrators do not so agree within thirty
(30) days after the date of the notice referred to above, the selection
shall be made pursuant to the rules of the American Arbitration Association
from the Commercial Arbitration Panel maintained by such Association. Any
award rendered by the arbitrators shall be conclusive and binding upon the
parties hereto; provided, however, that any such award shall be accompanied
by a written opinion of the arbitrators giving the reasons for the award.
In making such award, the arbitrators shall be authorized to award interest
on any amount awarded. This provision for arbitration shall be specifically
enforceable by the Sellers and the Buyer and the decision of the
arbitrators in accordance herewith shall be final and binding and there
shall be no right of appeal therefrom. Each of the Sellers and the Buyer
shall pay its own expenses of arbitration and the expenses of the
arbitrators shall be equally shared; provided, however, that if in the
opinion of a majority of the arbitrators any claim or any defense or
objection thereto was frivolous or in bad faith, the arbitrators may
assess, as part of the award, all or any part of the arbitration expenses
of the other party (including reasonable attorneys' fees) and of the
arbitrators against the party raising such unreasonable claim, defense or
objection.
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(b) To the extent that arbitration may not be legally permitted
hereunder and the Sellers and the Buyer do not at the time of such dispute
or claim mutually agree to submit such dispute or claim to arbitration
either the Sellers or the Buyer may commence a civil action in a court of
appropriate jurisdiction to solve disputes or claims hereunder. Nothing
contained in this Section 18.14 shall prevent the Sellers and the Buyer
from settling any dispute or claim by mutual agreement at any time.
(c) Neither party shall be precluded hereby from seeking, from the
courts of any jurisdiction, provisional or equitable remedies of a type not
available in arbitration, including without limitation, temporary
restraining orders and preliminary or permanent injunctions, nor shall the
pursuit of such provisional or equitable relief constitute a waiver or
modification of such party's right and obligation to arbitrate any related
or unrelated dispute which is otherwise subject to arbitration under this
Agreement, unless such waiver is expressed in writing and signed by such
party. In the event any Person not a party to this Agreement shall commence
any interpleader or similar action which either directly or indirectly
raises issues which are subject to arbitration hereunder, the Sellers and
the Buyer shall seek a stay of such proceedings pending arbitration in
accordance with this Agreement.
(d) In the event of any Third Party Claim or any Infringement Claim
where the Indemnifying Party does not assume the defense of such Third
Party Claim, nothing in this Section 18.14 shall prevent the Indemnified
Party from impleading the Indemnifying Party or otherwise joining the
Indemnifying Party to any litigation relating to such Third Party Claim or
Infringement Claim.
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
an instrument under seal as of the day and year first above written.
RAYTHEON COMPANY
By: /s/ DAVID S. DWELLEY
-----------------------------------------
Name: David S. Dwelley
Title: Vice President
RAYTHEON TI SYSTEMS, INC.
By: /s/ DAVID W. WELP
-----------------------------------------
Name: David W. Welp
Title: President
RAYTHEON SYSTEMS GEORGIA, INC.
By: /s/ BROOKS S. DOYLE JR.
-----------------------------------------
Name: Brooks S. Doyle, Jr.
Title: Secretary
DRS TECHNOLOGIES, INC.
By: /s/ MARK NEWMAN
-----------------------------------------
Name: Mark Newman
Title: President
RAYTHEON TI SYSTEMS, INC. RAYTHEON COMPANY RAYTHEON SYSTEMS GEORGIA, INC.
17217 WATERVIEW PARKWAY 141 SPRING STREET 1302 ORCHARD HILL ROAD
DALLAS, TX 75252 LEXINGTON, MA 02173 LAGRANGE, GA 30240
PERSONAL AND CONFIDENTIAL
October 20, 1998
DRS Technologies, Inc.
5 Sylvan Way
Parrispany, NJ 07054
Dear Ladies and Gentlemen:
Reference is hereby made to (i) the Asset Purchase Agreement, dated as of
July 28, 1998 (the "Agreement"), among Raytheon Company, a Delaware corporation
("Raytheon"), Raytheon Systems Georgia, Inc., a Delaware corporation ("RSG"),
Raytheon TI Systems, Inc., a Delaware corporation ("RTIS" and, together with
Raytheon and RSG, the "Sellers"), and DRS Technologies, Inc., a Delaware
corporation (the "Buyer") and (ii) the letter agreement relating thereto, dated
as of July 28, 1998 (the "Side Letter"), by and among the Sellers and the Buyer.
Defined terms used herein without definition have the meanings given them in the
Agreement.
The Sellers and Buyer agree as follows:
1. The Agreement is hereby amended as follows:
(i) Section 1.1(b) of the Agreement is hereby amended in its entirety to
read as follows:
"(b) Subject to Section 12.27, all of the Sellers' billed and unbilled
accounts receivable relating primarily to either of the Businesses
outstanding on the Closing Date, including the accounts receivable listed
on Schedule 1.1(b) to the extent not collected prior to the Closing Date,
in
<PAGE>
each case to the extent reflected on the Closing Balance Sheets (as defined
in Section 3.2), as finally adjusted pursuant to Section 3.2;"
(ii) Section 1.2(b) of the Agreement is hereby amended in its entirety to
read as follows:
"(b) any of the Sellers' cash, marketable or other securities,
commercial paper and cash equivalents or other investments, on hand or in
bank accounts, and all of the Sellers' bank accounts and the Progress
Payments (as defined in Section 12.27)."
(iii) Section 3.2(a) of the Agreement is hereby amended by deleting the
last sentence thereof.
(iv) The last sentence of Section 3.2(b) of the Agreement is hereby amended
to read as follows:
"Attached hereto as Schedule 3.2 is a statement of Net Assets as of
December 31, 1997, based on the December Statement and procedures for
calculating Net Assets as provided above (the 'Model Statement')."
(v) Section 3.2(d) of the Agreement is hereby amended in its entirety to
read as follows:
"(d) Upon the determination pursuant to paragraph (c) of this Section
3.2 of the definitive Closing Balance Sheets and the Net Assets as of the
Closing Date, the Purchase Price shall be either (i) increased by the
amount, if any, by which the amount of Net Assets is greater than
$29,051,000 or (ii) decreased by the amount, if any, by which the amount of
Net Assets is less than $29,051,000 (the "Adjustment"); provided, however,
in no event will any upward Adjustment, excluding any upward Adjustment
attributable to the acquisition of the equipment described in Schedule
3.2(d), exceed $7,000,000, unless the Closing occurs after October 20, 1998
(in which event the maximum upward Adjustment shall be subject to
modification by the parties), in which case an upward Adjustment may exceed
$7,000,000. If the Purchase Price is increased, the Buyer shall pay such
amount to the Sellers, and if the Purchase Price is decreased, the Sellers
shall pay such amount to the Buyer. Any such payment shall be made in cash
or same day funds within ten (10) days after the determination of the
Adjustment pursuant to paragraph (c). Any such payment shall bear interest
from the Closing Date to the date preceding payment at a rate equal to the
"Prime Rate" as set forth from time to time in The Wall Street Journal
"Money Rates" column from the Closing Date to the date preceding payment."
<PAGE>
(vi) Section 5.5 of the Agreement is hereby amended in its entirety to read
as follows:
"The Sellers have furnished to the Buyer, and attached as Schedule 5.5
hereto is, a copy of the Statement of Assets to be Acquired and Liabilities
to be Assumed of the Ground EO Business and FPA Business on a combined
basis as of December 31, 1997 (the 'December Statement'). The December
Statement has been audited by PriceWaterhouse Coopers LLP, the Sellers'
independent accountants, but is in draft form subject to changes in the
footnotes to describe any changes to the ancillary agreements described in
the footnotes and subject to delivery of PriceWaterhouse Coopers LLP's
audit opinion after consummation of the Closing. The December Statement has
been prepared in accordance with GAAP and fairly presents in all material
respects the combined financial position of the Businesses as of December
31, 1997, except as otherwise disclosed in the notes to the December
Statement."
vii Section 5.17 of the Agreement is hereby amended by amending paragraph
(a)(ii) in its entirety to read as follows:
"(ii) Each of the Businesses has all licenses, permits and
governmental consents required under Environmental Laws for the operation
of the Businesses as presently conducted (the "Environmental Permits") and
there are no violations, investigations or proceedings nor, to the
knowledge of the Sellers, are any investigations or proceedings pending or
threatened, with respect to the Environmental Permits except where the
failure to have such Environmental Permits or where the violation,
investigation or proceeding relating thereto would not, individually or in
the aggregate, have a Material Adverse Effect. Such Environmental Permits
are listed on Schedule 5.20 hereto. Without limiting the generality of the
foregoing, the Environmental Permits include one or more air discharge
permits relating in part to the FPA Business (the "Texas Air Permits"). The
Texas Air Permits are sufficient in all material respects for the operation
of the Sellers' businesses at the TI Expressway site in Dallas, Texas
(including the S/C building and the Research West building) as currently
conducted, including the FPA Business. After the Closing the Sellers will
cooperate with the Buyer to cause the applicable regulatory authorities to
issue one or more new air permits (as replacements for the Texas Air
Permits as they relate to the FPA Business) applicable to the FPA Business
as owned by the Buyer, with the applications for such air permits to
request permitted discharge levels sufficient to permit the FPA Business to
continue its operations as currently conducted. To the knowledge of the
Sellers, there is no reason the issuance of such new air permits will not
be granted by the applicable regulatory authorities. RTIS as owner of the
FPA Business, if it wished to increase from current levels the level of
VOCs permitted to be
<PAGE>
generated, would be eligible for the exemption provided under 30 Tex Admin.
Code tit. 30, ss.106.225."
(viii) Article 12 of the Agreement is hereby amended by adding the
following Section 12.27:
"12.27. Progress Payments. (a) The Sellers shall retain as Excluded
Assets the right to receive $2,195,772 in progress payments as described on
Schedule 12.27 hereto (the 'Progress Payments')."
(b) The Sellers will be responsible for collecting the Progress
Payments and will have the right to take all commercially reasonable
actions in collecting the Progress Payments consistent with past practice.
The Buyer will provide reasonable cooperation to the Sellers in collecting
the Progress Payments. In the event that the Buyer receives any amounts
with respect to the Progress Payments, it will promptly remit such amounts
to the Sellers."
(ix) Section 12.22(a) of the Agreement is hereby amended by adding the
phrase "per person" at the end of the second sentence, by amending the reference
to September 30, 1998 to November 25, 1998 and by adding the following after the
third sentence of Section 12.22(a):
"RSG also agrees to allow Buyer to use space in the Georgia Facility
for storage of equipment only through December 11, 1998."
(x) Section 15.1 of the Agreement is hereby amended by amending clause
(a)(i) in its entirety to read as follows:
"(i) the Closing shall not have occurred on or before October 20,
1998 or, in the event the DOJ provides an extension as contemplated by
Section IV of the Final Judgment, until the end of such extension,
other than as a consequence of the material breach or the material
default of this Agreement by the terminating party,"
(xi) The Agreement is hereby amended by amending all references to
"December Balance Sheets" to "December Statement".
(xii) The Disclosure Schedules are hereby amended by adding thereto as
Schedules 3.2, 3.2(d), 5.5 and 12.27 the attached Schedules 3.2, 3.2(d), 5.5 and
12.27.
2. Contract Assignment and Novation. Pursuant to Section 18.3 of the
Agreement, the Buyer intends (i) to assign to DRS EO, Inc., ("DRS EO"), a
Delaware corporation wholly-owned by the Buyer, the Buyer's right to acquire the
Acquired Assets
<PAGE>
and assume the Assumed Obligations related to the Ground EO Business and (ii) to
assign to DRS FPA, L.P. ("DRS FPA"), a Delaware limited partnership of which the
Buyer is the sole limited partner and a corporation wholly-owned by the Buyer is
the sole general partner, the Buyer's right to acquire the Acquired Assets and
assume the Assumed Obligations related to the FPA Business. In connection with
the transfer or novation of Assumed Contracts contemplated by Sections 12.1 and
12.2 of the Agreement, the Buyer agrees that if any party to such Assumed
Contract requests that the Buyer provide a guaranty with respect to the
obligations under the Assumed Contract of DRS EO or DRS FPA, the Buyer will
provide such a guaranty in a form generally comparable to the Guaranty to be
delivered by the Buyer pursuant to Section 18.3 of the Agreement, and with such
guaranty in any event guaranteeing all obligations guaranteed by the applicable
Seller in any novation agreement relating to such Assumed Contract and provided
that any guarantees to be provided by the Buyer or any Seller will also be in a
form acceptable to the Department of Defense. In addition, in connection with
the novation of Government Contracts contemplated by Section 12.2 of the
Agreement, the Buyer will take commercially reasonable steps to satisfy novation
requirements, including, if necessary, converting ownership of the FPA Business
to a corporation.
3. Export Licenses. With respect to the permits and licenses referred to in
Schedule 5.20 of the Disclosure Schedule, attached for the Buyer's reference as
Annex A is an updated list of export licenses still applicable to the FPA
Business and the Ground EO Business.
4. Wiring Instructions. At the Closing, the Buyer will wire transfer to
Raytheon Company the sum of $45,000,000, which represents the Purchase Price
prior to the adjustments provided for in Section 3.2(d).
The wire transfer should be made to the following account:
Bank of Boston
100 Federal Street
Boston, MA
ABA 011000390
Raytheon Company - Account No. 326-80007
<PAGE>
Please sign where noted below to confirm the foregoing agreements.
Very truly yours,
RAYTHEON TI SYSTEMS, INC.
By: /s/ JOHN W. KAPPLES
----------------------------
Name: John W. Kapples
Title: Assistant Secretary
RAYTHEON COMPANY
By: /s/ DAVID S. DWELLEY
----------------------------
Name: David S. Dwelley
Title: Vice President
RAYTHEON SYSTEMS GEORGIA,INC.
By: /s/ BROOKS S. DOYLE, JR.
----------------------------
Name: Brooks S. Doyle, Jr.
Title: Secretary
ACCEPTED AND AGREED:
DRS TECHNOLOGIES, INC.
By: /s/ NINA LASERSON DUNN
-------------------------
Name: Nina Laserson Dunn
Title: Executive Vice
President, General
Counsel & Secretary
<PAGE>
Schedule 3.2(d) to
Asset Purchase Agreement
New Equipment Excluded
From Adjustment Cap
See attached letter dated September 3, 1998.
<PAGE>
Schedule 5.5 to
Asset Purchase Agreement
December Statement
See attached.
[To be filed by amendment]
<PAGE>
Schedule 12.27 to
Asset Purchase Agreement
Progress Payments
See attached.
<PAGE>
Annex A to
Letter Agreement
See attached.
================================================================================
AMENDED AND RESTATED
REVOLVING CREDIT LOAN AND TERM LOAN AGREEMENT
executed by and among
DRS TECHNOLOGIES, INC., DRS TECHNOLOGIES CANADA COMPANY,
DRS TECHNOLOGIES CANADA, INC., DRS EO, INC.
AND DRS FPA, L.P.,
as the Co-Borrowers,
and
MELLON BANK, N.A.,
as the Agent and as a Lender
and
MELLON BANK CANADA,
as a Lender
and
OTHER LENDERS HEREAFTER
SIGNATORY HERETO,
as a Lender
Dated: October 20, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
PREAMBLE AND RECITALS....................................................... 1
ARTICLE I
DEFINITIONS; RULES OF
INTERPRETATION AND CONSTRUCTION;
AND ACCOUNTING PRINCIPLES
Section 1.01 Definitions.................................................... 11
Section 1.02 Rules of Interpretation and Construction...................... 47
Section 1.03 Accounting Principles......................................... 48
ARTICLE II
AMOUNTS AND TERMS OF THE
LOAN FACILITIES
Section 2.01 Revolving Credit Loan Facility................................ 50
Section 2.02 Term Loan Facility #1......................................... 59
Section 2.03 Term Loan Facility #2......................................... 61
Section 2.04 Interest on the Loan Facilities............................... 62
Section 2.04A Canadian Bankers Acceptances.................................. 67
Section 2.05 Fees.......................................................... 72
Section 2.06 Prepayments................................................... 74
Section 2.07 Payments; Collection of Accounts.............................. 78
Section 2.08 Special Provisions Governing Eurodollar Rate Loans............ 80
Section 2.09 Increased Capital............................................. 84
Section 2.10 Authorized Officers of the Co-Borrowers....................... 84
Section 2.11 Taxes......................................................... 84
Section 2.12 Security for the Loan Facilities.............................. 87
Section 2.13 Currency Fluctuations......................................... 87
Section 2.14 Joint and Several Liability................................... 89
ARTICLE III
CONDITIONS TO THE LOAN FACILITIES
Section 3.01 Conditions Precedent to the Effectiveness of this Loan
Agreement................................................... 90
Section 3.02 Conditions Precedent to All Loans and Letters of Credit....... 93
i
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties on the Closing Date............. 95
Section 4.02 Subsequent Funding Representations and Warranties..............105
ARTICLE V
REPORTING COVENANTS
Section 5.01 Statement of Accounting........................................106
Section 5.02 Reporting and Information Requirements.........................106
Section 5.03 Environmental Notices..........................................111
Section 5.04 Notice of Name Changes and Location Changes....................111
ARTICLE VI
AFFIRMATIVE COVENANTS
Section 6.01 Corporate Existence, etc.......................................112
Section 6.02 Corporate Powers, etc..........................................112
Section 6.03 Compliance with Laws, etc......................................112
Section 6.04 Payment of Taxes and Claims....................................112
Section 6.05 Maintenance of Properties; Insurance...........................112
Section 6.06 Inspection of Property; Books and Records; Discussions.........113
Section 6.07 Litigation, Claims, etc........................................113
Section 6.08 Labor Disputes.................................................114
Section 6.09 Maintenance of Licenses, Permits, etc..........................114
Section 6.10 Use of Proceeds................................................114
Section 6.11 Continuation of or Change in Business..........................114
Section 6.12 Additional Corporate Guarantors and/or Partnership
Guarantors...................................................114
Section 6.13 Minimum Asset Coverage.........................................114
Section 6.14 Minimum Required Interest Rate Hedge Protection................114
Section 6.15 Year 2000......................................................115
Section 6.16 Year 2000 Compliance...........................................115
ii
<PAGE>
ARTICLE VII
NEGATIVE COVENANTS
Section 7.01 Consolidated Debt..............................................116
Section 7.02 Sales of Assets; Liens.........................................116
Section 7.03 Loans, Advances and Investments................................117
Section 7.04 Restricted Junior Payments.....................................118
Section 7.05 Restriction on Fundamental Changes.............................118
Section 7.06 ERISA..........................................................119
Section 7.07 Amendment of Articles of Incorporation or By-Laws..............119
Section 7.08 Margin Regulations.............................................119
Section 7.09 Cancellation of Consolidated Debt; Prepayments.................119
Section 7.10 Environmental Liabilities......................................120
Section 7.11 Guaranties.....................................................120
Section 7.12 No Negative Pledges to Other Person............................120
ARTICLE VIII
FINANCIAL COVENANTS
Section 8.01 Minimum Consolidated Net Worth.................................121
Section 8.02 Maximum Consolidated Senior Debt Leverage Ratio................121
Section 8.03 Maximum Consolidated Funded Debt Leverage Ratio................122
Section 8.04 Minimum Consolidated Fixed Charge Coverage Ratio...............123
ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 9.01 Events of Default..............................................125
Section 9.02 Rights and Remedies............................................127
Section 9.03 Application of Proceeds........................................128
Section 9.04 No Notices.....................................................128
Section 9.05 Agreement to Pay Attorneys' Fees and Expenses..................128
Section 9.06 No Additional Waiver Implied by One Waiver.....................129
Section 9.07 Failure to Exercise Rights.....................................129
Section 9.08 Waiver Of Jury Trial...........................................129
Section 9.09 Remedies Cumulative............................................129
iii
<PAGE>
ARTICLE X
THE AGENT
Section 10.01 Appointment...................................................131
Section 10.02 General Nature of the Agent's Duties..........................131
Section 10.03 Exercise of Powers............................................132
Section 10.04 General Exculpatory Provisions................................132
Section 10.05 Administration by the Agent...................................133
Section 10.06 Each Lender Not Relying on Agent or Other Lenders.............134
Section 10.07 Indemnification...............................................134
Section 10.08 Agent in its Individual Capacity..............................134
Section 10.09 Holders of Notes..............................................135
Section 10.10 Successor Agent...............................................135
Section 10.11 Additional Agents.............................................135
Section 10.12 Calculations..................................................136
ARTICLE XI
MISCELLANEOUS
Section 11.01 Concerning the Collateral and the Collateral Documents........137
Section 11.02 Assignments and Participations................................137
Section 11.03 Expenses......................................................140
Section 11.04 Indemnity.....................................................141
Section 11.05 Ratable Sharing...............................................142
Section 11.06 Amendments and Waivers........................................142
Section 11.07 Independence of Covenants.....................................144
Section 11.08 Notices.......................................................144
Section 11.09 Survival of Warranties and Agreements.........................144
Section 11.10 Marshalling; Recourse to Security; Payments Set Aside.........144
Section 11.11 Severability..................................................144
Section 11.12 Governing Law.................................................144
Section 11.13 Successors and Assigns........................................144
Section 11.14 Consent to Jurisdiction and Service of Process................145
Section 11.15 Counterparts; Effectiveness; Inconsistencies..................145
Section 11.16 Construction..................................................146
Section 11.17 Entire Agreement..............................................146
Section 11.18 Process Agent.................................................146
Section 11.19 Judgment Currency.............................................146
iv
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit "A" Form of Assignment and Acceptance Agreement
Exhibit "B" Form of Letters of Credit Reimbursement Agreement
Exhibit "C" Form of Borrowing Base Certificate
Exhibit "D" Form of Notice of Borrowing and Form of Canadian
Bankers Acceptance Notice
Exhibit "E" Form of Notice of Conversion/Continuation
Exhibit "F" Form of Officer's Certificate
Exhibit "G" Form of Amended and Restated Revolving Credit Loan
Note and Form of Amended and Restated Canadian Revolving
Credit Loan Note
Exhibit "H" Form of Swap Agreement
Exhibit "I" Form of Term Loan #1 Note and Form of Canadian Term Loan
Note
Exhibit "J" Form of Term Loan #2 Note
Exhibit "K" Form of Opinion Letter
SCHEDULES
Schedule 1.01-A List of Leased Properties
Schedule 1.01-B Customary Permitted Liens
Schedule 1.01-C Eurodollar Affiliates
Schedule 1.01-D Permitted Encumbrances
Schedule 2.01 List of Subsidiaries and/or Affiliates who may Borrow
and/or Have Letters of Credit Issued for their Account
Schedule 2.01 (vi) Schedule of Existing Letters of Credit
Schedule 2.05 (ii) Letter of Credit Fees
Schedule 4.01 (iii) Ownership of Capital Stock
Schedule 4.01 (vii) Pending or Threatened Litigation
Schedule 4.01 (xv) Environmental Matters
Schedule 4.01 (xvi) ERISA
Schedule 4.01 (xx) Joint Venture/Partnership
Schedule 4.01 (xxi) Insurance Policies, Programs and Claims
Schedule 4.01 (xxv) List of Undisclosed Liabilities
Schedule 4.01 (xxvii) Labor Matters
Schedule 4.01 (xxix) Locations of Books and Records
Schedule 4.01 (xxx) Business Names
Schedule 4.01 (xxxi) Location of Collateral
Schedule 6.05 Schedule of Insurance Policies and Programs
Schedule 7.01(iii) Permitted Existing Debt
Schedule 7.03 Existing Loans, Advances, Investments
Schedule 7.11(i) Existing Guaranties
v
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT LOAN AND
TERM LOAN AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM LOAN AGREEMENT
(hereinafter as it may be from time to time amended, modified, extended,
refinanced, renewed and/or supplemented referred to as this "Loan Agreement"),
is made this 20th day of October, 1998, by and among
DRS TECHNOLOGIES, INC., a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, having its principal
office located at 5 Sylvan Way, Parsippany, New Jersey 07054 (hereinafter
referred to as "DRS"),
AND
DRS TECHNOLOGIES CANADA, INC., a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, having
its principal office located at 5 Sylvan Way, Parsippany, New Jersey 07054
(hereinafter referred to as "DRS Canada Inc."),
AND
DRS TECHNOLOGIES CANADA COMPANY, a Nova Scotia company, having its
principal office and chief executive office located at 365 March Road, Kanata,
Ontario K2K 1X3 (hereinafter referred to as "DRS Flight Safety"),
AND
DRS EO, INC., a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, having its principal office
located at 2000 East El Segundo Blvd., El Segundo, California 90245 (hereinafter
referred to as "DRS EO"),
AND
DRS FPA, L.P., a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware, having its principal
office located at 13588 North Central Expressway, Dallas, Texas 75243
(hereinafter referred to as "DRS FPA, L.P." and hereinafter DRS, DRS Canada
Inc., DRS Flight Safety, DRS EO and DRS FPA L.P. shall be collectively referred
to as the "Co-Borrowers" and sometimes individually referred to as a
"Borrower"),
AND
MELLON BANK, N.A., a national banking association duly organized and
validly existing under the laws of the United States of America, having an
office located at Mellon Bank Center, 1735 Market Street, Philadelphia,
Pennsylvania 19101, in its capacity as a lender
1
<PAGE>
hereunder (hereinafter sometimes referred to individually as "Mellon US" and/or
as a "Lender"),
AND
MELLON BANK CANADA, one of the chartered banks of Canada, duly organized
and validly existing under the laws of Canada, having an office located at Royal
Trust Tower, 32nd Floor, Toronto Dominion Center, Toronto, Ontario M5K 1K2, in
its capacity as a lender hereunder as well as a holder of certain security
provided for herein (hereinafter sometimes referred to as "Mellon Canada" and/or
as a "Lender"),
AND
OTHER FINANCIAL INSTITUTIONS, that are either signatories to this Loan
Agreement or who from time to time may hereafter become a lender under the Loan
Agreement pursuant to Section 11.8 hereof (hereinafter together with Mellon US
and Mellon Canada, collectively referred to as the "Lenders" and individually
referred to as a "Lender"),
AND
MELLON BANK, N.A., a national banking association duly organized and
validly existing under the laws of the United States of America, having an
office located at Mellon Bank Center, 1735 Market Street, Philadelphia,
Pennsylvania 19101, in its capacity as the agent for the Lenders hereunder
(hereinafter referred to as the "Agent", as said definition is more fully
described in Section 1.01 hereof).
W I T N E S S E T H:
WHEREAS, the Co-Borrowers are engaged in the business of designing,
manufacturing and marketing high technology products for military and commercial
customers in the United States, Canada and overseas; and
WHEREAS, on October 29, 1997, pursuant to a certain Revolving Credit
Loan and Term Loan Agreement dated October 29, 1997 (hereinafter as it may be
from time to time amended, modified, extended, renewed, refinanced and/or
supplemented referred to as the "Original Loan Agreement"), executed by and
between DRS, DRS Canada Inc. and DRS Flight Safety, collectively as the
co-borrowers (hereinafter referred to as the "Original Co-Borrowers"), and
Mellon US and Mellon Canada, collectively as the lenders (hereinafter referred
to as the "Original Lenders") agreed to make to the Original Co-Borrowers a
secured recourse revolving credit loan in the aggregate principal amount of up
to Forty Million and 00/100 (US$40,000,000.00) Dollars for the purposes of
financing (i) a portion of the Original Co-Borrowers' general corporate
requirements, including, without limitation, (a) working capital, (b)
commercial/documentary and standby letters of credit and (ii) the acquisition by
DRS Canada Inc. of 100% of the stock of Spar Aerospace (U.K.) Limited, a company
incorporated under the laws of England and Wales (hereinafter referred to as
"Spar (UK)"), as such acquisition is more fully described in the Loan Agreement
(hereinafter referred to as the "Original Revolving Credit
2
<PAGE>
Loan Facility"), subject to the terms and conditions of the Original Loan
Agreement; and
WHEREAS, on October 29, 1997, pursuant to the terms and conditions of the
Original Loan Agreement, the Original Lenders agreed to make to the Original
Co-Borrowers a secured recourse term loan in "Canadian Dollars" (as such term is
defined in the Original Loan Agreement), having a "Dollar Equivalent" (as such
term is defined in the Original Loan Agreement), in the aggregate principal
amount of Twenty Million and 00/100 (US$20,000,000.00) Dollars for the purpose
of financing the acquisition by DRS Flight Safety of certain assets and
properties of Spar Aerospace Limited, a corporation existing under the laws of
Canada, as such acquisition is more fully described in the Original Loan
Agreement (hereinafter referred to as the "Original Term Loan Facility"), also
subject to the terms and conditions of the Original Loan Agreement; and
WHEREAS, for the purposes of this Loan Agreement, the Original Revolving
Credit Loan Facility and the Original Term Loan Facility, as they may from time
to time be hereinafter amended, modified, extended, refinanced and/or otherwise
supplemented, shall be collectively referred to as the "Original Loan
Facilities"; and
WHEREAS, on October 29, 1997, pursuant to a certain Agreement of Guaranty
dated October 29, 1997 (hereinafter as it may be from time to time amended,
modified, extended, renewed, refinanced and/or supplemented referred to as the
"Original Agreement of Guaranty"), executed by the "Corporate Guarantors" and
the "Partnership Guarantor" (as such terms are defined in the Original Loan
Agreement and the Original Agreement of Guaranty), on a joint and several basis,
in favor of the Agent, on behalf of the Original Lenders, the Corporate
Guarantors and the Partnership Guarantor (hereinafter collectively referred to
as the "Original Guarantors"), unconditionally agreed to guaranty the "Liability
of the Co-Borrowers" and the "Liabilities of the Co-Borrowers" (as such terms
are defined in the Original Agreement of Guaranty); and
WHEREAS, on October 29, 1997, pursuant to a certain Security Agreement #1
dated October 29, 1997 (hereinafter referred to as the "Original Security
Agreement #1"), executed by and among DRS, DRS Canada Inc. and the Agent, on
behalf of the Original Lenders, DRS and DRS Canada Inc. granted to the Agent, on
behalf of the Original Lenders, a security interest in all of the "Collateral"
(as such term is defined in the Original Security Agreement #1), as security for
all of the "Obligations" (as such term is defined in the Original Security
Agreement #1) of the Original Co-Borrowers; and
WHEREAS, on October 29, 1997, pursuant to a certain Security Agreement #2
dated October 29, 1997 (hereinafter referred to as the "Original Security
Agreement #2"), executed by and among the Original Guarantors and the Agent, on
behalf of the Original Lenders, the Original Guarantors granted to the Agent, on
behalf of the Original Lenders, a security interest in all of the "Collateral"
(as such term is defined in the Original Security Agreement #2), as security for
all of the "Obligations" (as such term is defined in the Original Security
Agreement #2) of the Original Co-Borrowers; and
WHEREAS, on October 29, 1997, pursuant to the Bank Act Security and a
certain
3
<PAGE>
Security Agreement #3 dated October 29, 1997 (hereinafter referred to as the
"Original Security Agreement #3" and hereinafter the Original Security Agreement
#1, the Original Security Agreement #2, the Original Security Agreement #3 and
the Bank Act Security shall be collectively referred to as the "Original
Security Agreements"), executed by DRS Flight Safety in favor of (i) the Agent,
on behalf of the Original Lenders, under the Original Security Agreement #3 and
(ii) Mellon Canada, the security provided for in the Bank Act Security, DRS
thereby granted to and in favor of the Agent and Mellon Canada, inter alia, a
security interest in all of the "Collateral" (as such term is defined in the
Original Security Agreement #3), as security for all of the "Obligations" (as
such term is defined in the Original Security Agreement #3) of the Original
Co-Borrowers; and
WHEREAS, on October 29, 1997, the Original Co-Borrowers, as the makers,
executed and delivered to Mellon US, as the payee, a certain Revolving Credit
Note dated October 29, 1997 (hereinafter referred to as the "Original Mellon US
Revolving Credit Note"), in the original aggregate principal amount of Forty
Million and 00/100 (US$40,000,000.00) Dollars, which Original Mellon US
Revolving Credit Loan Note evidenced the maximum amount of the Original
Revolving Credit Loan Facility; and
WHEREAS, on October 29, 1997, the Original Co-Borrowers, as the makers,
executed and delivered to Mellon Canada, as the payee, a certain Revolving
Credit Note dated October 29, 1997 (hereinafter referred to as the "Original
Mellon Canada Revolving Credit Note"), in the original aggregate principal
amount of Twenty Million and 00/100 (US$20,000,000.00) Dollars, which Original
Mellon Canada Revolving Credit Loan Note evidenced the "Revolving Credit
Commitment" (as such term is defined in the Original Loan Agreement) of Mellon
Canada; and
WHEREAS, on October 29, 1997, the Original Co-Borrowers, as the makers,
executed and delivered to Mellon Canada, as the payee, a certain Term Loan Note
dated October 29, 1997 (hereinafter referred to as the "Original Mellon Canada
Term Loan Note"), in the original aggregate principal amount of Twenty Million
and 00/100 (US$20,000,000.00) Dollars; and
WHEREAS, on November 4, 1997, pursuant to a certain Assignment and
Acceptance Agreement dated as of November 4, 1997 (hereinafter referred to as
the "Toronto-Dominion NY Agreement"), executed by and between Toronto Dominion
(New York), Inc., a state banking institution organized and existing under the
laws of the State of New York, having an office located at 31 West 55th Street,
New York, New York 10019-6101 (hereinafter referred to as "Toronto-Dominion
NY"), as the assignee, and Mellon US, as the assignor, Mellon US assigned a
portion of its outstanding "Revolving Credit Loans", "Letter of Credit
Obligations" and "Revolving Credit Commitments" (as such terms are defined in
the Original Loan Agreement) to Toronto-Dominion NY; and
WHEREAS, on November 4, 1997, pursuant to a certain Assignment and
Acceptance Agreement dated as of November 4, 1997 (hereinafter referred to as
the "Toronto-Dominion Agreement"), executed by and between The Toronto-Dominion
Bank, one of the chartered banks of Canada, duly organized and validly existing
under the laws of Canada, having an office located at TD Tower, 9th Floor, 55
King Street West, Toronto, Ontario, Canada M5K 1A2
4
<PAGE>
(hereinafter referred to as "Toronto-Dominion"), as the assignee, and Mellon
Canada, as the assignor, Mellon Canada assigned a portion of its outstanding
"Revolving Credit Loans", "Term Loan", "Letter of Credit Obligations",
"Revolving Credit Commitments" and "Term Loan Commitments" (as such terms are
defined in the Original Loan Agreement) to Toronto-Dominion; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to Mellon US, as the payee, a certain Revolving Credit Note dated November 7,
1997 (hereinafter referred to as the "Original Mellon US Revolving Credit Note
#2"), in the original aggregate principal amount of Twenty-Six Million Six
Hundred Sixty-Six Thousand Six Hundred Sixty-Six and 66/100 (US$26,666,666.66)
Dollars, which Original Mellon US Revolving Credit Note #2 evidenced the
Revolving Credit Commitment of Mellon US after giving effect to the
Toronto-Dominion NY Agreement; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to Mellon Canada, as the payee, a certain Revolving Credit Note dated November
7, 1997 (hereinafter referred to as the "Original Mellon Canada Revolving Credit
Note #2"), in the original aggregate principal amount of Thirteen Million Three
Hundred Thirty-Three Thousand Three Hundred Thirty-Three and 34/100
(US$13,333,333.34) Dollars, which Original Mellon Canada Revolving Credit Note
#2 evidenced the Revolving Credit Commitment of Mellon Canada after giving
effect to the Toronto-Dominion Agreement; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to Toronto-Dominion NY, as the payee, a certain Revolving Credit Note dated
November 7, 1997 (hereinafter referred to as the "Original Toronto-Dominion NY
Revolving Credit Note"), in the original aggregate principal amount of Thirteen
Million Three Hundred Thirty-Three Thousand Three Hundred Thirty Three and
34/100 (US$13,333,333.34) Dollars, which Original Toronto-Dominion NY Revolving
Credit Note evidenced the Revolving Credit Commitment of Toronto-Dominion NY
after giving effect to the Toronto-Dominion NY Agreement; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to Toronto-Dominion, as the payee, a certain Revolving Credit Note dated
November 7, 1997 (hereinafter referred to as the "Original Toronto-Dominion
Revolving Credit Note"), in the original aggregate principal amount of Six
Million Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six and 66/100
(US$6,666,666.66) Dollars, which Original Toronto-Dominion Revolving Credit Note
evidenced the Revolving Credit Commitment of Toronto-Dominion after giving
effect to the Toronto-Dominion Agreement; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to Mellon Canada, as the payee, a certain Term Loan Note dated November 7, 1997
(hereinafter referred to as the "Original Mellon Canada Term Loan Note #2"), in
the original aggregate principal amount of Thirteen Million Three Hundred
Thirty-Three Thousand Three Hundred Thirty-Three and 34/100 (US$13,333,333.34)
Dollars, which Original Mellon Canada Term Loan Note #2 evidenced the Term Loan
Commitment of Mellon Canada after giving effect to the Toronto-Dominion
Agreement; and
5
<PAGE>
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to Toronto-Dominion, as the payee, a certain Term Loan Note dated November 7,
1997 (hereinafter referred to as the "Original Toronto-Dominion Term Loan
Note"), in the original aggregate principal amount of Six Million Six Hundred
Sixty-Six Thousand Six Hundred Sixty-Six and 66/100 (US$6,666,666.66) Dollars,
which Original Toronto-Dominion Term Loan Note evidenced the Term Loan
Commitment of Toronto-Dominion after giving effect to the Toronto-Dominion
Agreement; and
WHEREAS, the Original Mellon US Revolving Credit Note, the Original Mellon
Canada Revolving Credit Note and the Original Mellon Canada Term Loan Note were
cancelled and replaced by the Original Mellon US Revolving Credit Note #2, the
Original Mellon Canada Revolving Credit Note #2, the Original Toronto-Dominion
NY Revolving Credit Note, the Original Toronto-Dominion Revolving Credit Note,
the Original Mellon Canada Term Loan Note #2 and the Original Toronto-Dominion
Term Loan Note; and
WHEREAS, on January 29, 1998, pursuant to a certain Assignment and
Acceptance Agreement dated as of January 29, 1998 (hereinafter referred to as
the "NBC US Agreement"), executed by and between National Bank of Canada, one of
the chartered banks of Canada, duly organized and validly existing under the
laws of Canada, having notice addresses located at both (i) Post Office Plaza,
50 Division Street, Suite 201, Somerville, New Jersey 08876 and (ii) Suite 305,
350 Burnhamthorpe Road, Mississaugua, Ontario, Canada L5B 3J1 (hereinafter
referred to as "NBC"), as the assignee, and Mellon US, as the assignor, Mellon
US assigned a portion of its outstanding "Revolving Credit Loans", "Letter of
Credit Obligations" and "Revolving Credit Commitments" (as such terms are
defined in the Original Loan Agreement) to NBC; and
WHEREAS, on January 29, 1998, pursuant to a certain Assignment and
Acceptance Agreement dated as of January 29, 1998 (hereinafter referred to as
the "NBC Canada Agreement"), executed by and between Mellon Canada, as the
assignee, and NBC, as the assignor, Mellon Canada assigned a portion of its
outstanding "Revolving Credit Loans", "Term Loan", "Letter of Credit
Obligations", "Revolving Credit Commitments" and "Term Loan Commitments" (as
such terms are defined in the Original Loan Agreement) to NBC; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to Mellon US, as the payee, a certain Revolving Credit Note dated January 29,
1998 (hereinafter referred to as the "Original Mellon US Revolving Credit Note
#3"), in the original aggregate principal amount of Sixteen- Million Six Hundred
Sixty-Six Thousand Six Hundred Sixty-Six and 66/100 (US$16,666,666.66) Dollars,
which Original Mellon US Revolving Credit Note #3 evidenced the Revolving Credit
Commitment of Mellon US after giving effect to the NBC US Agreement; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and
delivered to Mellon Canada, as the payee, a certain Revolving Credit Note dated
January 29, 1998 (hereinafter referred to as the "Original Mellon Canada
Revolving Credit Note #3"), in the original aggregate principal amount of Eight
Million Three Hundred Thirty-Three Thousand
6
<PAGE>
Three Hundred Thirty-Three and 34/100 (US$8,333,333.34) Dollars, which Original
Mellon Canada Revolving Credit Note #3 evidenced the Revolving Credit Commitment
of Mellon Canada after giving effect to the NBC Canada Agreement; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to NBC, as the payee, a certain Revolving Credit Note dated January 29, 1998
(hereinafter referred to as the "Original NBC US Revolving Credit Note"), in the
original aggregate principal amount of Ten Million and 00/100 (US$10,000,000.00)
Dollars, which Original NBC US Revolving Credit Note evidenced the Revolving
Credit Commitment of NBC after giving effect to the NBC US Agreement; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to NBC, as the payee, a certain Revolving Credit Note dated January 29, 1998
(hereinafter referred to as the "Original NBC Canada Revolving Credit Note"), in
the original aggregate principal amount of Five Million and 00/100
(US$5,000,000.00) Dollars, which Original NBC Canada Revolving Credit Note
evidenced the Revolving Credit Commitment of NBC after giving effect to the NBC
Canada Agreement; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to Mellon Canada, as the payee, a certain Term Loan Note dated January 29, 1998
(hereinafter referred to as the "Original Mellon Canada Term Loan Note #3"), in
the original aggregate principal amount of Eight Million Three Hundred
Thirty-Three Thousand Three Hundred Thirty-Three and 34/100 (US$8,333,333.34)
Dollars, which Original Mellon Canada Term Loan Note #3 evidenced the Term Loan
Commitment of Mellon Canada after giving effect to the NBC Canada Agreement; and
WHEREAS, the Original Co-Borrowers, as the makers, executed and delivered
to NBC, as the payee, a certain Term Loan Note dated January 29, 1998
(hereinafter referred to as the "Original NBC Term Loan Note"), in the original
aggregate principal amount of Five Million and 00/100 (US$5,000,000.00) Dollars,
which Original NBC Term Loan Note evidenced the Term Loan Commitment of NBC
after giving effect to the NBC Canada Agreement; and
WHEREAS, the Original Mellon US Revolving Credit Note #2, the Original
Mellon Canada Revolving Credit Note #2, and the Original Mellon Canada Term Loan
Note #2 were cancelled and replaced by the Original Mellon US Revolving Credit
Note #3, the Original Mellon Canada Revolving Credit Note #3, the Original NBC
US Revolving Credit Note, the Original NBC Canada Revolving Credit Note, the
Original Mellon Canada Term Loan Note #3 and the Original NBC Term Loan Note;
and
WHEREAS, on the date hereof, pursuant to a certain Assignment and
Acceptance Agreement dated the date hereof (hereinafter referred to as the
"Mellon US Agreement #1"), executed by and between Mellon US, as the assignee,
and Toronto-Dominion NY, as the assignor, Toronto-Dominion NY assigned all of
its outstanding "Revolving Credit Loans", "Letter of Credit Obligations" and
"Revolving Credit Commitments" (as such terms are defined in the Original Loan
Agreement) to Mellon US; and
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WHEREAS, on the date hereof, pursuant to a certain Assignment and
Acceptance Agreement dated the date hereof (hereinafter referred to as the
"Mellon Canada Agreement #1"), executed by and between Mellon Canada, as the
assignee, and Toronto-Dominion, as the assignor, Toronto-Dominion assigned all
of its outstanding "Revolving Credit Loans", "Term Loan", " Letter of Credit
Obligations", "Revolving Credit Commitments" and "Term Loan Commitments" (as
such terms are defined in the Original Loan Agreement) to Mellon Canada; and
WHEREAS, on the date hereof, pursuant to a certain Assignment and
Acceptance Agreement dated the date hereof (hereinafter referred to as the
"Mellon US Agreement #2"), executed by and between Mellon US, as the assignee,
and NBC, as the assignor, NBC assigned all of its outstanding "Revolving Credit
Loans", " Letter of Credit Obligations" and "Revolving Credit Commitments" (as
such terms are defined in the Original Loan Agreement) to Mellon US; and
WHEREAS, on the date hereof, pursuant to a certain Assignment and
Acceptance Agreement dated the date hereof (hereinafter referred to as the
"Mellon Canada Agreement #2"), executed by and between Mellon Canada, as the
assignee, and NBC, as the assignor, NBC assigned all of its outstanding
"Revolving Credit Loans", "Term Loan", " Letter of Credit Obligations",
"Revolving Credit Commitments" and "Term Loan Commitments" (as such terms are
defined in the Original Loan Agreement) to Mellon Canada; and
WHEREAS, on the date hereof, the Original Co-Borrowers, as the makers,
executed and delivered to Mellon US, as the payee, a certain Substituted and
Replacement Revolving Credit Loan Note #1 dated the date hereof (hereinafter
referred to as the "Original Mellon US Revolving Credit Note #4"), in the
aggregate principal amount of Forty Million and 00/100 (US$40,000,000.00)
Dollars, which Original Mellon US Revolving Credit Note #4 evidences the
Revolving Credit Commitment of Mellon US after giving effect to the Mellon US
Agreement #1 and the Mellon US Agreement #2; and
WHEREAS, on the date hereof, the Original Co-Borrowers, as the makers,
executed and delivered to Mellon Canada, as the payee, a certain Substituted and
Replacement Revolving Credit Loan Note #2 dated the date hereof (hereinafter
referred to as the "Original Mellon Canada Revolving Credit Note #4"), in the
aggregate principal amount of Twenty Million and 00/100 (US$20,000,000.00)
Dollars, which Original Mellon Canada Revolving Credit Note #4 evidences the
Revolving Credit Commitment of Mellon Canada after giving effect to the Mellon
Canada Agreement #1 and the Mellon Canada Agreement #2; and
WHEREAS, on the date hereof, the Original Co-Borrowers, as the makers,
executed and delivered to Mellon Canada, as the payee, a certain Substituted and
Replacement Term Loan Note dated the date hereof (hereinafter referred to as the
"Original Mellon Canada Term Loan Note #4"), in the aggregate principal amount
of Twenty Million and 00/100 (US$20,000,000.00) Dollars, which Original Mellon
Canada Term Loan Note evidences the Term Loan Commitment of Mellon Canada after
giving effect to the Mellon Canada Agreement #1 and the Mellon Canada Agreement
#2; and
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WHEREAS, the Original Mellon US Revolving Credit Note #3, the Original
Mellon Canada Revolving Credit Note #3, the Original Mellon Canada Term Loan
Note #3, the Original NBC US Revolving Credit Note, the Original NBC Canada
Revolving Credit Note, the Original NBC Term Loan Note, the Original
Toronto-Dominion NY Revolving Credit Note, the Original Toronto-Dominion
Revolving Credit Note and the Original Toronto-Dominion Term Loan Note were
cancelled and replaced by the Original Mellon US Revolving Credit Note #4, the
Original Mellon Canada Revolving Credit Note #4 and the Original Mellon Canada
Term Loan Note #4; and
WHEREAS, all of the Co-Borrowers have now requested that the Lenders amend
and restate the Original Loan Agreement and all of the documentation associated
therewith for the purpose of amending, modifying, extending and restating the
terms, conditions and provisions thereof in order to provide for, inter alia,
(i) an amended and restated secured recourse revolving credit loan in the
increased aggregate principal amount of up to Seventy Million and 00/100
(US$70,000,000.00) Dollars for the purposes of financing (a) the purchase of the
scanning and staring infrared detector business and electro-optical business of
Raytheon TI Systems, Inc., Raytheon Company and Raytheon Systems Georgia, Inc.,
(b) the refinance of existing indebtedness, (c) working capital (including,
without limitation, the issuance of trade / commercial and standby letters of
credit) and (d) general corporate purposes (hereinafter referred to as the
"Revolving Credit Loan Facility"), (ii) an amended and restated secured recourse
term loan in the increased aggregate principal amount of Thirty Million and
00/100 (US$30,000,000.00) Dollars for the purposes of financing (a) the purchase
of the scanning and staring infrared detector business and electro-optical
business of Raytheon TI Systems, Inc., Raytheon Company and Raytheon Systems
Georgia, Inc., (b) the refinance of existing indebtedness, (c) working capital
and (d) general corporate purposes (hereinafter referred to as the "Term Loan
Facility #1") and (iii) an additional secured recourse term loan in the
aggregate principal amount of Fifty Million and 00/100 (US$50,000,000.00)
Dollars for the purposes of financing (a) the purchase of the scanning and
staring infrared detector business and electro-optical business of Raytheon TI
Systems, Inc., Raytheon Company and Raytheon Systems Georgia, Inc., (b) the
refinance of existing indebtedness, (c) working capital and (d) general
corporate purposes (hereinafter referred to as the "Term Loan Facility #2"); and
WHEREAS, for the purposes of this Loan Agreement, the Revolving Credit Loan
Facility, the Term Loan Facility #1 and the Term Loan Facility #2, as they may
from time to time be hereafter amended, modified, extended, refinanced and/or
otherwise supplemented, shall be collectively referred to as the "Loan
Facilities"; and
WHEREAS, the Lenders have agreed to make the Loan Facilities available to
the Co-Borrowers, subject to the terms, conditions and provisions hereinafter
set forth; and
WHEREAS, all of the Co-Borrowers, the Agent and the Lenders anticipate and
contemplate that the Lenders may sell, assign and transfer at times after the
date hereof, a portion of their respective interests in the Loan Facilities to
other financial institutions described in the
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definition of "Eligible Assignee" set forth in Section 1.01 of this Loan
Agreement, and said additional lenders shall hereinafter be a part of and
constitute a member of the Lenders; and
WHEREAS, the Lenders have requested that the Agent act as administrative
and collateral agent for the Lenders in connection with the Loan Facilities, and
the Agent has agreed to accept such responsibilities and duties, subject to the
terms, conditions and provisions hereinafter set forth.
NOW, THEREFORE, in consideration of these premises and the mutual
representations, covenants and agreements of all of the Co-Borrowers, the
Lenders and the Agent, each party binding itself and its respective successors
and assigns, hereby promises, covenants and agrees to amend, modify and restate
the Original Loan Agreement with all of the terms, conditions and provisions set
forth hereinbelow and all of the terms, conditions and provisions of the
Original Loan Agreement are hereby deemed superseded, substituted and replaced
by the following:
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ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION AND
CONSTRUCTION; AND ACCOUNTING PRINCIPLES
Section 1.01 Definitions. The following terms, as used in this Loan
Agreement, shall have the following meanings, unless the context clearly
indicates and requires otherwise:
"Acceptance Fee" means the fee payable at the time of the acceptance of a
Canadian Bankers Acceptance established by multiplying the face amount of such
Canadian Bankers Acceptance by the BA Margin as of the date of issue and
acceptance of such Canadian Bankers Acceptance and by multiplying the product so
obtained by a fraction having a numerator equal to the number of days in the
term of such Canadian Bankers Acceptance and a denominator of 365.
"Accounts" or "Account Receivable" or "Accounts Receivable" shall mean
(i) any "account", as such term is defined in Section 9-106 of the Uniform
Commercial Code of each State where applicable (or any successor section of the
Uniform Commercial Code) and (ii) any "account" as such term is defined in
subsection 1(1) of the Personal Property Security Act (Ontario), whether now
owned or hereafter acquired by any one of the Co-Borrowers and/or their
Subsidiaries and Affiliates, and in any event, includes, without limitation, all
accounts, contracts, contract rights, chattel paper, general intangibles, notes,
drafts, acceptances, chattel mortgages, conditional sale contracts, bailment
leases, security agreements, contribution rights and other forms of obligations
now or hereafter arising out of or acquired in the course of or in connection
with any business of the Co-Borrowers', their Subsidiaries' or Affiliates'
conduct, together with all liens, guaranties, securities, rights, remedies and
privileges pertaining to any of the foregoing, whether now existing or hereafter
created or arising, and all rights with respect to returned and repossessed
items of inventory.
"Accrued Unbilled Government Accounts Receivable" shall mean the aggregate
face amount owing in respect of Accounts of the Co-Borrowers, their Subsidiaries
and Affiliates, generated in connection with Contractual Obligations with any
Governmental Authority for work performed for which payment to vendors or
subcontractors has been made or accrued, if the Account (i) has not yet been
invoiced to the relevant Governmental Authority as a result of the normal
frequency of billing under the particular contract or governmental delays in the
preparation of contract documents and (ii) will otherwise meet all requirements
of Qualified Billed Government Accounts Receivable upon invoicing.
"Advance Limit" shall mean the Dollar Equivalent of the amount of the
Revolving Credit Facility which the Lenders may from time to time advance to the
Co-Borrowers in the form of either direct Revolving Credit Loans or Letters of
Credit or Canadian Bankers Acceptances, and which amount shall not in the
aggregate at any time outstanding exceed the lesser of (i) US$70,000,000.00 or
(ii) the sum of (a) eighty percent (80%) of all Qualified Billed Accounts
Receivable (including Qualified Billed Government Accounts Receivable), as of
the date of determination, plus (b) fifty (50%) of all Accrued Unbilled
Government Accounts Receivable, as of the date of determination plus (c) fifty
percent (50%) of the Qualified Inventory (net of all progress
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billings and/or payments), as of the date of determination, provided, however,
in no event shall the amount described in this clause (c) ever exceed the lesser
of (1) US$17,500,000.00 or (2) thirty percent (30%) of the total Revolving
Credit Loans outstanding, as of the date of determination plus (d) an amount of
up to $5,000,000.00 in the aggregate at any time which the Agent, in its sole
and absolute discretion, may agree to advance to the Co-Borrowers against
Accounts which do not satisfy the test for Qualified Billed Accounts Receivable
solely as a result of novation and administrative issues which cause the Account
to remain unpaid for a period of more than ninety (90) days but less than one
hundred and fifty (150) days from the invoice date.
"Affiliate" of any Person shall mean any other Person which or who,
directly or indirectly, controls or is controlled by, or is under common control
with such Person; provided, however, natural persons and minority partners of
any said Person shall not be deemed an Affiliate for purposes of this
definition. For the purposes of the preceding sentence, "controls" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise, and in any case
shall include direct or indirect ownership (beneficially or of record) of, or
direct or indirect power to vote, fifty percent (50%) or more of the outstanding
shares of any class of capital stock of such Person (or in the case of Person
that is not a corporation, fifty percent (50%) or more of any class of equity
interest).
"Affiliate Canadian Lender" shall mean an Affiliate, branch or agency of a
Lender that is resident in Canada for purposes of the Income Tax Act (Canada)
and qualified as a bank under the Bank Act (Canada) or a trust or loan company
under the applicable Laws of Canada.
"Agent" shall have the meaning ascribed and assigned to such term as set
forth in the preamble of this Loan Agreement; provided, however, pursuant to
Section 10.11, Agent hereby designates Mellon Bank Canada to act as a co-agent
or agent with respect to the administration and funding of Canadian Bankers
Acceptances and Canadian Loans and Canadian Letters of Credit to the extent
appropriate, the establishment of the "Prime Rate" for relevant Canadian Loans
and the administration of Lenders' rights with respect to any Collateral located
in Canada (including, without limitation, under the Bank Act (Canada)).
"Agent's Office" shall mean the Agent's principal office located at Mellon
Bank Center, 1735 Market Street, Philadelphia, Pennsylvania 19101, or at such
office or offices of the Agent or branch, subsidiary or affiliate thereof, as
may be designated in writing from time to time by the Agent to the Co-Borrowers
and the Lenders.
"Agreement of Guaranty" shall mean that certain Amended and Restated
Agreement of Guaranty executed by the Corporate Guarantors and the Partnership
Guarantor, on a joint and several basis, and delivered to the Agent, for the
benefit of the Lenders, dated the date of this Loan Agreement, pursuant to which
the Corporate Guarantors and the Partnership Guarantor unconditionally guaranty
the prompt and complete performance of all of the Co-Borrowers' duties,
covenants and obligations under this Loan Agreement, the Revolving Credit Loan
Notes, the Term
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Loan Notes and the other Loan Documents. The term "Agreement of Guaranty" shall
also be deemed to mean and refer to all amendments, modifications and
supplements to said agreement made and/or entered into subsequent to the Closing
Date, including, without limitation, all amendments which are consummated for
the purposes of adding any new and/or additional Persons as guarantors, all as
provided for in Section 6.12 of this Loan Agreement.
"Agreements of Lease" shall mean a reference to those certain lease
agreements between any one or more of the Co-Borrowers, as tenants, and various
owners, as landlords (as more fully set forth on Schedule 1.01-A hereto),
pursuant to which such Co-Borrowers have agreed to lease certain real property
from their respective landlords.
"Applicable Margin" shall have the meaning set forth in Section 2.04(i)(d)
of this Loan Agreement.
"Assignment and Acceptance Agreement" shall mean an Assignment and
Acceptance Agreement in the form of Exhibit "A" attached hereto and made a part
hereof (with blanks appropriately filled in) delivered to the Agent in
connection with an assignment to an Eligible Assignee of a Lender's interest
under this Loan Agreement pursuant to Section 11.02 hereof.
"Authorized Officer" shall mean those officers/general partners of the
Co-Borrowers, the Corporate Guarantors, the Partnership Guarantor and any
Affiliates, whose signatures and incumbency shall have been certified to the
Agent pursuant to an Officer's Certificate delivered on the Closing Date or any
other form of resolution or certification delivered to and approved by the Agent
after the Closing Date.
"BA Margin" shall mean the applicable percentage set forth in the Leverage
Matrix under the heading "BA Margin".
"Bank Act Security" shall mean a collective reference to (i) the Notice of
Intention to Give Security under the Bank Act (Canada) dated October 28, 1997,
(ii) the Application for Credit and Promise to Give Security dated October 28,
1997, (iii) the Agreement as to Loans and Advances dated October 29, 1997 and
(iv) the Security under Section 427 of the Bank Act (Canada) dated October 29,
1997 by DRS Flight Safety in favor of Mellon Canada.
"Bankruptcy Act" shall mean the Bankruptcy and Insolvency Act (Canada) as
amended from time to time, or any successor statute.
"Bankruptcy Code" shall mean Title 11 of the United States Bankruptcy Code
(11 U.S.C. Section 101 et seq.), as amended from time to time, or any successor
statute.
"Benefit Plan" shall mean a defined benefit plan as defined in Section 3
(35) of ERISA (other than a Multiemployer Plan) in respect of which any of the
Co-Borrowers or an ERISA Affiliate is, or within the immediately preceding six
(6) years was, an "employer" as defined in Section 3(5) of ERISA.
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"Big Five Accounting Firm" shall mean any of Arthur Andersen & Co., KPMG
Peat Marwick, Ernst & Young LLP, Deloitte & Touche and Pricewaterhouse Coopers
or any of their respective successors.
"Borrower" shall have the meaning ascribed and assigned to such term as set
forth in the preamble of this Loan Agreement.
"Borrowing" and/or "Borrowings" shall mean, except as otherwise provided in
Section 2.07(v)(b) hereof, a borrowing consisting of either Revolving Credit
Loans of the same type made on the same day by all or some of the Lenders, as
applicable, and/or the Term Loan.
"Borrowing Base Certificate" shall mean a certificate duly executed by an
Authorized Officer of the Co-Borrowers in the form of Exhibit "C" attached
hereto and made a apart hereof, setting forth the Co-Borrowers' calculations of
the Advance Limit for purposes of determining the availability of a Borrowing
under the Revolving Credit Facility.
"Borrowing Date" shall mean, with respect to (i) any Revolving Credit Loan,
any Business Day specified in any Notice of Borrowing delivered to the Agent by
the Co-Borrowers in accordance with the provisions of Section 2.01(ii) of this
Loan Agreement, as the date upon which the Co-Borrowers request the Lenders to
make a Revolving Credit Loan hereunder (including a conversion or rollover of
credit) and upon which such Revolving Credit Loan is made, (ii) the portion of
the Original Term Loan Facility presently evidenced by the Term Loan Note #2, as
specified in a Notice of Borrowing delivered to the Agent by the Co-Borrowers on
October 29, 1997 in accordance with the provisions of Section 2.02(i)(c) of this
Loan Agreement, being the date upon which DRS Flight Safety requested that
Mellon Canada fund the Original Term Loan Facility and upon which the Original
Term Loan Facility was funded and (iii) the Term Loan Facility #2, the Closing
Date as specified in a Notice of Borrowing delivered to the Agent by the
Co-Borrowers in accordance with the provisions of Section 2.03(i)(c) of this
Loan Agreement, as the date upon which DRS EO and/or DRS FPA, L.P. request that
Mellon US fund the Term Loan Facility #2 hereunder and upon which the Term Loan
Facility #2 is funded.
"Business Day" shall mean (i) for all purposes (other than as covered by
clause (ii) below), any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the Commonwealth of Pennsylvania and/or the laws
of the Province of Ontario (Canada) or is a day upon which banking institutions
located in such state or province are required or authorized by law or other
governmental action to close, (ii) with respect to all notices, determination,
fundings and payments in connection with the Eurodollar Rate, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in the London interbank eurodollar market and (iii) when such term
is used in respect of a day on which a Canadian Loan is to be made or an
interest rate with respect thereto is to be set, a payment is to be made in
respect of a Canadian Loan, an Exchange Rate is to be set in respect of Canadian
Dollars or any other dealing in Canadian Dollars is to be carried out pursuant
to this Agreement, such term shall mean a day on which banks in Toronto, Ontario
are open for general banking business, other than a Saturday, Sunday or other
day on which commercial banks in Pennsylvania are authorized or required by law
to close.
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"Calculation Date" shall have the meaning ascribed and assigned to such
term as set forth in Section 2.13(i) of this Loan Agreement.
"Canadian Bankers Acceptance" and "Canadian Bankers Acceptances" shall mean
a non-interest bearing bill of exchange denominated in Canadian Dollars, drawn
and endorsed by or on behalf of the Canadian Borrower and accepted by a Canadian
Lender pursuant to this Agreement, having a term of one month to six months, and
maturing on a Business Day on or before the Revolving Credit Termination Date or
the Term Loan #1 Maturity Date, as the case may be, which may be issued in the
form of a "depository bill" and deposited with a "clearing house" as each such
term is defined in the Depository Bills and Notes Act (Canada) and in respect of
which each Canadian Lender purchasing any such bill of exchange shall make the
net proceeds available to the Canadian Borrower as a Canadian Loan after
deducting the Acceptance Fee and the amount resulting from the application of
the Discount Rate.
"Canadian Bankers Acceptance Notice" shall have the meaning ascribed and
assigned to such term as set forth in Section 2.04A(i) of this Loan Agreement.
"Canadian Borrower" shall mean DRS Flight Safety.
"Canadian Dollar", "Canadian Dollars" and the symbol "C$" shall mean lawful
money of Canada.
"Canadian Dollar Equivalent" shall mean with respect to an amount of U.S.
Dollars on any date, the amount of Canadian Dollars that may be purchased with
such amount of U.S. Dollars at the Exchange Rate with respect to U.S. Dollars on
such date.
"Canadian Lender" shall mean Mellon Canada and any other Lender in its
capacity as a maker of Canadian Loans or issuer of or participant in Canadian
Letters of Credit.
"Canadian Letters of Credit" shall mean those Letters of Credit issued by
Mellon Canada that are denominated in Canadian Dollars and for the account of
the Canadian Borrower.
"Canadian Letter of Credit Obligations" shall mean, at any time, the sum of
(i) Reimbursement Obligations at such time for Canadian Letters of Credit and
(ii) the Dollar Equivalent of the aggregate maximum amount then available for
drawing under the outstanding Canadian Letters of Credit.
"Canadian Loan" means a Loan denominated in Canadian Dollars that is to, or
is to be made for the account of, the Canadian Borrower (and which shall include
the Canadian Revolving Credit Loans and the Canadian Term Loan).
"Canadian Revolving Credit Commitment" or "Canadian Revolving Credit
Commitments" shall mean, with respect to each Canadian Lender, as of any date of
determination, such Canadian Lender's Pro Rata Share of the amount of the
Canadian Revolving
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Credit Loans, as of such date, which percentage and amount shall be set forth on
the signature pages to this Loan Agreement and/or in any Assignment and
Acceptance Agreement.
"Canadian Revolving Credit Exposure" shall have the meaning ascribed and
assigned to such term as set forth in Section 11.02(i)(g) of this Loan
Agreement.
"Canadian Revolving Credit Loans" shall mean those Revolving Credit Loans
that also constitute Canadian Loans, and which shall include, Canadian Bankers
Acceptances.
"Canadian Revolving Credit Note" and "Canadian Revolving Credit Notes"
shall have the meaning ascribed and assigned to such terms as set forth in
Section 2.01(i)(a) of this Loan Agreement.
"Canadian Revolving Credit Sublimit" shall have the meaning ascribed and
assigned to such term as set forth in Section 2.01(i)(a) of this Loan Agreement.
"Canadian Term Loan" or "Canadian Term Loans" shall mean that portion of
the Term Loan Facility #1 which is evidenced by a Canadian Term Loan #1 Note and
is denominated in U.S. Dollars or in Canadian Dollars with a Dollar Equivalent,
as selected in writing by the Canadian Borrower, in the aggregate principal
amount of US$17,500,000.00 made to the Canadian Borrower by the Canadian Lenders
under Section 2.02 of this Loan Agreement.
"Canadian Term Loan Commitment" or "Canadian Term Loan Commitments" shall
mean, with respect to each Canadian Lender, as of any date of determination,
such Canadian Lender's Pro Rata Share of the amount of the Canadian Term Loans,
as of such date, which percentage and amount shall be set forth on the signature
pages to this Loan Agreement and/or in any Assignment and Acceptance Agreement.
"Canadian Term Loan Note" and "Canadian Term Loan Notes" shall have the
meaning ascribed and assigned to such terms as set forth in Section 2.02(i)(a)
of this Loan Agreement.
"Canadian Term Loan Sublimit" shall have the meaning ascribed and assigned
to such term as set forth in Section 2.02(i)(a) of this Loan Agreement.
"Capital Expenditures" shall mean, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities during such period)
of any one or more of the Co-Borrowers, their Subsidiaries and Affiliates, which
would be properly classified as capital expenditures in accordance with
Generally Accepted Accounting Principles (including, without limitation,
expenditures for maintenance and repairs which are capitalized, and Capitalized
Leases to the extent an asset is recorded in connection therewith in accordance
with Generally Accepted Accounting Principles).
"Capitalized Lease" and "Capitalized Leases" shall mean at any time any
lease which is, or is required under Generally Accepted Accounting Principles to
be, capitalized on the balance sheet of the lessee at such time.
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"Capitalized Lease Obligation" and "Capitalized Lease Obligations" shall
mean all monetary obligations of any Person under any leasing or similar
arrangement which, in accordance with Generally Accepted Accounting Principles,
are or would be classified as Capitalized Leases.
"CDIC" shall mean the Canada Deposit Insurance Corporation.
"CERCLIS" shall mean the Comprehensive Environmental Response, Compensation
and Liability Information System List, as the same may be amended from time to
time.
"Claim" shall mean any claim or demand, by any Person, of whatsoever kind
or nature for any alleged Liabilities and Costs, based in dispute whether based
in contract, tort, implied or express warranty, strict liability, criminal or
civil statute, permit, ordinance or regulation, common law or otherwise, the
consequences of which disputes are reasonably likely to result in a Material
Adverse Effect.
"Closing Date" shall mean the date upon which this Loan Agreement is
executed by the Lenders, the Co-Borrowers and the Agent, and the conditions set
forth in Section 3.01 of this Loan Agreement have been completed and fulfilled
to the satisfaction of the Agent.
"Co-Borrowers" shall have the meaning ascribed and assigned to such term as
set forth in the preamble of this Loan Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, any successor
statute of similar import, and regulations thereunder, in each case as in effect
from time to time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Collateral" shall mean all property, assets, contracts, interests and/or
rights on or in which a Lien is granted to the Agent on behalf of the Lenders
pursuant to this Loan Agreement, the Pledge of Stock Agreements, the Security
Agreements and/or any other Collateral Documents provided for herein or therein
or delivered or to be delivered hereunder or thereunder, as any such Collateral
Documents may be amended, supplemented, restated or otherwise modified from time
to time in accordance with the provisions hereof or thereof.
"Collateral Documents" shall mean the collective reference to the Security
Agreements, the Bank Act Security and any other security agreements, mortgages,
deeds of trust, collateral assignments, instruments, documents, certificates or
agreements executed and delivered by, or on behalf of, the Co-Borrowers, the
Corporate Guarantors, the Partnership Guarantor and any other Person, to the
Agent, on behalf of the Lenders, at any time pursuant to or in connection with
the Loan Facilities to create, continue or evidence Liens to secure the
Obligations (which, however, in the case of any Swap Obligation owed to Mellon
Bank, N.A. or any other Lender, all said Liens shall be subordinated to the
senior and superior interests of the Agent and the Lenders in the Collateral
securing their non-Swap Obligations).
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"Commitment Percentage" of a Lender at any time shall mean the percentages
for such Lender set forth below its name on the signature pages to this Loan
Agreement with respect to its Pro Rata Share of the Loan Facilities, adjusted
from time to time to give effect to any transfer by a Lender to another Lender
(as an Eligible Assignee) of all or any portion of said Lender's Pro Rata Share,
all as provided for in Section 11.02 of this Loan Agreement. A Lender may (but
is not obligated to) have a Pro Rata Share of the Revolving Credit Loan
Facility, the Term Loan Facility #1 and the Term Loan Facility #2.
"Commitments" shall mean the aggregate of each Lender's Revolving Credit
Commitment, Term Loan #1 Commitment and Term Loan #2 Commitment (if any).
"Consolidated Cash and Cash Equivalents" shall mean all (i) cash and cash
equivalents and (ii) any of the following: (a) marketable direct obligations
issued or unconditionally guarantied 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 one (1) year after the date of acquisition
thereof; (b) 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 within one (1) year 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. and not listed in Credit Watch published by Standard &
Poor's Corporation; (c) commercial paper of a corporation having a net worth of
not less than US$1,000,000,000.00, other than commercial paper issued by the
Co-Borrowers, their Subsidiaries or Affiliates, maturing no more than ninety
(90) days after the date of creation thereof and, at the time of acquisition,
having a rating of at least A1 or P1 from either Standard & Poor's Corporation
or Moody's Investors Service, Inc.; (d) domestic certificates of deposit or
domestic time deposits or repurchase agreements maturing within one (1) year
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 having FDIC deposit insurance; (e) any funds deposited or
invested by any of the Co-Borrowers, their Subsidiaries and/or Affiliates in
accounts maintained with the Agent and/or any of the Lenders and/or with any
other commercial bank organized under the laws of (1) Canada having insurance
with CDIC or (2) the United States of America or any state thereof or the
District of Columbia having FDIC insurance; and (f) money market funds having
assets in excess of US$1,000,000,000.00.
"Consolidated Debt" shall mean with respect to the Co-Borrowers, their
Subsidiaries and Affiliates, the aggregate sum of the following items as such
items may appear on a consolidated balance sheet of the Co-Borrowers, their
Subsidiaries and Affiliates to any Person (other than each other) in accordance
with Generally Accepted Accounting Principles: (i) the unpaid principal balance
of all indebtedness or liability for money borrowed by the Co-Borrowers, their
Subsidiaries and/or Affiliates to any Person (other than each other) from time
to time (including any renewals, extensions and refundings thereof), whether or
not the indebtedness was heretofore or hereafter created, issued, incurred,
assumed or guaranteed; (ii) the unpaid principal balance of all indebtedness or
liability for the deferred purchase price of property or services incurred
(including trade obligations); (iii) all obligations as lessee under leases
which have been or should be recorded as Capitalized Lease Obligations; (iv) all
current Obligations in respect of any unfunded vested benefits under any Plan
covered by Title IV of ERISA; (v) all obligations, contingent or otherwise
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relative to the face amount of all Letters of Credit issued for the
Co-Borrowers', their Subsidiaries' and/or Affiliates' account, whether or not
drawn; (vi) all obligations arising under bankers' acceptance facilities issued
for the account of the Co-Borrowers, their Subsidiaries and/or Affiliates; (vii)
all guaranties, endorsements and other contingent obligations to purchase, to
provide funds for payments, to supply funds to invest in the Co-Borrowers, their
Subsidiaries and/or Affiliates or otherwise to assure a creditor against loss
(except endorsements of negotiable instruments for deposit or collection in the
ordinary course of business shall not constitute Consolidated Debt); and (viii)
all obligations secured by any mortgage, lien, pledge, or security interest or
other charge or encumbrance on property, whether or not the obligations have
been assumed.
"Consolidated EBITDA" shall mean with respect to the Co-Borrowers, their
Subsidiaries and Affiliates, as of any date of determination thereof, for the
period of four (4) consecutive Fiscal Quarters immediately preceding said date
of determination taken together as one accounting period, the amount equal to
the sum of (i) Consolidated Net Income for such test period, plus (ii) all gross
interest expense on Consolidated Debt of the Co-Borrowers, their Subsidiaries
and Affiliates, for such test period, plus (iii) all charges against income of
the Co-Borrowers, their Subsidiaries and Affiliates for foreign, federal, state
and local taxes for such test period, plus (iv) all depreciation expense for
such test period, plus (v) all amortization expense for such test period plus
(vi) all other net non-cash charges for such test period, after eliminating
therefrom any, (a) extraordinary items, (b) gains and losses from the sale of
assets in connection with any sale/leaseback transaction or arrangement and (c)
results of discontinued operations, all as determined in accordance with
Generally Accepted Accounting Principles.
"Consolidated Fixed Charge Coverage Ratio" shall mean, as of any date of
determination thereof, for the period of four (4) consecutive Fiscal Quarters
immediately preceding said date of determination taken together as one
accounting period, the ratio of (i) Consolidated EBITDA for such test period
minus all Capital Expenditures paid or incurred during said test period divided
by (ii) the sum of (a) all interest expenses on all Consolidated Debt incurred
during such test period plus (b) all principal payments due and payable on all
Consolidated Debt incurred during such test period plus (c) all charges against
income of the Co-Borrowers, their Subsidiaries and Affiliates for foreign,
federal, state and local taxes for such test period, plus (d) all dividends paid
by the Co-Borrowers, their Subsidiaries and Affiliates as permitted under
Section 7.04 of this Loan Agreement to Persons other than the Co-Borrowers,
their Subsidiaries and their Affiliates, all as calculated in accordance with
Generally Accepted Accounting Principles.
"Consolidated Funded Debt" shall mean, as of any date of determination
thereof, all items which in accordance with Generally Accepted Accounting
Principles would be Consolidated Debt, including, without limitation, all
Consolidated Subordinated Debt, but exclusive of (i) those items described in
clause (iv), (v) and (vii) of the definition of Consolidated Debt and (ii) trade
obligations.
"Consolidated Funded Debt Leverage Ratio" shall mean, as of any date of
determination thereof, the ratio of Consolidated Funded Debt divided by
Consolidated EBITDA.
"Consolidated Net Income" shall mean, as of any date of determination for
any test period,
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all amounts which, in accordance with Generally Accepted Accounting Principles,
would be included under net income (after the provision for the payment of all
federal and state income taxes) on a consolidated income statement of the
Co-Borrowers, their Subsidiaries and Affiliates for such test period.
"Consolidated Net Worth" shall mean, as at any date of determination, all
items which, in accordance with Generally Accepted Accounting Principles, would
be included under shareholders' equity on a consolidated balance sheet of the
Co-Borrowers, their Subsidiaries and Affiliates at such date.
"Consolidated Senior Debt" shall mean, as at any date of determination, all
items which in accordance with Generally Accepted Accounting Principles would be
included on a consolidated balance sheet of the Co-Borrowers, their Subsidiaries
and Affiliates as Consolidated Funded Debt, excluding, however, Consolidated
Subordinated Debt.
"Consolidated Senior Debt Leverage Ratio" shall mean, as of any date of
determination thereof, the ratio of Consolidated Senior Debt divided by
Consolidated EBITDA.
"Consolidated Subordinated Debt" shall mean, as at any date of
determination, any Consolidated Debt of the Co-Borrowers, their Subsidiaries
and/or Affiliates, which in accordance with the terms of the documentation
evidencing said Consolidated Debt, is subordinated to the repayment of the Loan
Facilities, including, without limitation, the then outstanding principal
balance of an original US$25,000,000.00, 9% Senior Subordinated Convertible
Debentures Due October 1, 2003, evidenced by that certain Indenture dated as of
September 22, 1995, executed by and between DRS and The Trust Company of New
Jersey.
"Contractual Obligation" shall mean with respect to any Person, any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, contract, undertaking, document, instrument or other agreement or
instrument 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
(including, without limitation, any restrictive covenant affecting such Person
or any of its properties).
"Corporate Guarantors" shall mean the collective reference to (i) DRS
Electronic Systems, Inc., a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, having its principal
office located at 200 Professional Drive, Gaithersburg, Maryland 20879; (ii) DRS
Photronics Corp., a corporation duly organized, validly existing and in good
standing under the laws of the State of New York, having its principal office
located at 138 Bauer Drive, Oakland, New Jersey 07436; (iii) DRS Precision Echo,
Inc., a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, having its principal office located at 3105
Patrick Henry Drive, Santa Clara, California 95054; (iv) DRS Ahead Technology,
Inc., a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, having its principal office located at 6410
Via Del Oro, San Jose, California 95054; (v) DRS Optronics, Inc., a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, having its principal office located at 2330 Commerce Park
Drive, N.E., Second Floor, Palm Bay, Florida 32905; (vi) DRS Systems
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Management Corporation, a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, having its principal
office located at 5 Sylvan Way, Parsippany, New Jersey 07054; (vii) DRS
Technical Services, Inc., a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, having its principal
office located at 2535 Camino Del Rio, Suite 300, San Diego, California 92108;
(viii) DRS/MS, Inc., a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, having its principal office
located at 5 Sylvan Way, Parsippany, New Jersey 07054; (ix) DRS International,
Inc., a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, having its principal office located at 5
Sylvan Way, Parsippany, New Jersey 07054 ; (x) DRS Air, Inc., a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, having its principal office located at 5 Sylvan Way, Parsippany, New
Jersey 07054; (xi) DRS Hadland, Inc., a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts, having its principal office located at 20480 Pacifica Drive,
Suite D, Cupertino, California 95014; (xii) DRS Merger Sub, Inc., a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, having its principal office located at 5 Sylvan Way,
Parsippany, New Jersey 07054; (xiii) DRS FPA, Inc., a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, having its principal office located at 5 Sylvan Way, Parsippany, New
Jersey 07054; and (xiv) any new or additional Subsidiaries of the Co-Borrowers
which are purchased, acquired or created during the term of the Loan Facilities.
Each of the Corporate Guarantors may sometimes be hereinafter referred to
individually as a "Corporate Guarantor".
"Customary Permitted Liens" shall mean:
(i) Liens (other than Environmental Liens and any Lien imposed under
ERISA) for taxes, assessments or charges of any Governmental Authority or
claims not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
Generally Accepted Accounting Principles;
(ii) statutory Liens of landlord and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens (other than any Lien imposed under
ERISA) imposed by Law, including, without limitation, Liens in favor of any
Governmental Authority securing progress payments made under government
contracts created in the ordinary course of business and for amounts not
yet due or which are being contested in good faith by appropriate
proceedings which are sufficient to prevent imminent foreclosure of such
Liens, are promptly instituted and diligently conducted and with respect to
which adequate reserves or other appropriate provision are being maintained
in accordance with Generally Accepted Accounting Principles;
(iii) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including, without
limitation, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social security
benefits which have accrued but are not yet payable or due to be remitted
or to
21
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secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Debt), statutory obligations and other similar obligations
or arising as a result of progress payments under government contracts;
(iv) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other restrictions, charges or
encumbrances (whether or not recorded) affecting the use of real property
or impair the use thereof;
(v) Liens arising as a result of filing of any financing statement
under the Uniform Commercial Code of a particular State, the Personal
Property Security Act (Ontario) or any comparable Law of any jurisdiction
covering consigned or leased goods which do not constitute assets of any of
the Co-Borrowers and/or their Subsidiaries or Affiliates and which
consignment and/or lease is not intended as security;
(vi) Liens arising out of and with respect to customer deposits made
in the ordinary course of the Co-Borrowers', their Subsidiaries and/or
Affiliates businesses;
(vii) Liens, security interests and other encumbrances as listed on
Schedule 1.01B; and
(viii) extensions, renewals or replacements of any Lien referred to in
paragraphs (i) through (vii) above, provided (a) that, in the case of
subparagraphs (i), (ii), (iii), (v) and (vi) above, the principal amount of
the obligation secured thereby is not increased and (b) that any such
extension, renewal or replacement is limited to the property originally
encumbered thereby.
"Default Rate" shall mean a rate of interest equal to the sum of (i) the
Prime Rate in effect at all times after the occurrence of an Event of Default
plus (ii) two hundred basis points (2.0%).
"Discount" shall mean, with respect to any issue of Canadian Bankers
Acceptances, the amount by which the face value of such Canadian Bankers
Acceptances exceeds the Discounted Proceeds of such Canadian Bankers
Acceptances.
"Discounted Proceeds" shall mean, with respect to any Canadian Bankers
Acceptance to be purchased by a Canadian Lender, an amount (rounded to the
nearest whole Canadian cent, and with one-half of one Canadian cent being
rounded up) calculated on the day of such purchase by multiplying (i) the face
amount of such Canadian Bankers Acceptance times (ii) the quotient equal to
(such quotient being rounded up or down to the nearest fifth decimal place and
.000005 being rounded up) (a) one divided by (b) the sum of (1) one plus (2) the
product of (A) the Discount Rate (expressed as a decimal) applicable to such
Canadian Bankers Acceptance times (B) the quotient equal to (x) the term to
maturity of such Canadian Bankers Acceptance divided by (y) the number of days
in the calendar year in which such Canadian Bankers Acceptance is to mature.
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"Discount Rate" as applicable to a Canadian Bankers Acceptance being
purchased by any Canadian Lender on any day, the percentage discount rate
(expressed to two decimal places and rounded upward, if necessary, to the
nearest 1/100th of 1%) quoted by Mellon Bank Canada as the percentage discount
rate at which Mellon Bank Canada would, in accordance with normal practice, at
or about 9:30 a.m. Toronto time, on such day, be prepared to purchase Canadian
Bankers Acceptances accepted by such Canadian Lender in an amount and having a
maturity date comparable to the amount and maturity date of such Canadian
Bankers Acceptance.
"DOL" shall mean the United States Department of Labor and any successor
department or agency.
"Dollar Equivalent" means, with respect to (i) the amount of any Canadian
Dollars on any date, the equivalent amount in U.S. Dollars that may be purchased
with such amount of Canadian Dollars, as determined by the Agent using the
Exchange Rate and (ii) any amount in U.S. Dollars, such amount.
"Domestic Letters of Credit" shall mean those Letters of Credit denominated
in U.S. Dollars for the joint and several account of the Co-Borrowers.
"Eligible Assignee" shall mean any Person(s), each of whom must be
acceptable to the Agent and the Co-Borrowers; provided, however, in each such
instance, said bank or other institutional lender must then be in compliance
with all then applicable Laws regarding regulatory capital requirements after
giving effect to any "phase-in" provisions thereof; provided, further, that such
Person shall have an Affiliate Canadian Lender which shall purchase and assume a
Pro Rata Share of the Canadian Revolving Credit Sublimit and the Canadian Term
Loan, and the term Eligible Assignee as used herein shall include such Person
and its Affiliate Canadian Lender as the context requires.
"Environment" shall mean all air, surface water, water, vapor, groundwater,
drinking water supply or land, including land surface or subsurface, and
includes all fish, wildlife, biota and all other natural resources, whether
located in the United States, Canada or elsewhere.
"Environmental Affiliate" shall mean, with respect to any Person, any other
Person whose liability (contingent or otherwise) for any Environmental Claim
such first mentioned Person has retained, assumed or otherwise is liable for (by
Law, agreement or otherwise).
"Environmental Approval" shall mean any Governmental Action pursuant to or
required under any Environmental Law.
"Environmental Claim" shall mean, with respect to any Person, any action,
suit, proceeding, investigation, notice, claim, complaint or demand, made by any
other Person (including but not limited to, any Governmental Authority,
citizens' group or present or former employee of such first Person) alleging,
asserting or claiming any actual or potential (i) violation of any Environmental
Law, (ii) liability under any Environmental Law or (iii) liability for
investigatory costs, cleanup costs, governmental response costs, damages to the
Environment, property damages, personal
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injuries, fines or penalties arising out of, based on or resulting from the
presence, or release into the Environment, of any Environmental Concern
Materials at any location, whether or not owned by such Person; provided,
however, in no event shall any voluntary action, proceeding or investigation
made or brought by the Co-Borrowers, their Subsidiaries and/or Affiliates from
time to time in connection with their own activities or inactivities be included
in this definition.
"Environmental Cleanup Site" shall mean any location whether located in the
United States, Canada or elsewhere which is listed or proposed for listing on
the National Priorities List, on CERCLIS or on any similar state list of sites
or identified by any Canadian Governmental Authority requiring investigation or
cleanup, or which is the subject of any pending or threatened action, suit,
proceeding or investigation related to or arising from any alleged violation of
any Environmental Law.
"Environmental Concern Materials" shall mean (i) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollution, contaminate or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including but not
limited to any "hazardous substance" as defined in any Environmental Law), (ii)
any toxic chemical or other substance from or related to industrial, commercial
or institutional activities, and (iii) asbestos, gasoline, diesel fuel, motor
oil, waste and used oil, heating oil and other petroleum products or compounds,
polychlorinated biphenyls, radon and urea-formaldehyde.
"Environmental Law" and "Environmental Laws" shall mean any Law, whether
now existing or subsequently enacted or amended, relating to (i) pollution or
protection of the Environment, (ii) exposure of Persons, including but not
limited to employees, to Environmental Concern Materials, (iii) protection of
the public health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of Environmental Concern Materials or (iv)
regulation of the manufacture, generation, use or introduction into commerce of
Environmental Concern Materials including their manufacture, formulation,
packaging, labeling, distribution, treatment, transportation, handling, storage
or disposal. Without limitation, "Environmental Law" shall include (a) any
Environmental Approval and the terms and conditions thereof; (b) any and all
federal, state and local Laws including, without limitation, the following
statutes: the Clean Air Act (42 U.S.C.A. sec.7401 et seq.); the Comprehensive
Environmental Response Compensation and Liability Act of 1980 (42 U.S.C.
sec.9601 et seq.); the Federal Water Pollution Control Act (33 U.S.C. sec.1251
et seq.), the Hazardous Material Transportation Act (49 U.S.C. sec.1801 et
seq.); the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
sec.136), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. sec.6901
et seq.) (including the Hazardous and Solid Waste Amendments of 1984), the Toxic
Substance Control Act (15 U.S.C. sec.2601 et seq.), the Federal Occupational
Safety & Health Act of 1970 (29 U.S.C. sec.651 et seq.) (including sec.3101 of
the Omnibus Reconciliation Act of 1990); the New Jersey Spill Compensation and
Control Act (N.J.S.A. 58:10-23.11 et seq.); the New Jersey Industrial Site
Recovery Act formerly known as the New Jersey Environmental Cleanup
Responsibility Act (N.J.S.A. 13:lK-6 et seq.); and the New Jersey Leaking
Underground Storage Tank Act (N.J.S.A. 58:l0A-21 et seq.), and all regulations
promulgated thereunder and all as
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amended from time to time; (c) the Environmental Protection Act (Ontario), the
Water Resources Act (Ontario), the Canadian Environmental Protection Act and The
Transportation of Dangerous Goods Act (Canada) and (d) any common law doctrine
(including, without limitation, injunctive relief and tort, such as negligence,
nuisance, trespass and strict liability) that may impose obligations or
liabilities for personal injury or property damage due to, or threatened as a
result of, the presence of or exposure to Environmental Concern Materials.
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability currently due and payable under any
Environmental Laws or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of any
Environmental Concern Material into the Environment.
"Equipment" of any Person, shall mean and include all of said Person's now
owned and hereafter acquired (i) machinery, (ii) manufacturing, distribution,
selling, data processing and office equipment and (iii) furniture, furnishings,
appliances, fixtures and trade fixtures, tools, toolings, molds, dies, vehicles,
vessels, aircraft and all other goods of every type and description (other than
Inventory).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations promulgated thereunder by the United States Treasury
Department, the Department of Labor and/or the PBGC.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with all or any of the Co-Borrowers would be deemed
to be a "single employer" within the meaning of Section 4001 of ERISA.
"Eurodollar Affiliate" shall mean with respect to each Lender, the
Affiliate of such Lender, if any, including, without limitation, those
Affiliates set forth on Schedule 1.01C attached to this Loan Agreement.
"Eurodollar Interest Payment Date" shall mean, with respect to any
Eurodollar Rate Loan, the last day of each Eurodollar Interest Period applicable
to such Eurodollar Rate Loan.
"Eurodollar Interest Period" shall mean one or more periods of time during
which the Co-Borrowers may select, convert to or continue a Eurodollar Rate
Loan, such funding period to be either a fourteen (14) day or a one (1), two
(2), three (3) or six (6) month period subject to availability, all as more
fully subject to the provisions of Section 2.08 of this Loan Agreement.
"Eurodollar Interest Rate Determination Date" shall mean the date on which
the Agent determines the Eurodollar Rate applicable to (i) a Borrowing of a
Eurodollar Rate Loan or (ii) the continuation or conversion of Eurodollar Rate
Loans. The Eurodollar Interest Rate Determination Date shall be the second
Business Day prior to the first day of the Eurodollar Interest Period applicable
to such Borrowing, continuation or conversion.
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"Eurodollar Portion" of any Revolving Credit Loan or any Term Loan shall
mean at any time the portion, including the whole, of such Revolving Credit Loan
or such Term Loan which is bearing interest at any time under the Eurodollar
Rate.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Interest
Period applicable to a Borrowing of Eurodollar Rate Loans, an interest rate per
annum determined by the Agent obtained by dividing (i) the rate of interest
determined by the Agent in good faith in accordance with its usual procedure
(which determination shall be conclusive, if made in good faith, absent manifest
error) to be the average (rounded upward to the nearest whole multiple of one
onethousandth of one percent (1/1000 of 1%) per annum if such average is not
such a multiple) of the rates per annum at which deposits in U.S. Dollars and/or
Canadian Dollars are offered by the Agent to major money center banks in the
London interbank eurodollar market at approximately 11:00 A.M. (London time) on
the Eurodollar Interest Rate Determination Date for a period equal to such
Eurodollar Interest Period and in an amount substantially equal to the amount of
the Eurodollar Rate Loan to be made by the Lenders and to be outstanding during
such Eurodollar Interest Period, by (ii) a percentage equal to 100% minus the
Eurodollar Reserve Percentage. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurodollar
Reserve Percentage. The "Eurodollar Rate" may also be expressed by the following
formula:
[average of the rates offered by the Agent to
major money center banks in the
London interbank Eurodollar market
Eurodollar Rate = determined by the Agent ]
-------------------------------------
[1.00-Eurodollar Reserve Percentage ]
Finally, the "Eurodollar Rate" shall in all circumstances mean the rate of
interest which is customarily referred to as the "London Interbank Offered
Rate".
"Eurodollar Rate Loans" shall mean those Revolving Credit Loans and those
Term Loans outstanding which bear interest at a rate determined by reference to
the Eurodollar Rate as provided for in Section 2.04(i) of this Loan Agreement.
"Eurodollar Rate Option" shall mean one of the interest rates available to
the Co-Borrowers as provided for and described in Section 2.04(i) of this Loan
Agreement.
"Eurodollar Rate Taxes" shall have the meaning ascribed and assigned to
such term as set forth in Section 2.08(vii) (a) of this Loan Agreement.
"Eurodollar Reserve Percentage" shall mean for any date that percentage, if
any, (expressed as a decimal, rounded upward to the nearest 1/100 of 1%), as
determined in good faith by the Agent (which determination shall be conclusive,
if made in good faith, absent manifest error) which is in effect on such date,
as prescribed by the Federal Reserve Board, 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
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System in respect of "eurocurrency liabilities" having a term equal to the
applicable Eurodollar Interest Period (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any bank to United
States residents).
"Event of Default" or "Events of Default" shall mean any of the events of
default as defined and described in Section 9.01 of this Loan Agreement.
"Excess Cash Flow" shall mean as of any date of determination thereof for
the period of four (4) consecutive Fiscal Quarters immediately preceding said
date of determination, taken together as one accounting period, Consolidated
EBITDA minus the sum of, without duplication (i) interest expense on all
Consolidated Debt of the Co-Borrowers for such test period, plus (ii) principal
amortization payments due and payable on all Consolidated Debt during such test
period, plus (iii) Capital Expenditures during such test period, plus (iv)
Restricted Junior Payments paid during such test period (which are permitted
under Section 7.04 of this Loan Agreement), plus (v) voluntary prepayments of
principal made on all Consolidated Senior Debt during such test period and plus
(vi) all charges against income of the Co-Borrowers for federal, state and local
taxes accrued for such test period, all as calculated in accordance with
Generally Accepted Accounting Principles.
"Exchange Rate" shall mean, on any day, (i) with respect to Canadian
Dollars in relation to U.S. Dollars, the spot rate as quoted by Mellon Bank
Canada as its noon spot rate at which U.S. Dollars are offered on such day for
Canadian Dollars and (ii) with respect to U.S. Dollars in relation to Canadian
Dollars, the spot rate as quoted by Mellon Bank Canada as its noon spot rate at
which Canadian Dollars are offered on such day for U.S. Dollars.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"Federal Funds Effective Rate" for any day shall mean the rate per annum
(rounded upward to the nearest 1/100 of 1%) determined by the Agent (which
determination shall be conclusive, if made in good faith, absent manifest error)
to be the rate per annum announced by the Federal Reserve Bank of Philadelphia
or the Federal Reserve Bank of Cleveland, as selected by the Agent (or any
successor) on such day as being the weighted average of the rates on overnight
Federal funds transactions arranged by Federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided that if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System or any governmental authority succeeding to its functions.
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<PAGE>
"Fiscal Quarter" shall mean the following three month periods of each
Fiscal Year:
April 1 - June 30
July 1 - September 30
October 1 - December 31
January 1 - March 31
"Fiscal Year" shall mean that period commencing on April 1 and ending on
March 31 of each succeeding year or such other period as the Co-Borrowers may
designate and the Agent may approve in writing.
"Funding Segment" shall mean with respect to an Eurodollar Rate Loan, the
entire principal amount of such Eurodollar Portion to which, at the time in
question, there is applicable a particular Eurodollar Interest Period beginning
on a particular day and ending on a particular day. (By definition, each such
Eurodollar Portion is at all times composed of an integral number of discrete
Funding Segments and the sum of the principal amounts of all Funding Segments of
any such Portion at any time equals the principal amount of such Portion at such
time.)
"Generally Accepted Accounting Principles" shall mean generally accepted
accounting principles in the United States of America, as in effect from time to
time, as developed, modified and set forth in the opinions and pronouncements of
the Accounting Principles Board, the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board, or in such other
statements by such other Person as may be in general use by significant segments
of the accounting profession, which are applicable to the circumstances as of
the date of determination, subject to the terms of Section 1.03 of this Loan
Agreement.
"Governmental Action" or "Governmental Approvals" shall mean any
approval, order, consent, authorization, certificate, license, permit or
validation of, or exemption or other action by, or filing, recording or
registration with or notice to, any Governmental Authority.
"Governmental Acts" shall have the meaning ascribed and assigned to such
term as set forth in Section 2.01(vii)(a) of this Loan Agreement.
"Governmental Authority" shall mean any government or political subdivision
or any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Indemnified Matters" shall have the meaning ascribed and assigned to
such term as set forth in Section 11.04 of this Loan Agreement
"Indemnified Party" and "Indemnified Parties" shall mean the Agent, each
Lender and the directors, officers, trustees, employees, agents, attorneys and
controlling shareholders of the Agent and each Lender.
"Independent Certified Public Accountant" shall mean KPMG Peat Marwick, and
its
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<PAGE>
successors and any other independent certified public accounting firm selected
by the Co-Borrowers, their Subsidiaries and Affiliates, which accounting firm is
reasonably satisfactory to the Agent and the Requisite Lenders including,
without limitation, any one of the Big Five Accounting Firms.
"Inventory" shall mean all "inventory", as such term is defined in (i) the
Uniform Commercial Code for each State in the United States in which the
Co-Borrowers, their Subsidiaries and Affiliates may now or hereafter have such
inventory located and (ii) the Personal Property Security Act for each Province
in Canada in which the Co-Borrowers, their Subsidiaries and Affiliates may now
or hereafter have such inventory located, whether now owned and hereafter
acquired by the Co-Borrowers, and shall also mean and include all inventory,
wherever located (whether in possession of the Co-Borrowers or of a bailee or
other Person), now owned or hereafter acquired by the Co-Borrowers or in which
the Co-Borrowers has or hereafter may acquire any rights, title or interests
including, without limitation, all goods, materials, supplies, merchandise and
other personal property furnished under any contract of service or intended for
sale or lease, including, without limitation, all raw materials, work in
process, finished goods and materials, parts and supplies of any kind, nature or
description which are used or consumed in such Person's business, all returned
or repossessed goods now, or at any time or times hereafter, in the possession
or under the control of such Person, and all documents of title or documents
representing the same, but excluding all goods not owned by such Person which
have been sold on consignment by such Person to the extent included in the
foregoing; together with all proceeds and products thereof.
"IRS" shall mean the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Issuing Bank" and "Issuing Banks" shall mean (individually or
collectively, as the context requires) any one or more of Mellon Bank, N.A. or
an Affiliate of Mellon Bank N.A., including, without limitation, Mellon Bank
Canada (with respect to Canadian Letters of Credit), which has agreed to act as
the issuer hereunder for purposes of issuing Letters of Credit.
"Law" or "Laws" shall mean any law (including common law), constitution,
statute, treaty, convention, regulation, rule, ordinance, order, injunction,
writ, decree or award of any Governmental Authority.
"Lender" and "Lenders" shall mean Mellon Bank, N.A., Mellon Bank Canada,
and each financial or banking institution that has purchased and/or acquired, by
way of assignment or participation, a portion of Mellon Bank, N.A.'s, Mellon
Bank Canada's or any other Lender's rights and interests under this Loan
Agreement, subject to the terms and conditions of Section 11.02 of this Loan
Agreement. For purposes of this agreement, "Lender" includes each Canadian
Lender unless the context otherwise requires.
"Letter of Credit" or "Letters of Credit" shall mean any sight
commercial/documentary or standby letter of credit issued by the Issuing Bank
for the account of the Co-Borrowers pursuant to Section 2.01(vi) of this Loan
Agreement (and shall include Canadian Letters of Credit).
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<PAGE>
"Letter of Credit Obligations" shall mean, at any time, the sum of (i)
Reimbursement Obligations at such time for Letters of Credit and (ii) the Dollar
Equivalent of the aggregate maximum amount then available for drawing under the
outstanding Letters of Credit.
"Letters of Credit Reimbursement Agreement" shall mean, with respect to any
Letter of Credit, such form of application therefor and form of continuing
Letters of Credit Reimbursement Agreement therefor (in the form of a single
document), as Issuing Bank may employ in the ordinary course of business for its
own account, all as more fully set forth in Exhibit "B" attached hereto and made
a part hereof.
"Letter of Credit Sublimit" shall mean the lesser of (i) the applicable
Advance Limit or (ii) US$20,000,000.00 minus the outstanding principal amount of
all Revolving Credit Loans in excess of US$50,000,000.00.
"Leverage Matrix" shall mean the following matrix, upon which (i) interest
rates described in Section 2.04 hereof and (ii) certain fees described in
Section 2.05 hereof are determined on the basis of the Consolidated Funded Debt
Leverage Ratio:
<TABLE>
<CAPTION>
Consolidated Unused
Funded Debt Eurodollar Prime Rate BA Commitment Letter of Credit
Leverage Ratio Spread Spread Margin Fee Rate Annual Fee
-------------- ---------- ----------- ------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
I less than 2.5 1.50% 0.00% 1.50% 0.20% 1.00%
II equal to or
greater than
2.5 but less
than 3.0 1.75% 0.25% 1.75% 0.25% 1.375%
III equal to or
greater than
3.0 but less
than 3.5 2.00% 0.50% 2.00% 0.25% 1.875%
IV equal to or
greater than
3.5 but less
than 4.0 2.25% 0.75% 2.25% 0.375% 2.25%
V equal to or
greater than
4.0 but less
than 4.5 2.50% 1.00% 2.50% 0.50% 2.50%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
VI equal to or
greater than
4.5 but less
than 5.0 2.75% 1.25% 2.75% 0.50% 2.75%
VII equal to or
greater
than 5.0 3.00% 1.50% 3.00% 0.50% 3.00%
</TABLE>
"Liabilities and Costs" shall mean all liabilities, obligations,
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including, without limitation, attorneys',
experts and consulting fees and costs of investigation and feasibility studies),
fines, penalties and monetary sanctions, interest, direct or indirect, known or
unknown, absolute or contingent, past, present or future, arising out of or
relating to any actions, suit, proceeding or resolution or settlement thereof.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other) or
preference, priority, security interest, or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction).
"Loan Account" shall have the meaning ascribed and assigned to such term as
set forth in Section 2.07(v) of this Loan Agreement.
"Loan Agreement" shall have the meaning ascribed and assigned to such term
as set forth in the preamble of this Loan Agreement.
"Loan Documents" shall mean any and all agreements, documents, certificates
and instruments executed by any one or more of the Co-Borrowers, the Corporate
Guarantors, the Partnership Guarantor and/or any other Person and delivered by
them to either or both the Lenders or the Agent pursuant to and in connection
with the Loan Facilities, including, without limitation, this Loan Agreement,
the Notes, the Collateral Documents and the Swap Agreement(s) in each case as
amended, supplemented, restated or otherwise modified from time to time in
accordance with the provisions thereof.
"Loan Facilities" shall have the meaning ascribed and assigned to such
term as set forth in the thirty-ninth recital of this Loan Agreement.
"Loans" shall mean a collective reference to all Revolving Credit Loans,
all Term Loans #1 and all Term Loans #2 outstanding from time to time.
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<PAGE>
"Margin Stock" shall have the meaning ascribed and assigned to such term in
Regulation U.
"Marketable Securities" shall mean any stock, shares, voting trust
certificates, bonds, debentures, notes or other evidences of indebtedness
commonly known as "securities", secured or unsecured, convertible, subordinated
or otherwise, and 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 subscribe to,
purchase or acquire, any of the foregoing which can readily be bought and sold
on any nationally recognized securities exchange and would properly be
classified as marketable securities on the consolidated balance sheet of the
Co-Borrowers and its Subsidiaries in accordance with Generally Accepted
Accounting Principles.
"Material Adverse Effect" shall mean (i) a material adverse effect upon the
business, financial condition, financial performance, properties or operations
of any one or more of the Co-Borrowers, their Subsidiaries and/or Affiliates
taken as a whole or (ii) a material adverse effect upon the ability of the
Co-Borrowers, their Subsidiaries and/or Affiliates to perform their Obligations
under the Loan Documents.
"Maximum Amount of Revolving Credit Loans" shall mean, as of any date of
determination, the available Advance Limit (as determined by the calculations
set forth in a current Borrowing Base Certificate) minus the amount of the
Letter of Credit Obligations as of any date of determination.
"Maximum Canadian Exposure" shall have the meaning ascribed and assigned to
such term as set forth in Section 2.13(iii) of this Loan Agreement.
"Mellon Canada Agreement #1" shall have the meaning ascribed and assigned
to such term as set forth in the thirty-first recital of this Loan Agreement.
"Mellon Canada Agreement #2" shall have the meaning ascribed and
assigned to such term as set forth in the thirty-third recital of this Loan
Agreement.
"Mellon US Agreement #1" shall have the meaning ascribed and assigned to
such term as set forth in the thirtieth recital of this Loan Agreement.
"Mellon US Agreement #2" shall have the meaning ascribed and assigned to
such term as set forth in the thirty-second recital of this Loan Agreement.
"Multiemployer Plan" shall mean an employee benefit plan defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by the Co-Borrowers, their Subsidiaries, their Affiliates or
an ERISA Affiliate.
"NBC" shall have the meaning ascribed and assigned to such term as set
forth in the twenty-first recital of this Loan Agreement.
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<PAGE>
"NBC Canada Agreement" shall have the meaning ascribed and assigned to such
term as set forth in the twenty-second recital of this Loan Agreement.
"NBC US Agreement" shall have the meaning ascribed and assigned to such
term as set forth in the twenty-first recital of this Loan Agreement.
"Note" or "Notes" shall mean the reference to (i) the Revolving Credit Loan
Note(s), (ii) the Term Loan #1 Note(s) and (iii) the Term Loan #2 Note(s),
together with any and all amendments, modifications, extensions, renewals,
refinancings or refundings of any thereof, in whole or in part.
"Notice of Borrowing" shall mean with respect to a proposed Borrowing
pursuant to Section 2.01(ii), Section 2.02(i)(c) or Section 2.03(i)(c) hereof, a
written loan authorization and certificate duly executed by an Authorized
Officer of the Co-Borrowers and delivered to the Agent in the form of Exhibit
"D" attached hereto.
"Notice of Conversion/Continuation" shall mean, with respect to a proposed
conversion or continuation of a Revolving Credit Loan or the Term Loan as a
Eurodollar Rate Loan or a Prime Rate Loan, pursuant to Section 2.04(iii) hereof,
a notice in the form of Exhibit "E" attached hereto.
"Obligations" shall mean all present and future indebtedness and other
liabilities of each of the Co-Borrowers owing to the Agent, any Lender, or any
Person entitled to indemnification pursuant to Section 11.04 hereof, or any of
their respective permitted successors, transferees or assigns, of every type and
description, arising under or in connection with this Loan Agreement or any
other Loan Document, whether or not for the payment of money, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired. The
term includes, without limitation, all Reimbursement Obligations, Swap
Obligations, all interest, charges, expenses, fees, attorneys' fees and
disbursements and any other sum chargeable to the Co-Borrowers under this Loan
Agreement or any other Loan Document.
"Office" when used in connection with the Agent, shall mean its principal
office located at 1735 Market Street, Philadelphia, Pennsylvania 19101, or at
such office or offices of the Agent or branch, subsidiary or affiliate thereof
as may be designated in writing from time to time by the Agent to the
Co-Borrowers and the Lenders.
"Officer's Certificate" shall mean a certificate for the Co-Borrowers
executed by any Authorized Officers of the Co-Borrowers, including, without
limitation, the president, any vice-president, the chief financial officer, the
controller and the treasurer, in the form of Exhibit "F".
"OECD" shall mean the Organization for Economic Cooperation and
Development.
"Operating Lease" shall mean, as applied to any Person, any lease of any
property
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<PAGE>
(whether real, personal or mixed) by that Person as lessee which is not a
Capitalized Lease.
"Original Agreement of Guaranty" shall have the meaning ascribed and
assigned to such term as set forth in the fifth recital of this Loan Agreement.
"Original Co-Borrowers" shall have the meaning ascribed and assigned to
such term as set forth in the second recital of this Loan Agreement.
"Original Guarantors" shall have the meaning ascribed and assigned to such
term as set forth in the fifth recital of this Loan Agreement.
"Original Lenders" shall have the meaning ascribed and assigned to such
term as set forth in the second recital of this Loan Agreement.
"Original Loan Agreement" shall have the meaning ascribed and assigned to
such term as set forth in the second recital of this Loan Agreement.
"Original Loan Facilities" shall have the meaning ascribed and assigned to
such term as set forth in the fourth recital of this Loan Agreement.
"Original Mellon Canada Revolving Credit Note" shall have the meaning
ascribed and assigned to such term as set forth in the tenth recital of this
Loan Agreement.
"Original Mellon Canada Revolving Credit Note #2" shall have the meaning
ascribed and assigned to such term as set forth in the fifteenth recital of this
Loan Agreement.
"Original Mellon Canada Revolving Credit Note #3" shall have the meaning
ascribed and assigned to such term as set forth in the twenty-fourth recital of
this Loan Agreement.
"Original Mellon Canada Revolving Credit Note #4" shall have the meaning
ascribed and assigned to such term as set forth in the thirty-fifth recital of
this Loan Agreement.
"Original Mellon Canada Term Loan Note" shall have the meaning ascribed
and assigned to such term as set forth in the eleventh recital of this Loan
Agreement.
"Original Mellon Canada Term Loan Note #2" shall have the meaning ascribed
and assigned to such term as set forth in the eighteenth recital of this Loan
Agreement.
"Original Mellon Canada Term Loan Note #3" shall have the meaning ascribed
and assigned to such term as set forth in the twenty-seventh recital of this
Loan Agreement.
"Original Mellon Canada Term Loan Note #4" shall have the meaning ascribed
and assigned to such term as set forth in the thirty-sixth recital of this Loan
Agreement.
"Original Mellon US Revolving Credit Note" shall have the meaning ascribed
and
34
<PAGE>
assigned to such term as set forth in the ninth recital of this Loan Agreement.
"Original Mellon US Revolving Credit Note #2" shall have the meaning
ascribed and assigned to such term as set forth in the fourteenth recital of
this Loan Agreement.
"Original Mellon US Revolving Credit Note #3" shall have the meaning
ascribed and assigned to such term as set forth in the twenty-third recital of
this Loan Agreement.
"Original Mellon US Revolving Credit Note #4" shall have the meaning
ascribed and assigned to such term as set forth in the thirty-fourth recital of
this Loan Agreement.
"Original NBC Canada Revolving Credit Note" shall have the meaning ascribed
and assigned to such term as set forth in the twenty-sixth recital of this Loan
Agreement.
"Original NBC Term Loan Note" shall have the meaning ascribed and assigned
to such term as set forth in the twenty-eighth recital of this Loan Agreement.
"Original NBC US Revolving Credit Note" shall have the meaning ascribed and
assigned to such term as set forth in the twenty-fifth recital of this Loan
Agreement.
"Original Revolving Credit Loan Facility" shall have the meaning
ascribed and assigned to such term as set forth in the second recital of this
Loan Agreement.
"Original Security Agreement #1" shall have the meaning ascribed and
assigned to such term as set forth in the sixth recital of this Loan Agreement.
"Original Security Agreement #2" shall have the meaning ascribed and
assigned to such term as set forth in the seventh recital of this Loan
Agreement.
"Original Security Agreement #3" shall have the meaning ascribed and
assigned to such term as set forth in the eighth recital of this Loan Agreement.
"Original Security Agreements" shall have the meaning ascribed and assigned
to such term as set forth in the eighth recital of this Loan Agreement.
"Original Term Loan Facility" shall have the meaning ascribed and assigned
to such term as set forth in the third recital of this Loan Agreement.
"Original Toronto-Dominion NY Revolving Credit Note" shall have the meaning
ascribed and assigned to such term as set forth in the sixteenth recital of this
Loan Agreement.
"Original Toronto-Dominion Revolving Credit Note" shall have the meaning
ascribed and assigned to such term as set forth in the seventeenth recital of
this Loan Agreement.
"Original Toronto-Dominion Term Loan Note" shall have the meaning ascribed
and
35
<PAGE>
assigned to such term as set forth in the nineteenth recital of this Loan
Agreement.
"Partnership Guarantor" shall mean (i) Laurel Technologies Partnership t/a
DRS Laurel Technologies, a general partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, having its
principal office located at 423 Walters Avenue, Johnstown, Pennsylvania 15904
and (ii) any new or additional non-corporate Affiliates of the Co-Borrowers in
which any of the Co-Borrowers acquires an ownership interest of more than fifty
percent (50%).
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any Person
succeeding to any or all of its functions and duties under ERISA.
"Pension Plan" shall mean any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA (other than a Multiemployer Plan) covered by
Title IV of ERISA by reason of Section 4021 of ERISA, of which the Co-Borrowers
or any ERISA Affiliate are or have been within the preceding five years a
"contributing sponsor" within the meaning of Section 4001(a)(13) of ERISA, or
which are or have been within the preceding five years maintained for employees
of the Co-Borrowers or any ERISA Affiliate.
"Permits" shall mean any permit, approval, authorization, license,
variance, or permission required from a Governmental Authority under an
applicable Requirement of Law.
"Permitted Encumbrances" shall mean a collective reference to (i) any
Customary Permitted Liens, (ii) any Liens created or contemplated by the Loan
Documents and (iii) any Liens existing on the Closing Date, as described on
Schedule 1.01-D attached hereto and made a part hereto which Liens are
reasonably acceptable to the Lender.
"Person" or "Persons" shall mean any natural person, employee, general or
limited partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture, limited liability
company, trust, bank or other organization, whether or not a legal entity or any
other non-governmental entity, or any Governmental Authority.
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA (other than a Multiemployer Plan) of which the
Co-Borrowers or any ERISA Affiliate are, or within the preceding five years
were, an "employer" as that term is defined in Section 3(5) of ERISA.
"Pledge of Stock Agreements" shall mean a collective reference to (i) that
certain Amended and Restated Pledge of Stock Agreement #1, dated October 20,
1998, executed by DRS Canada Inc., as pledgor, pledging 100% of the authorized,
issued and outstanding voting capital stock of DRS Flight Safety, as hereafter
amended, modified, extended, renewed, refinanced and/or supplemented; (ii) that
Amended and Restated certain Pledge of Stock Agreement #2, dated October 20,
1998, executed by DRS, as pledgor, pledging 100% of the authorized, issued and
outstanding voting capital stock of (a) DRS International, (b) DRS Canada Inc.,
(c) DRS Systems Management, (d) DRS/MS, (e) DRS Air, (f) DRS Electronic Systems,
(g)
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<PAGE>
DRS Photronics and (h) DRS Precision Echo, (i) DRS EO, (j) DRS FPA, Inc. and (k)
DRS Merger Sub, Inc., as hereafter amended, modified, extended, renewed,
refinanced and/or supplemented; (iii) that certain Amended and Restated Pledge
of Stock Agreement #3, dated October 20, 1998, executed by DRS Electronic
Systems, Inc., as pledgor, pledging 100% of the authorized, issued and
outstanding voting capital stock of DRS Technical Services, Inc., as hereafter
amended, modified, extended, renewed, refinanced and/or supplemented; (iv) that
certain Amended and Restated Pledge of Stock Agreement #4, dated October 20,
1998, executed by DRS Precision Echo, Inc., as pledgor, pledging 100% of the
authorized, issued and outstanding voting capital stock of DRS Ahead Technology,
Inc., as hereafter amended, modified, extended, renewed, refinanced and/or
supplemented; (v) that certain Amended and Restated Pledge of Stock Agreement
#5, dated October 20, 1998, executed by DRS Photronics, Inc., as pledgor,
pledging 100% of the authorized, issued and outstanding voting capital stock of
DRS Optronics, Inc., as hereafter amended, modified, extended, renewed,
refinanced and/or supplemented; (vi) that certain Amended and Restated Pledge of
Stock Agreement #6, dated October 20, 1998, executed by DRS Canada Inc., as
pledgor, pledging no more than 65% of the authorized, issued and outstanding
voting capital stock of Spar (UK), as hereafter amended, modified, extended,
renewed, refinanced and/or supplemented; (vii) that certain Pledge of Stock
Agreement #1, dated October 20, 1998, executed by DRS Ahead Technologies, Inc.,
as pledgor, pledging no more than 65% of the authorized, issued and outstanding
voting capital stock of DRS Ahead Technology, Inc. (Bulgaria) JSC, as hereafter
amended, modified, extended, renewed, refinanced and/or supplemented; (viii)
that certain Pledge of Stock Agreement #2, dated October 20, 1998, executed by
DRS International, Inc., as pledgor, pledging no more than 65% of the
authorized, issued and outstanding voting capital stock of Diagnostic/Retrieval
Systems (DRS) Technologies Parsippany B.V., as hereafter amended, modified,
extended, renewed, refinanced and/or supplemented; (ix) that certain Pledge of
Stock Agreement #3, dated October 20, 1998, executed by DRS Hadland Ltd., as
pledgor, pledging (a) 100% of the authorized, issued and outstanding voting
capital stock of DRS Hadland, Inc. and (b) no more than 65% of the authorized,
issued and outstanding voting capital stock of DRS Hadland Photonics GmbH; and
(x) that certain Pledge of Stock Agreement #4, dated October 20, 1998, executed
by DRS Technologies (Europe) Ltd., as pledgor, pledging no more than 65% of the
authorized, issued and outstanding voting capital stock of DRS Hadland Ltd., as
hereafter amended, modified, extended, renewed, refinanced and/or supplemented.
"Potential Event of Default" shall mean an event, condition or situation
which, with the giving of any required notice and/or the passage of any required
grace or cure periods, or any combination of the foregoing, would constitute an
Event of Default.
"Prime Rate" or "Prime Lending Rate" shall mean the fluctuating interest
rate per annum publicly announced by the Agent from time to time as its "prime
rate" or "prime lending rate", which interest rate may not necessarily be the
rate actually charged by the Agent to its most creditworthy customers.
"Prime Rate Loans" shall mean all Revolving Credit Loans and the Term Loan
outstanding which bear interest at a rate determined by reference to the Prime
Rate as provided for in Section 2.04(i) of this Loan Agreement.
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<PAGE>
"Prime Rate Option" shall mean one of the two interest rates available to
the Co-Borrowers as provided for and described in Section 2.04(i)(a) and Section
2.04(i)(b) of this Loan Agreement.
"Prime Rate Portion" of any Borrowing or Borrowings shall mean at any time
the portion, including the whole, of such Borrowing or Borrowings bearing
interest at such time under the Prime Rate Option. If no Borrowing or Borrowings
is specified, "Prime Rate Portion" shall refer to the Prime Rate Portion of all
Borrowings outstanding at such time.
"Process Agent" shall have the meaning ascribed and assigned to such term
as set forth in Section 11.18 of this Loan Agreement.
"Property" shall mean any real or personal property, plant, building,
facility, structure, underground storage tank, machinery and Equipment,
Inventory, Accounts or other assets now or hereafter owned, leased or operated
by the Co-Borrowers.
"Pro Rata Share" for any Lender shall mean with respect to (i) the
Revolving Credit Facility, a fraction (expressed as a percentage), the numerator
of which shall be the amount of such Lender's Revolving Credit Commitment and
the denominator of which shall be the aggregate amount of all of the Lenders'
Revolving Credit Commitments, as adjusted from time to time to give effect to
any applicable Assignment and Acceptance Agreement and any reduction of the
Revolving Credit Facility under Section 2.01(v) of this Loan Agreement, (ii) the
Term Loan Facility #1, a fraction (expressed as a percentage), the numerator of
which shall be the amount of such Lender's Term Loan #1 Commitment and the
denominator of which shall be the aggregate amount of all of the Lenders' Term
Loan #1 Commitments, as adjusted from time to time to give effect to any
applicable Assignment and Acceptance Agreement and (iii) the Term Loan Facility
#2, a fraction (expressed as a percentage), the numerator of which shall be the
amount of such Lender's Term Loan #2 Commitment and the denominator of which
shall be the aggregate amount of all of the Lenders' Term Loan #2 Commitments,
as adjusted from time to time to give effect to any applicable Assignment and
Acceptance Agreement. A Lender may have a Pro Rata Share of all of the Loan
Facilities or any individual Loan Facility.
"Purchase Agreement" shall mean that certain agreement dated as of July 28,
1998 executed by and among the Sellers, as the sellers, and DRS Technologies,
Inc., as the purchaser, pursuant to which the Sellers have agreed to sell to DRS
Technologies, Inc. certain of the assets of the scanning and staring infrared
detector business and electro-optical business of the Sellers, as amended and
modified up through and including the Closing Date and, with the consent of the
Agent, as amended and modified after the Closing Date.
"Qualified Billed Accounts Receivable" shall mean an Account which has been
identified by the Co-Borrowers, their Subsidiaries and Affiliates to the Agent
in the Borrowing Base Certificate and is represented by the Co-Borrowers, the
Corporate Guarantors and the Partnership Guarantor to the best of their
knowledge (by their acceptance of Revolving Credit Loans hereunder) as meeting
all of the following criteria on its origination date and thereafter until
collected, and is in
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<PAGE>
all other respects acceptable to the Agent based on its customary credit and
collateral considerations regarding the value of the Account: (i) the
Co-Borrowers, their Subsidiaries and Affiliates are the sole owners of the
Account and have not sold, assigned or otherwise transferred it, and the Account
is not subject to any claim or Lien (other than any Lien granted to the Agent in
connection with the Loan Facilities); (ii) the Account is bona fide and legally
enforceable and owing to the Co-Borrowers, their Subsidiaries and Affiliates for
the sale of goods and performance of services in the United States, Canada
and/or their respective territories and possessions, and in the ordinary course
of business and the Account does not require any further act on the part of the
Co-Borrowers, their Subsidiaries and Affiliates to make it owing by the Account
debtor, and the Co-Borrowers, their Subsidiaries and Affiliates have delivered
to the Agent if required by the Agent, invoices, billings, shipping documents
and other documents evidencing the obligation to pay the Account; (iii) the
Account does not represent a conditional sale, consignment or other sale on a
basis other than that of absolute sale, is not evidenced by any note,
instrument, chattel paper or like document; (iv) the Account is invoiced for
payment promptly on or about the date Inventory or other goods represented
thereby are shipped to the account debtor, and said Account has not remained
unpaid for more than ninety (90) days after its invoice date; (v) the Account is
not subject to any valid defense, offset, request for equitable adjustment,
claim, counterclaim, credit, allowance or adjustment except usual and customary
prompt payment discounts, nor has the account debtor returned the goods or
indicated any dispute or complaint concerning them; provided, however, if the
account debtor has returned any goods, or indicated a dispute or complaint with
respect thereto or with respect to the Account, then the Account will be
disqualified under this clause (v) only to the extent of the goods returned or
the amount of the dispute or the complaint if the account debtor can reasonably
be expected to pay the remainder of the Account; (vi) the Co-Borrowers, their
Subsidiaries and Affiliates have not received any notice, nor have any
knowledge, of any facts which materially adversely affect the creditworthiness
of the applicable Account debtor, including, without limitation, the customer,
is not the subject of any bankruptcy or other insolvency proceeding; (vii) the
account debtor is not an Affiliate of the Co-Borrowers, their Subsidiaries or
Affiliates nor a director or officer of the Co-Borrowers, their Subsidiaries or
Affiliates or an Affiliate of any director or officer; (viii) the Account does
not represent a contra account; (ix) the Agent holds a first priority perfected
security interest lien on said Account, subject to any rights of any
Governmental Authority under a Contractual Obligation; (x) the Account is not
with a customer located in any state denying creditors access to said state's
courts in the absence of a Notice of Business Activities Report or other similar
filing, unless the Co-Borrowers, their Subsidiaries and Affiliates have either
qualified as a foreign corporation authorized to transact business in such state
or has filed a Notice of Business Activities Report or similar filing with the
applicable state agency for the then current year; and (xi) the Account is not
due from an account debtor whose principal place of business is located outside
the United States of America or Canada unless (a) such Account is backed by a
letter of credit issued or confirmed by a bank that is organized under the laws
of the United States of America or a State thereof and has capital and surplus
in excess of US$1,000,000,000.00 (provided, however, that such letter of credit
shall have been delivered to the Agent as additional Collateral under the Loan
Documents) or such Account is covered by foreign credit insurance reasonably
satisfactory to the Agent or (b) such account debtor is, in the reasonable
commercial judgment of the Agent, creditworthy in relation to the Accounts owing
by such customer to the Co-Borrowers, their Subsidiaries and Affiliates. The
Agent shall have the right to request from the Co-Borrowers, their Subsidiaries
and Affiliates, at any time, such information concerning an Account or Accounts
as the Agent may reasonably require in order to
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ascertain that the criteria set forth above in clauses (i) through (xi) have
been satisfied with respect to such Account or Accounts. In addition, if an
Account or Accounts of an account debtor representing fifty (50%) percent or
more of the total balance due on all Accounts of said account debtor fail(s) to
satisfy the requirements described in clauses (i) through (xi) above, then all
Accounts of said account debtor shall be ineligible and shall not be "Qualified
Billed Accounts Receivable".
Additionally, without limiting any other provision of this Loan Agreement,
or the discretion of the Agent or Lenders to deem Accounts ineligible pursuant
to any other provision of this Loan Agreement, it is expressly understood and
agreed that if any of the Co-Borrowers, their Subsidiaries or Affiliates, (i)
has been debarred or suspended by any Governmental Authority, or been issued a
notice of proposed debarment or notice of proposed suspension by any
Governmental Authority; (ii) is the subject of an investigation by any
Governmental Authority (other than a normal and customary review) involving or
possibly involving fraud, willful misconduct or any other wrongdoing, and which
could result in criminal liability, civil liability or expense in excess of One
Million and 00/100 (US$1,000,000.00) Dollars, suspension, debarment or any other
adverse administrative action; (iii) is a party to any Contractual Obligation
with any Governmental Authority which has been actually terminated due to such
Co-Borrower's, Subsidiary's or Affiliate's alleged fraud, willful misconduct or
any other wrongdoing; (iv) is a party to any Contractual Obligation with any
Governmental Authority which has been actually terminated for any other reason
whatsoever, which could result in liability or expense in excess of One Million
and 00/100 (US$1,000,000.00) Dollars, and (v) has been issued a cure notice or
show cause notice under any Contractual Obligation with any Governmental
Authority involving amounts in excess of One Million and 00/100
(US$1,000,000.00) Dollars and has failed to cure the default giving rise to such
cure notice or failed to resolve the matter set forth in the show cause notice
(a) within the time period available to such Co-Borrower, Subsidiary or
Affiliate, pursuant to such Contractual Obligation with any Governmental
Authority and/or such notice or (b) before the date on which the Contractual
Obligation as a consequence of such default or matter set forth in the show
cause notice, then in any such event, any and all Accounts of such Co-Borrower,
Subsidiary or Affiliate, may, in the sole but reasonable discretion of the
Agent, be deemed and treated by the Agent as ineligible Accounts and shall not
be "Qualified Billed Accounts Receivable."
"Qualified Billed Government Accounts Receivable" shall mean all Accounts
arising from a Contractual Obligation with any Governmental Authority which (i)
represents amounts due and owing to the Co-Borrowers, their Subsidiaries or
Affiliates pursuant to a Contractual Obligation with any Governmental Authority,
(ii) have been properly billed, (iii) arise in the ordinary course of
Co-Borrowers', their Subsidiaries' or Affiliates' businesses, (iv) are due,
owing and not subject to any defense, set-off or counterclaim and (v) are
otherwise in all cases a Qualified Billed Accounts Receivable.
"Qualified Inventory" shall mean the Inventory of each of the Co-Borrowers,
their Subsidiaries and Affiliates in the sole possession or control of such
Co-Borrowers, their Subsidiaries and Affiliates, stored in a location or
locations and in a manner acceptable to the Agent, valued at the lower of cost
or market value, which Inventory is, and at all times continues to be,
acceptable to the Agent, and in which the Agent has an enforceable perfected
security interest under the applicable Uniform Commercial Code or the Personal
Property Security Act which is
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prior to all Liens, except Liens for taxes not yet due and payable to the extent
given priority by statute and prior to any rights of suppliers in Canada to
repossess thirty (30) day goods pursuant to the Bankruptcy Act.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
sec.6901 et. seq., and any successor statute, and regulations promulgated
thereunder.
"Refunding Bankers Acceptance" shall have the meaning ascribed and assigned
to such term as set forth in Section 2.04A(ii) in this Loan Agreement.
"Regulation D" shall mean Regulation D of the Federal Reserve Board, or any
successor statute or regulation thereto, as in effect from time to time.
"Regulation T" shall mean Regulation T of the Federal Reserve Board, or any
successor statute or regulation thereto, as in effect from time to time.
"Regulation U" shall mean Regulation U of the Federal Reserve Board, or any
successor statute or regulation thereto, as in effect from time to time.
"Regulation X" shall mean Regulation X of the Federal Reserve Board, or any
successor statute or regulation thereto, as in effect from time to time.
"Reimbursement Obligations" shall mean the Dollar Equivalent of the unpaid
reimbursement or repayment obligations of the Co-Borrowers to either or both
Issuing Banks pursuant to the Letter(s) of Credit Reimbursement Agreement for
amounts paid out under Letters of Credit.
"Release" shall mean release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of Environmental
Concern Materials in violation of Environmental Laws into the indoor or outdoor
Environment or into or out of any Property, including the movement of
Environmental Concern Materials through or in the air, soil, surface water,
groundwater or Property.
"Remedial Action" shall mean actions required to (i) clean up, remove,
treat or in any other way address Environmental Concern Materials in the indoor
or outdoor Environment; (ii) prevent the Release or threat of Release or
minimize the further Release of Environmental Concern Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor Environment; or (iii) perform preremedial studies and
investigations and postremedial monitoring and care.
"Reportable Event" shall mean any event described as such in Section 4043
of ERISA or regulations promulgated thereunder.
"Requirements of Law" shall mean, as to any Person, the charter and by-laws
or other organization or governing documents of such Person, and any law, rule
or regulation, Permit, or
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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, including, without
limitation, the Securities Act, the Securities Exchange Act, Regulations U and
X, and any certificate of occupancy, zoning ordinance, building, environmental
or land use requirement or Permit or occupational safety or health law, rule or
regulation.
"Requisite Lenders" shall mean, as of any date of determination, (i) if the
Commitments are then in effect, Lenders having Pro Rata Shares which are, in the
aggregate, fifty-one percent (51%) or more of the then aggregate amount of the
Commitments then in effect and (ii) if the Commitments are not then in effect
but there are Obligations outstanding, Lenders holding, in the aggregate,
fifty-one percent (51%) or more of the outstanding Obligations.
"Reset Date" shall have the meaning ascribed and assigned to such term as
set forth in Section 2.13(i) of this Loan Agreement.
"Restricted Junior Payments" shall mean (i) any dividend or other
distribution to the shareholders of DRS (whether direct or indirect and whether
in cash, property, Securities or otherwise) on account of any shares of any
class of capital stock (or equivalent partnership interest) of DRS now or
hereafter outstanding, (ii) any scheduled payment or prepayment of principal of,
premium, if any, or interest on, or fees in respect of, redemption, conversion,
exchange, purchase, retirement, defeasance, sinking fund or similar payment with
respect to any Consolidated Subordinated Debt after the occurrence of an Event
of Default and (iii) any prepayment in advance of anticipated and scheduled
payment dates of principal of, premium, if any, or interest on, or fees in
respect of, redemption, conversion, exchange, purchase, retirement, defeasance,
sinking fund or similar payment with respect to any Consolidated Subordinated
Debt (except for (a) prepayments in connection with the refinance of such
Consolidated Subordinated Debt in amounts and on terms and conditions equal to
or better than the existing terms and conditions and (b) prepayments of up to
US$1,000,000.00 in the aggregate of outstanding principal on any said
Consolidated Subordinated Debt).
"Revolving Credit Accommodations" shall mean, at any time, the sum of (i)
all Revolving Credit Loans outstanding at such time and (ii) all Letter of
Credit Obligations outstanding at such time.
"Revolving Credit Commitment" shall mean, with respect to each Lender, as
of any date of determination, such Lender's Pro Rata Share of the amount of the
Revolving Credit Loan Facility as of such date which percentage and amount shall
be set forth on the signature pages to this Loan Agreement and/or in any
Assignment and Acceptance Agreement.
"Revolving Credit Commitments" shall mean, as of any date of determination,
collectively, the aggregate amount of each Revolving Credit Commitment of all
the Lenders as of such date, including, without limitation, the Canadian
Revolving Credit Commitments of all Canadian Lenders.
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"Revolving Credit Loan Facility" shall have the meaning ascribed and
assigned to such term as set forth in the thirty-eighth recital of this Loan
Agreement.
"Revolving Credit Loan" and "Revolving Credit Loans" shall have the meaning
ascribed and assigned to such term in Section 2.01(i)(a) of this Loan Agreement.
"Revolving Credit Loan Note" or "Revolving Credit Loan Notes" shall mean
those Revolving Credit Notes in substantially the form attached hereto as
Exhibit "G" with blanks appropriately filled, each such note payable to the
order of a Lender, in a face amount equal to such Lender's Pro Rata Share of the
Revolving Credit Commitments.
"Revolving Credit Termination Date" shall mean the earlier of (i) October
20, 2003, (ii) the date of the permanent termination of the Revolving Credit
Commitments pursuant to Section 2.01(v) of this Loan Agreement or (iii) the date
of termination of the Revolving Credit Commitments pursuant to Section 9.02 of
this Loan Agreement.
"Securities" shall mean any stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, and 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 subscribe to, purchase or acquire any of the
foregoing, but shall not include any evidence of the Obligations.
"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 from time to time hereafter, and any successor
statute.
"Security Agreement" and "Security Agreements" shall mean those certain
Amended and Restated Security Agreements dated the date of this Loan Agreement,
whereby the Co-Borrowers, the Corporate Guarantors (excluding DRS Hadland, Inc.)
and the Partnership Guarantor have collaterally assigned, hypothecated, pledged,
conveyed, transferred, given and granted to the Agent, for the benefit of all of
the Lenders, a continuing security interest in all of their respective rights,
title and interests in and to certain assets and properties of the Co-Borrowers,
the Corporate Guarantors and the Partnership Guarantor described therein
(including, without limitation, Accounts, Inventory and Equipment), as such
Security Agreements may be from time to time hereafter amended, modified,
extended, renewed, refinanced and/or supplemented.
"Sellers" shall mean a collective reference to (i) Raytheon Company, (ii)
Raytheon Systems Georgia, Inc. and (iii) Raytheon TI Systems, Inc.
"Senior Financial Officer" shall mean the chief financial officer of the
Co-Borrowers designated by the Co-Borrowers in a written statement delivered to
the Agent.
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"Single Employer Plan" shall mean any Plan which is not a Multiemployer
Plan under ERISA.
"Solvent" shall mean when used with respect to any Person, that at the time
of determination:
(i) the fair value of its assets (both at fair valuation and at
present fair salable value) in excess of the total amount of its
liabilities, including, without limitation, contingent liabilities; and
(ii) is then able to pay its Consolidated Debts as they mature; and
(iii) it owns property having a value (both at fair valuation and
at present fair salable value) in excess of the total amount required to pay its
Consolidated Debts.
"Subsidiary" or "Subsidiaries" shall mean (i) a corporation a majority of
whose capital stock with voting power, under ordinary circumstances, to elect a
majority of directors is at the time, directly or indirectly, owned by any of
the Co-Borrowers, by any of the Co-Borrowers and one or more Subsidiaries of any
of the Co-Borrowers or by one or more Subsidiaries of any of the Co-Borrowers,
(ii) any other Person (other than a corporation) in which the Co-Borrowers and
one or more Subsidiaries of the Co-Borrowers, directly or indirectly, at the
date of determination thereof has at least majority ownership interest and/or
(iii) any entity whose net earnings (losses) or portions thereof would be
properly included and consolidated with the net earnings of the Co-Borrowers in
accordance with Generally Accepted Accounting Principles; provided, however,
that the term Subsidiary shall not include any entity that is not reflected on
the consolidated balance sheet of the Co-Borrowers due to inactivity and lack of
material assets and liabilities.
"Swap Agreement" shall mean one or more written agreements between any of
the Co-Borrowers and one or more financial institutions providing for "swap",
"cap", "collar" or other interest rate or currency exchange protection with
respect to any of the Loan Facilities, including, without limitation, that
certain Interest Rate and Currency Exchange Agreement in substantially the form
attached hereto as Exhibit "H", as said Interest and Currency Rate Exchange
Agreement may hereinafter be executed by the Co-Borrowers and delivered to the
Agent, all as it may be amended, modified, supplemented, extended, renewed or
otherwise renegotiated by and between the Agent and the Co-Borrowers.
"Swap Obligation" shall mean the Co-Borrowers' obligations to any Person
(that is or was a Lender or an Affiliate of a Lender at the time of entering
into a Swap Agreement) arising from time to time under a Swap Agreement,
including any and all payment or reimbursement obligations of whatever nature.
"Taxes" shall have the meaning ascribed and assigned to such term as set
forth in Section 2.10 of this Loan Agreement.
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"Termination Event" shall mean (i) any Reportable Event with respect to any
Benefit Plan, (ii) the withdrawal of the Co-Borrowers, or an ERISA Affiliate
from a Benefit Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA, (iii) the notification by either the
Co-Borrowers or an ERISA Affiliate to affected parties of an intent to terminate
a Benefit Plan in a distress termination described in Section 4041(c) of ERISA,
(iv) the institution by the PBGC of proceedings to terminate any Benefit Plan,
(v) any event or condition which constitutes grounds under Section 4042 of ERISA
for the appointment of a trustee to administer a Benefit Plan or (vi) the
partial or complete withdrawal of the Co-Borrowers or any ERISA Affiliate from a
Multiemployer Plan.
"Term Loan #1" and "Term Loans #1" shall have the meaning ascribed and
assigned to such term as set forth in Section 2.02(i)(a) of this Loan Agreement.
"Term Loan #1 Commitment" or "Term Loan #1 Commitments" shall mean, with
respect to each Lender, as of any date of determination, such Lender's Pro Rata
Share of the amount of the Term Loan Facility #1, as of such date, which
percentage and amount shall be set forth on the signature pages to this Loan
Agreement and/or in any Assignment and Acceptance Agreement, and which shall
include, where applicable, each Canadian Lender's Pro Rata Share of the amount
of each Canadian Term Loan.
"Term Loan #1 Maturity Date" shall mean October 19, 2003.
"Term Loan #1 Note" and "Term Loan #1 Notes" shall mean those Amended and
Restated Term Loan #1 Notes in substantially the form attached hereto as Exhibit
"I" with blanks appropriately filled in, each such note payable to the order of
a Lender, in a face amount equal to such Lender's Pro Rata Share of the Term
Loan #1 Commitments.
"Term Loan #2" and "Term Loans #2" shall have the meaning ascribed and
assigned to such term as set forth in Section 2.03(i)(a) of this Loan Agreement.
"Term Loan #2 Commitment" or "Term Loan #2 Commitments" shall mean, with
respect to each Lender (but not including a Canadian Lender), as of any date of
determination, such Lender's Pro Rata Share of the amount of the Term Loan
Facility #2, as of such date, which percentage and amount shall be set forth on
the signature pages to this Loan Agreement and/or in any Assignment and
Acceptance Agreement.
"Term Loan #2 Maturity Date" shall mean October 19, 2005.
"Term Loan #2 Note" and "Term Loan #2 Notes" shall mean those Term Loan #2
Notes in substantially the form attached hereto as Exhibit "J" with blanks
appropriately filled in, each such note payable to the order of a Lender, in a
face amount equal to such Lender's Pro Rata Share of the Term Loan #2
Commitments.
"Term Loan Commitments" shall mean, as of any date of determination,
collectively the aggregate amount of all Term Loan #1 Commitments and all Term
Loan #2 Commitments of all
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of the Lenders as of such date.
"Term Loan Facility #1" shall have the meaning ascribed and assigned to
such term as set forth in the thirty-eighth recital of this Loan Agreement.
"Term Loan Facility #2" shall have the meaning ascribed and assigned to
such term as set forth in the thirty-eighth recital of this Loan Agreement.
"Term Loan Facilities" shall mean the collective reference to the Term Loan
Facility #1 and the Term Loan Facility #2.
"Term Loan Notes" shall mean a collective reference to all of (i) the Term
Loan #1 Notes and (ii) the Term Loan #2 Notes.
"Toronto-Dominion" shall have the meaning ascribed and assigned to such
term as set forth in the thirteenth recital of this Loan Agreement.
"Toronto-Dominion Agreement" shall have the meaning ascribed and assigned
to such term as set forth in the thirteenth recital of this Loan Agreement.
"Toronto-Dominion NY" shall have the meaning ascribed and assigned to such
term as set forth in the twelfth recital of this Loan Agreement.
"Toronto-Dominion NY Agreement" shall have the meaning ascribed and
assigned to such term as set forth in the twelfth recital of this Loan
Agreement.
"Uniform Customs" shall mean the Uniform Customs and Practice for
Documentary Credits (1993 Revisions), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"Unused Commitment Fee Rate" shall mean, as of each date of determination
during the term of the Loan Facilities, the applicable percentage set forth in
the Leverage Matrix opposite the Consolidated Funded Debt Leverage Ratio
(determined as of the last day of the prior Fiscal Quarter).
"US Dollar", "US Dollars" and the symbol "US$" shall mean lawful money of
the United States of America.
"Year 2000 Compliant" means, with regard to any Person, that all software,
embedded microchips, and other processing capabilities utilized by, and material
to the business operations or financial condition of, such Person are able to
interpret and manipulate data on and involving all calendar dates correctly and
without causing any abnormal ending scenario, including in relation to dates in
and after the year 2000.
"Year 2000 Problem" shall mean the risk that computer applications used by
or for the
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benefit of the Co-Borrowers, their Subsidiaries and Affiliates may be unable to
recognize or perform properly certain date sensitive functions involving certain
dates prior to, and any date after, December 31, 1999.
Section 1.02 Rules of Interpretation and Construction. In this Loan
Agreement unless the context otherwise clearly requires:
(i) Articles and Sections mentioned by number only are the respective
Articles and Sections of this Loan Agreement as so numbered;
(ii) Words importing a particular gender mean and include every other
gender, and words importing the singular number mean and include the plural
number and vice versa;
(iii) Words importing persons mean and include firms, associations,
partnerships (including limited partnerships), societies, trusts,
corporations or other legal entities, including public or governmental
bodies, as well as natural persons;
(iv) Any headings preceding the texts of the several Articles and
Sections of this Loan Agreement, and any table of contents or marginal
notes appended to copies hereof, shall be solely for convenience of
reference and shall not affect or control the meaning, construction or
interpretation of this Loan Agreement;
(v) If any clause, provision or section of this Loan Agreement shall
be ruled invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any of the
remaining provisions thereof, unless not invalidating or rendering
unenforceable the remaining provisions shall be inequitable;
(vi) The terms "herein", "hereunder", "hereby", "hereto", "hereof" and
any similar terms as used in this Loan Agreement refer to this Loan
Agreement as a whole and not to any particular provision of this Loan
Agreement; the term "heretofore" means before the date of execution of this
Loan Agreement; and the term "hereafter" means on or after the date of
execution of this Loan Agreement;
(vii) This Loan Agreement and all matters relating hereto shall be
governed by and construed and interpreted in accordance with the laws of
the Commonwealth of Pennsylvania;
(viii) If any clause, provision or section of this Loan Agreement
shall be determined to be apparently contrary to or conflicting with any
other clause, provision or section of this Loan Agreement, then the clause,
provision or section containing the more specific provisions shall control
and govern with respect to such apparent conflict;
(ix) References in this Loan Agreement to "determination" (and similar
terms) by the Agent or by any Lender include good faith estimates by the
Agent or by any Lender (in the case of quantitative determinations) and
good faith beliefs by the Agent or by any Lender (in the
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case of qualitative determinations); and
(x) Any reference to "$" when used herein, shall be construed to mean
and refer to dollars denominated in the currency of the United States,
unless the context clearly indicates otherwise.
Section 1.03 Accounting Principles.
(i) As used in this Loan Agreement "Generally Accepted Accounting
Principles" shall be established on the date a relevant computation or
determination is to be made or the date of relevant financial statements,
as the case may be.
(ii) Except as otherwise provided in this Loan Agreement, all
computations and determinations as to accounting or financial matters shall
be made, and all financial statements to be delivered pursuant to this Loan
Agreement shall be prepared, in accordance with Generally Accepted
Accounting Principles (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by Generally Accepted Accounting Principles.
(iii) If any change in Generally Accepted Accounting Principles after
the date of this Loan Agreement is or shall be required to be applied to
transactions then or thereafter in existence, and a violation of one or
more provisions of this Loan Agreement shall have occurred or in the
opinion of the Co-Borrowers would likely occur which would not have
occurred or be likely to occur if no change in accounting principles had
taken place, (a) the Co-Borrowers and the Agent agree that such violation
shall not be considered to constitute an Event of Default or a Potential
Event of Default for a period of thirty (30) days from the date the
Co-Borrowers notify the Agent and the Lenders of the applicability of this
Section 1.03 (iii); (b) the Co-Borrowers, the Agent and the Lenders agree
in such event to negotiate in good faith an amendment of this Loan
Agreement which shall approximate to the extent possible the economic
effect of the original financial covenants after taking into account such
change in Generally Accepted Accounting Principles; and (c) if the
Co-Borrowers, the Agent and the Lenders are unable to negotiate such an
amendment within the thirty (30) day period described above in clause (a),
the Co-Borrowers shall have the option of (1) prepaying the Loans (pursuant
to applicable provisions hereof) or (2) submitting the drafting of such an
amendment to a firm of independent certified public accountants of
nationally recognized standing acceptable to the Co-Borrowers, the Agent
and the Lenders, which shall complete its draft of such amendment, which
shall be binding upon the parties, within thirty (30) days of submission;
if the Co-Borrowers, the Agent and the Lenders cannot agree, the firm shall
be selected by binding arbitration in the City of Philadelphia,
Pennsylvania in accordance with the rules then obtaining of the American
Arbitration Association. If the Co-Borrowers do not exercise either such
option within said period, then as used in this Loan Agreement, "Generally
Accepted Accounting Principles" shall mean generally accepted accounting
principles in effect at the relevant date. The Co-Borrowers, the Agent and
the Lenders agree that if the Co-Borrowers elect the option in clause (2)
above, until such firm has been selected and completes drafting such
amendment, no such violation shall constitute an Event of Default or a
Potential Event of Default.
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(iv) If any change in Generally Accepted Accounting Principles after
the date of this Loan Agreement is required to be applied to transactions
or conditions then or thereafter in existence, and the Agent shall assert
that the effect of such change is or shall likely be to distort materially
the effect of any of the definitions of financial terms in Article I of
this Loan Agreement or any of the covenants of the Co-Borrowers in Article
VIII of this Loan Agreement (hereinafter referred to as the "Financial
Provisions"), so that the intended economic effect of any of the Financial
Provisions will not in fact be accomplished, then
(a) the Agent shall notify the Co-Borrowers of such assertion,
specifying the change in Generally Accepted Accounting Principles
which is objected to, and until otherwise determined as provided
below, the specified change in Generally Accepted Accounting
Principles shall not be made by the Co-Borrowers in their financial
statements for the purpose of applying the Financial Provisions; and
(b) the Agent and the Co-Borrowers shall follow the procedures
set forth in paragraph (iii)(b) and the first sentence of paragraph
(c) of subsection (iii) of this Section 1.03. If the Agent, the
Co-Borrowers and the Lenders are unable to agree on an amendment as
provided in said paragraph (iii)(b) and if the Co-Borrowers does not
exercise either option set forth in the first sentence of said
paragraph (iii)(c) within the specified period, then as used in this
Loan Agreement "Generally Accepted Accounting Principles" shall mean
generally accepted accounting principles in effect at the relevant
date, except that the specified change in "Generally Accepted
Accounting Principles" which is objected to by the Agent shall not be
made in applying the Financial Provisions. The Agent, the Co-Borrowers
and the Lenders agree that if the Co-Borrowers elect the option in
clause (2) of this first sentence of said paragraph (iii)(c), until
such independent accounting firm has been selected and completes
drafting such amendment, the specified change in "Generally Accepted
Accounting Principles" shall not be made in applying the Financial
Provisions.
(v) All expenses of compliance with this Section 1.03 shall be paid
for by the Co-Borrowers, except the Co-Borrowers and the Lenders shall be
responsible for their own costs and expenses associated with proceedings
under Section 1.03(iii)(c) hereof other than the cost and expense payable
to the American Arbitration Association and any such accounting firm which
shall be divided equally between the Agent and Lenders on the one hand and
the Co-Borrowers on the other.
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ARTICLE II
AMOUNTS AND TERMS FOR THE LOAN FACILITIES
Section 2.01 Revolving Credit Loan Facility.
(i) Availability. (a) Subject to the terms and conditions set forth in
this Loan Agreement, and provided no Potential Event of Default or Event of
Default shall have occurred and be continuing, each Lender (other than a
Canadian Lender) holding a Revolving Credit Commitment hereby severally and
not jointly agrees to make available to the Co-Borrowers (or to any other
Person described on Schedule 2.01 attached hereto, as directed by the
Co-Borrowers in writing), and each Canadian Lender holding a Canadian
Revolving Credit Commitment hereby severally and not jointly agrees to make
available to the Canadian Borrower, from time to time during the period
from the Closing Date to the Business Day next preceding the Revolving
Credit Termination Date, revolving credit loans (hereinafter each
individually referred to as a "Revolving Credit Loan" and collectively
referred to as the "Revolving Credit Loans"), in a principal amount which
shall not exceed, in the aggregate at any time outstanding, such Lender's
Pro Rata Share of the Revolving Credit Commitments in effect at such time;
provided, however, that (1) at no time shall the aggregate principal amount
of all Revolving Credit Loans outstanding at any time exceed the Maximum
Amount of Revolving Credit Loans at such time, (2) the aggregate Dollar
Equivalent of the outstanding principal amount of the Canadian Revolving
Credit Loans and the Canadian Letter of Credit Obligations shall not exceed
a maximum aggregate principal amount outstanding equal to US$10,000,000.00
(hereinafter referred to as the "Canadian Revolving Credit Sublimit") and
(3) Canadian Revolving Credit Loans shall be (A) made solely to the
Canadian Borrower, (B) made only by the Canadian Lenders and (C)
denominated in U.S. Dollars or in Canadian Dollars with a Dollar
Equivalent, as selected by the Canadian Borrower in writing. The Revolving
Credit Loans may be made in U.S. Dollars or Canadian Dollars and from time
to time be (x) in the case of Revolving Credit Loans denominated in U.S.
Dollars, Eurodollar Rate Loans or Prime Rate Loans and (y) in the case of
Revolving Credit Loans that are denominated in Canadian Dollars, Eurodollar
Rate Loans, Prime Rate Loans or Canadian Bankers Acceptances. The Revolving
Credit Loans shall be evidenced by the Revolving Credit Notes. Each Lender
(including each Canadian Lender) is hereby authorized to record the date
and amount of each Revolving Credit Loan (including Canadian Revolving
Credit Loans) made by said Lender, the date and amount of each payment or
prepayment of principal thereof either (1) on the Schedule "1" annexed to
and constituting a part of said Lender's Revolving Credit Note or (2) by
entering such information into said Lender's automated loan tracking
system, and any such recordation shall constitute prima facie evidence of
the accuracy of the information so recorded; provided, however, the failure
to make such notation(s) with respect to any Borrowing shall not limit or
otherwise affect the obligation of the Co-Borrowers to the Lenders under
this Loan Agreement or the Revolving Credit Notes. The Canadian Revolving
Credit Loans shall be evidenced by separate promissory notes of the
Canadian Borrower in substantially the form of Exhibit "G" hereto
(hereinafter each referred to as a "Canadian Revolving Credit Note"), dated
as of the Closing Date and completed with appropriate insertions. One
Canadian Revolving Credit Note shall be payable to the order of each
Canadian Lender in an amount equal to its Pro Rata Share of the Canadian
Revolving Credit Sublimit.
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If the outstanding amount of the Revolving Credit Loans shall exceed the
Maximum Amount of the Revolving Credit Loans at any time, such excess shall be
immediately due and payable to the Lenders. The Co-Borrowers hereby acknowledge
and agree that they are jointly and severally liable for all Revolving Credit
Loans.
(b) All Revolving Credit Loans under this Loan Agreement shall be made
by the Lenders simultaneously and proportionately to their respective Pro
Rata Share of the Revolving Credit Commitments. It shall be understood that
no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make a Revolving Credit Loan hereunder and that
the Revolving Credit Commitment of any Lender shall not be increased or
decreased as a result of the failure by any other Lender to perform its
obligation to make a Revolving Credit Loan.
(c) Revolving Credit Loans may be voluntarily prepaid pursuant to
Section 2.06(i) hereof and, subject to the provisions of this Loan
Agreement, any amounts so prepaid may be reborrowed, up to the amount
available under this Section 2.01(i) at the time of such Borrowing, until
the Business Day next preceding the Revolving Credit Termination Date. Each
Lender's Revolving Credit Commitment shall expire and each Revolving Credit
Loan then outstanding shall be repaid by the Co-Borrowers no later than the
Revolving Credit Termination Date. The final payment of all principal,
unpaid accrued interest, fees and expenses, if any, owing to the Lenders on
the Revolving Credit Loan Facility shall be due and payable on the
Revolving Credit Termination Date.
(ii) Notice of Borrowing. Whenever the Co-Borrowers (or in the case of a
Canadian Revolving Credit Loan, the Canadian Borrower) desire to borrow under
this Section 2.01, the Co-Borrowers (or in the case of a Canadian Revolving
Credit Loan, the Canadian Borrower) shall deliver to the Agent a Notice of
Borrowing no later than 10:00 A.M. (Philadelphia, Pennsylvania time) (a) at
least one (1) Business Day in advance of the proposed Borrowing Date, in the
case of a Borrowing as a Prime Rate Loan and (b) at least three (3) Business
Days in advance of the proposed Borrowing Date in the case of a Borrowing as a
Eurodollar Rate Loan; provided that the Co-Borrowers may deliver to the Agent a
Notice of Borrowing no later than 10:00 A.M. (Philadelphia, Pennsylvania time)
on the proposed Borrowing Date if in connection with such Borrowing the Agent
would be required to comply with Section 2.01(iii)(a) hereof. The Notice of
Borrowing shall specify (1) the Borrowing Date (which shall be a Business Day)
in respect of the Revolving Credit Loan, (2) the amount of the proposed
Borrowing which shall not be less than US$250,000.00 (or in the case of a
Canadian Revolving Credit Loan, an amount in Canadian Dollars of which the
Dollar Equivalent is at least US$250,000.00) (except in those situations where a
Letter of Credit becomes a Reimbursement Obligation under Section 2.0l(vi)(d)(2)
hereof), (3) the designation of whether the Borrowing shall be made available to
the Co-Borrowers in U.S. Dollars or to the Canadian Borrower in Canadian Dollars
(in which case the Borrowing shall be funded and booked by the Canadian
Lenders), (4) the applicable interest rate option as described in Section
2.04(i) of this Loan Agreement and, if applicable, (5) the Eurodollar Interest
Period. In lieu of delivering the above-described Notice of Borrowing, the
Co-Borrowers may give the Agent telephonic notice of any
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proposed Borrowing by the time required under this Section 2.01(ii); provided,
however, that such notice shall be confirmed in writing by delivery to the Agent
promptly (but in no event later than the Borrowing Date of the requested
Revolving Credit Loan) of a Notice of Borrowing. Any Notice of Borrowing (or
telephonic notice in lieu thereof) pursuant to this Section 2.01(ii) shall be
irrevocable.
(iii) Making of Revolving Credit Loans. (a) Promptly after receipt of a
Notice of Borrowing under Section 2.01(ii) hereof (or telephonic notice in lieu
thereof), the Agent shall notify Mellon Bank, N.A. and its syndicate members
and/or participants with a Revolving Credit Commitment or Mellon Bank Canada and
its syndicate members and/or participants with a Canadian Revolving Credit
Commitment, by telex or telecopy or other similar form of teletransmission, of
the proposed Borrowing. Each such Lender shall make the amount of its Pro Rata
Share of each Revolving Credit Loan available to the Agent in the requested
currency (U.S. Dollars or Canadian Dollars, as applicable), and in immediately
available funds, to such bank and account, in Philadelphia, Pennsylvania, or in
Toronto, Ontario as the Agent may designate, not later than 10:00 A.M.
(Philadelphia, Pennsylvania time) on the Borrowing Date. After the Agent's
receipt of the proceeds of such Revolving Credit Loans, the Agent shall make the
proceeds of such Revolving Credit Loan available to the Co-Borrowers in
Philadelphia, Pennsylvania or to the Canadian Borrower in Toronto, Ontario on
such Borrowing Date and shall disburse such funds in U.S. Dollars or Canadian
Dollars, as applicable, and in immediately available funds to an account of the
Co-Borrowers at the Agent (or to an account of the Canadian Borrower at Mellon
Bank Canada in Toronto, Ontario) and thereafter to any substitute account,
designated in writing by the Co-Borrowers (or the Canadian Borrower, as the case
may be) in the Notice of Borrowing.
(b) In connection with Revolving Credit Loans funded pursuant to Section
2.01(iii) (a) hereof, unless the Agent shall have been notified by any Lender
prior to any Borrowing Date in respect of any Borrowing of Revolving Credit
Loans that such Lender does not intend to make available to the Agent such
Lender's Pro Rata Share of the requested Revolving Credit Loan on such Borrowing
Date, the Agent may assume that such Lender has made such amount available to
the Agent on such Borrowing Date and the Agent in its sole discretion may, but
shall not be obligated to, make available to the Co-Borrowers a corresponding
amount on such Borrowing Date. If such corresponding amount is not in fact made
available to the Agent by such Lender on or prior to a Borrowing Date, such
Lender agrees to pay (and, provided the Agent fund said amount, the Co-Borrowers
agree to repay the Agent in accordance with the terms of the Loan Documents)
such corresponding amount together with interest thereon, for each day from the
date such amount is made available to the Co-Borrowers until the date such
amount is paid or repaid to the Agent, at (1) in the case of such non-performing
Lender, the Federal Funds Effective Rate (or if a Canadian Lender, the
corresponding rate for overnight funds) and (2) in the case of the Co-Borrowers
(or the Canadian Borrower), the interest rate applicable at the time to a
Borrowing of Prime Rate Loans made on such Borrowing Date. If such
non-performing Lender shall pay to the Agent such corresponding amount, such
amount so paid shall constitute such Lender's Pro Rata Share of the Revolving
Credit Loan, and if both such Lender and the Co-Borrowers (or the Canadian
Borrower) shall have paid and repaid, respectively, such corresponding amount,
the Agent shall promptly return to the Co-
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Borrowers (or the Canadian Borrower) such corresponding amount in same day
funds. Nothing in this Section 2.01(iii) shall be deemed to relieve any Lender
of its obligation hereunder to fund its Pro Rata Share of the Revolving Credit
Loan on any Borrowing Date.
(iv) Use of Proceeds of Revolving Credit Loans and Use of Letters of
Credit. The proceeds of the Revolving Credit Loans shall be used by the
Co-Borrowers for working capital in the ordinary course of their businesses and
for other lawful and permitted corporate purposes to the extent not otherwise
prohibited hereunder including, without limitation (a) refinancing Consolidated
Debt, (b) working capital in the ordinary course of the Co-Borrowers', their
Subsidiaries' and Affiliates' businesses, (c) Letters of Credit, subject to the
Letter of Credit Sublimit and (d) for the acquisition by DRS, DRS EO and/or DRS
FPA, L.P. of the scanning and staring infrared detector business and
electro-optical business of the Sellers in accordance with the terms, conditions
and provisions of the Purchase Agreement. Letters of Credit may be used in
support of working capital in the ordinary course of business and for other
lawful and permitted corporate purposes to the extent not otherwise prohibited
hereunder.
(v) Reduction of Revolving Credit Commitments; Revolving Credit Termination
Date. (a) The Co-Borrowers shall have the right, at any time and from time to
time, to terminate in whole or permanently reduce in part, without premium or
fee, the Revolving Credit Commitments by an amount not to exceed the amount of
(1) the aggregate Revolving Credit Commitments in effect at such time minus (2)
the aggregate principal amount of the Revolving Credit Accommodations then
outstanding. The Co-Borrowers shall give not less than five (5) Business Days'
prior express written notice to the Agent designating the date (which shall be a
Business Day) of such termination or total permanent reduction and the amount of
any partial permanent reduction. Promptly after receipt of a notice of such
termination or reduction, the Agent shall notify each Lender of the proposed
termination or reduction. Such termination or partial reduction of the Revolving
Credit Commitments shall be effective on the date specified in the Co-Borrowers'
notice and shall reduce the Revolving Credit Commitment of each Lender
proportionately in accordance with its Pro Rata Share of all of the Revolving
Credit Commitments (including each Canadian Lender's corresponding Pro Rata
Share of the Canadian Revolving Credit Sublimit). Any such partial reduction of
the Revolving Credit Commitments shall be in an aggregate minimum amount of
US$5,000,000.00 and integral multiples of US$1,000,000.00 in excess of that
amount.
(b) Each Lender's Revolving Credit Commitment shall expire without further
action on the part of the Lenders, and all then outstanding Revolving Credit
Loans and Reimbursement Obligations shall be due and payable in full on the
Revolving Credit Termination Date.
(vi) Issuance of Letters of Credit. (a) Subject to the terms and conditions
set forth in this Loan Agreement, the Issuing Banks agree to issue for the
account of the Co-Borrowers one or more Letters of Credit up to an aggregate
face amount at any one time outstanding equal to the Letter of Credit Sublimit,
from time to time during the period commencing on the Closing Date and ending on
a Business Day at least sixty (60) Business Days preceding the Revolving Credit
Termination Date; provided, however, the Letters of Credit
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described on Schedule 2.01(vi) attached hereto shall also be considered Letters
of Credit issued under this Loan Agreement. The Letter of Credit Obligations
shall constitute financial accommodations under the Revolving Credit Loan
Facility and shall reduce availability under the Revolving Credit Commitments by
the stated amount of such Letter of Credit Obligations. Each Letter of Credit
(1) shall be denominated in U.S. Dollars or Canadian Dollars, (2) shall be in
all instances either a standby letter of credit or a documentary/commercial
letter of credit and (3) shall expire no later than thirty (30) days prior to
the Revolving Credit Termination Date. Each Letter of Credit shall be subject to
the Uniform Customs and, to the extent not inconsistent therewith, the Laws of
the Commonwealth of Pennsylvania if issued by Mellon Bank, N.A., or the Laws of
the Province of Ontario if issued by Mellon Bank Canada.
(b) In addition to being subject to the satisfaction of the conditions
precedent contained in Section 3.02 hereof, the obligation of the Issuing Bank
to issue any Letter of Credit is subject to the satisfaction in full of the
following conditions:
(1) the Co-Borrowers shall have delivered to the Issuing Bank at such
times and in such manner as the Issuing Bank may prescribe, a Letter of
Credit Reimbursement Agreement and such other documents and materials as
may be required pursuant to the terms thereof and the terms of the proposed
Letter of Credit shall be reasonably satisfactory to the Issuing Bank
thereof;
(2) immediately after the issuance of such Letter of Credit, the
aggregate principal amount of Letter of Credit Obligations then existing
shall not exceed the Letter of Credit Sublimit; and
(3) as of the date of issuance, no order, judgment or decree of any
court, arbitrator or Governmental Authority shall purport by its terms to
enjoin or restrain the Issuing Bank from issuing the Letter of Credit and
no Law applicable to the Issuing Bank and no request or directive (whether
or not having the force of Law and whether or not the failure to comply
therewith would be unlawful) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit or request that the
Issuing Bank refrain from the issuance of letters of credit generally or
the issuance of such Letter of Credit.
(c) To open a Letter of Credit, the Co-Borrowers shall give the Issuing
Bank written notice at the following address: (1) if the Letter of Credit is to
be denominated in U.S. Dollars, then Mellon Bank, N.A., 3 Mellon Bank Center,
Room 2329, Pittsburgh, PA 15259 not later than 10:00 A.M. (Philadelphia,
Pennsylvania time) on the requested issuance date thereof under this Loan
Agreement and (2) if the Letter of Credit is to be denominated in Canadian
Dollars, then Mellon Bank Canada, Royal Trust Tower, 32nd Floor, Toronto
Dominion Center, Toronto, Ontario, M5K 1K2 not later than 10:00 A.M. (Toronto,
Ontario time) on the requested issuance date thereof under this Loan Agreement.
Such notice shall be irrevocable and shall specify (A) the stated amount of the
Letter of Credit requested, (B) the effective date (which day shall be a
Business Day) of issuance of such requested Letter of Credit, (C) the date on
which such requested Letter of Credit is to expire (which date shall be a
Business Day), (D) the Person
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for whose benefit the requested Letter of Credit is to be issued, (E) the stated
amount of then outstanding Letter of Credit Obligations and (F) the principal
amount of then outstanding Revolving Credit Loans. A copy of such notice shall
be delivered by facsimile to the Agent contemporaneously therewith at the
Agent's Edison, New Jersey address.
(d) Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement:
(1) the Co-Borrowers shall unconditionally reimburse the Issuing Bank
for drawings under such Letter of Credit no later than the time specified
in such Letter of Credit Reimbursement Agreement irrespective of any claim,
set-off, defense or other right which the Co-Borrowers may have at any time
against the Agent, Issuing Bank and/or the Lenders, except with respect to
the Agent's, the Issuing Bank's and/or the Lender's gross negligence or
willful misconduct; and
(2) in connection with a Letter of Credit issued by the Issuing Bank,
to the extent any Reimbursement Obligation is not paid when due, such
Reimbursement Obligation shall be deemed to be a Revolving Credit Loan
payable to the Lenders in the amount of such Reimbursement Obligation made
in accordance with Section 2.01(i) hereof;
(3) any Reimbursement Obligation with respect to any Letter of Credit
shall bear interest from the date of the relevant drawing under the
pertinent Letter of Credit at the interest rate applicable to Prime Rate
Loans described in Section 2.04(i)(a) hereof, until paid in full; and
(4) With respect to all Letters of Credit which, on or before the
Revolving Credit Termination Date, have not been presented for honor,
notwithstanding the occurrence of the Revolving Credit Termination Date and
the satisfaction of all other obligations under the Loan Documents, the
Co-Borrowers' obligations under the Loan Documents shall continue until all
amounts paid by the Issuing Bank under such Letters of Credit have been
reimbursed (as well as all other Obligations under the Loan Documents have
been satisfied) and the Liens granted under and pursuant to the Loan
Documents shall continue to secure such Letter of Credit Obligations;
provided, however, that the Agent may release the Liens under the Loan
Documents (but not the other Obligations thereunder) upon (A) the deposit
by the Co-Borrowers in an interestbearing cash collateral account opened by
the Agent of an amount in Cash or Cash Equivalents equal to the aggregate
amount of the Letter of Credit Obligations to collateralize the
Reimbursement Obligations with respect to such Letters of Credit or (B) an
indemnification agreement from a financial institution or "back-up" letters
of credit issued by a financial institution all in form and substance
reasonably satisfactory to the Agent. Notwithstanding, the payment of all
other Obligations under the Loan Documents, the Reimbursement Obligations
associated with such Letters of Credit shall accrue interest in accordance
with Section 2.01(vi)(d)(3) until such Reimbursement Obligations have been
satisfied in full.
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(5) With respect to any Reimbursement Obligation, such Reimbursement
Obligation shall: (A) be payable by the Co-Borrowers upon demand, (B) be
deemed to be a Revolving Credit Loan as described in Section 2.0l(vi)(d)(2)
above, (C) bear interest from the date of payment by the Issuing Bank at
the interest rate applicable to Prime Rate Loans described in Section
2.04(i)(a) hereof, until paid in full and (D) be subject to immediate
reimbursement by the Lenders to the Issuing Bank, in an amount equal to
each Lender's Pro Rata Credit Share of the Revolving Credit Commitments.
(e) No action taken or omitted to be taken by the Issuing Bank under or in
connection with any Letter of Credit (except in connection with its gross
negligence or willful misconduct) shall put the Issuing Bank under any resulting
liability to the Co-Borrowers and/or any Lender or, subject to paragraph (b)
above, relieve that Lender of its obligations hereunder to reimburse the Issuing
Bank. In the event this Loan Agreement and any Letter of Credit Reimbursement
Agreement are inconsistent, the terms of this Loan Agreement shall prevail. In
determining whether to pay under any Letter of Credit, the Issuing Bank shall
have no obligation to the other Lenders other than to confirm that any documents
required to be delivered under such Letter of Credit appear to have been
delivered and that they appear on their face to comply with the requirements of
such Letter of Credit.
(f) (1) Immediately upon issuance by the Issuing Bank of any Letter of
Credit for the account of the Co-Borrowers in accordance with the procedures set
forth in this Section 2.01(vi), each Lender for Domestic Letters of Credit and
each Canadian Lender for Canadian Letters of Credit (other than the Issuing
Bank) shall be deemed to have irrevocably and unconditionally purchased and
received from the Issuing Bank without recourse to or warranty from the Issuing
Bank an undivided interest in such Letter of Credit in the amount of such
Lender's Pro Rata Share (including, without limitation, all obligations of the
Co-Borrowers with respect thereto other than amounts owing to the Issuing Bank
under Section 2.04(ii) hereof) and any security therefor or guaranty pertaining
thereto.
(2) If the Issuing Bank makes any payment under any Letter of Credit
(whether prior or subsequent to the Revolving Credit Termination Date) and the
Co-Borrowers do not repay such amount to the Issuing Bank pursuant to Section
2.01(vi)(d)(1) above or effect a Borrowing as provided for in Section
2.01(vi)(d)(2) above, the Agent shall promptly notify each other Lender of such
failure, and each such other Lender or its Affiliate Canadian Lender (other than
the Issuing Bank) shall promptly and unconditionally pay to the Agent for the
account of the Issuing Bank the amount of such Lender's Pro Rata Share of such
payment, in U.S. Dollars or Canadian Dollars, as applicable, and in immediately
available funds, and the Agent shall promptly pay such amount, and any other
amounts received by the Agent for the Issuing Bank's account pursuant to this
Section 2.01(vi)(f), to the Issuing Bank. If the Agent so notifies a Lender
prior to 10:00 A.M. (Philadelphia, Pennsylvania time) on any Business Day, such
Lender or its Affiliate Canadian Lender shall make available to the Agent for
the account of the
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Issuing Bank, its Pro Rata Share of the amount of such payment on such Business
Day in U.S. Dollars or Canadian Dollars, as applicable, and in immediately
available funds in Pittsburgh, Pennsylvania. If and to the extent such Lender
shall not have so made its Pro Rata Share of the amount of such payment
available to the Agent for the account of the Issuing Bank, such Lender agrees
to pay to the Agent for the account of the Issuing Bank forthwith on demand such
amount together with interest thereon, for each day from the date such payment
was first due until the date such amount is paid to the Agent for the account of
the Issuing Bank, at the Federal Funds Effective Rate (or the corresponding
Canadian overnight rate) for three (3) Business Days and then at the Prime Rate.
The failure of any Lender (other than the Issuing Bank) to make available to the
Agent for the account of the Issuing Bank its Pro Rata Share of any such payment
shall not relieve any other Lender (other than the Issuing Bank) of its
obligation hereunder to make available to the Agent for the account of the
Issuing Bank its Pro Rata Share of any payment on the date such payment is to be
made.
(3) Whenever the Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which the Agent
has previously received payments from the Lenders (other than the Issuing Bank)
for the account of the Issuing Bank pursuant to this Section 2.01(vi)(f), it
shall promptly pay to the Agent and the Agent shall promptly pay to each Lender
which has funded its participating interest therein, in Pittsburgh,
Pennsylvania, in U.S. Dollars or Canadian Dollars, as applicable, and in the
kind of funds so received, an amount equal to such Lender's Pro Rata Share
thereof. Each such payment shall be made by the Issuing Bank or the Agent, as
the case may be, on the Business Day on which such Person receives the funds
paid to such Person pursuant to the preceding sentence, if received prior to
10:00 A.M. (Philadelphia, Pennsylvania time) on such Business Day, and otherwise
on the next succeeding Business Day.
(4) The obligations of a Lender (other than the Issuing Bank) to make
payments to the Agent for the account of the Issuing Bank with respect to a
Letter of Credit issued on behalf of the Co-Borrowers by such Issuing Bank shall
be irrevocable, shall not be subject to any qualification or exception
whatsoever and shall be honored in accordance with the terms and conditions of
this Loan Agreement under all circumstances (subject to Section 2.01(vi)(b)
above) including, without limitation any of the following circumstances (except
in connection with the gross negligence or willful misconduct of the Issuing
Bank):
(A) any lack of validity or enforceability of this Loan Agreement or
any of the other Loan Documents;
(B) the existence of any claim, setoff , defense or other right which
the Co-Borrowers may have at any time against a beneficiary named in a
Letter of Credit or any transferee of any Letter of Credit (or any Person
for whom any such transferee may be acting), the Agent, the Issuing Bank
any Lender, or any other Person, whether in connection with this Loan
Agreement, any Letter of Credit, the transactions
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contemplated herein or any unrelated transactions (including any underlying
transactions between the Co-Borrowers and the beneficiary named in any
Letter of Credit);
(C) any draft, certificate of any other document presented under the
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;
(D) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents;
(E) any failure by the Agent or the Issuing Bank to make any reports
required pursuant to Section 2.07(v) below; or
(F) the occurrence of any Event of Default or Potential Event of
Default.
(g) (1) The Co-Borrowers unconditionally agree to pay to the Issuing Bank
the amount of all Reimbursement Obligations, interest and other amounts payable
to the Issuing Bank under or in connection with any Letter of Credit issued on
behalf of one or more of the Co-Borrowers immediately when due, irrespective of
any claim, set-off, defense or other right which the Co-Borrowers may have at
any time against the Issuing Bank or any other Person.
(2) In the event any payment by the Co-Borrowers received by the
Issuing Bank with respect to such Letter of Credit and distributed by the
Agent to the Lenders on account of their participations is thereafter set
aside, avoided or recovered from the Issuing Bank in connection with any
receivership, liquidation or bankruptcy proceeding or otherwise, each
Lender which received such distribution shall, upon demand by the Issuing
Bank, contribute such Lender's Pro Rata Share of the amount set aside,
avoided or recovered together with interest at the rate required to be paid
by the Issuing Bank upon the amount required to be repaid by it.
(vii) Issuing Bank, Agent and Lenders Not Liable. (a) In addition to
amounts payable as elsewhere provided in Section 2.01(vi), the Co-Borrowers
hereby agree on a joint and several basis to protect, indemnify, pay and save
the Agent, the Issuing Bank and each Lender harmless from and against any and
all Liabilities and Costs which the Agent or the Issuing Bank or any Lender may
incur or be subject to as a consequence, direct or indirect, of (1) the issuance
of a Letter of Credit for the account of the Co-Borrowers other than, in the
case of the Issuing Bank, as a result of its gross negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction or (2) the failure of the Issuing Bank to honor a drawing under
such Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Authority
(all such acts or omissions hereinafter referred to as the "Governmental Acts").
(b) As between the Co-Borrowers, their Subsidiaries and Affiliates, the
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Lenders, the Agent and the Issuing Bank, subject to the second to the last
sentence of this Section 2.01(vii)(b), the Co-Borrowers assume all risks of the
acts and omissions of, or misuse of such Letter of Credit by the beneficiary of
such Letter of Credit. In furtherance and not in limitation of the foregoing,
subject to the provisions of the Letter of Credit Reimbursement Agreements, the
Agent, the Issuing Bank and the Lenders shall not be responsible: (1) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by the Co-Borrowers or the beneficiary in connection with the
application for and issuance of the Letters of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (2) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason; (3) for failure of the beneficiary
of a Letter of Credit to comply duly with conditions required in order to draw
upon such Letter of Credit; (4) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph, telex,
or other similar form of teletransmission or otherwise, whether or not they be
in cipher; (5) for errors in interpretation of technical terms; (6) for any loss
or delay in the transmission or otherwise of any document required in order to
make a drawing under any Letter of Credit or of the proceeds thereof; (7) for
the misapplication by the beneficiary of a Letter of Credit of the proceeds of
any drawing under such Letter of Credit; and (8) for any consequences arising
from causes beyond the control of the Agent, the Issuing Bank and the Lenders
including, without limitation, any Governmental Acts. None of the above shall
affect, impair, or prevent the vesting of any of the rights or powers of the
Issuing Bank under this subparagraph (b); provided, however, the Co-Borrowers
may have a Claim against either the Agent, the Issuing Bank and/or the Lenders,
to the extent of any direct, but not consequential, damages suffered by the
Co-Borrowers that were caused by the Agent's, Issuing Bank's and/or Lenders'
willful misconduct or gross negligence. In furtherance and not in limitation of
the foregoing, the 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.
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Bank under or in connection with Letters of Credit issued on behalf of the
Co-Borrowers and/or the Persons described on Schedule 2.01 attached hereto in
accordance with written directions of the Co-Borrowers, or any related
certificates, if taken or omitted in good faith, shall not, in the absence of an
express violation of the standards set forth in the Uniform Customs and
subsequent revisions thereof, put the Issuing Bank, the Agent or any Lender
under any resulting liability to the Co-Borrowers or relieve the Co-Borrowers of
any of its obligations hereunder to any such Person.
Section 2.02 Term Loan Facility #1.
(i) Availability. (a) Subject to the terms and conditions set forth in this
Loan Agreement, each Lender (other than a Canadian Lender) holding a Term Loan
#1 Commitment hereby severally and not jointly agrees to make available to the
Co-Borrowers (or to any other Person described on Schedule 2.01 attached hereto,
as directed by the Co-Borrowers in writing),
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and each Canadian Lender holding a Canadian Term Loan Commitment hereby
severally and not jointly agrees to make available to the Canadian Borrower on
the Closing Date, a term loan (hereinafter each individually referred to as a
"Term Loan #1" and collectively referred to as the "Term Loans #1") in the
principal amount which shall not exceed in the aggregate at any time
outstanding, such Lender's Pro Rata Share of the Term Loan #1 Commitments in
effect at such time; provided, however, that (1) the aggregate Dollar Equivalent
of the outstanding principal amount of the Canadian Term Loans shall not exceed
a maximum aggregate principal amount outstanding equal to US$17,500,000.00
(hereinafter referred to as the "Canadian Term Loan Sublimit") and (2) Canadian
Term Loans shall be (A) made solely to the Canadian Borrower, (B) made only by
the Canadian Lenders and (C) denominated in U.S. Dollars or in Canadian Dollars
with a Dollar Equivalent, as selected by the Canadian Borrower in writing. The
Canadian Term Loans may be made in U.S. Dollars or Canadian Dollars and from
time to time be in the case of Canadian Term Loans denominated in U.S. Dollars,
Eurodollar Rate Loans or Prime Rate Loans. The Term Loans shall be evidenced by
the Term Loan #1 Notes. The Co-Borrowers hereby acknowledge and agree that they
are jointly and severally liable for the Term Loans made to the Co-Borrowers,
including, without limitation, the Canadian Term Loans made to the Canadian
Borrower.
(b) The Co-Borrowers, including without limitation the Canadian Borrower,
may not reborrow any principal amount repaid or prepaid on the Term Loan
Facility #1.
(c) The Co-Borrowers shall deliver to the Agent at least two (2) days prior
to the Closing Date, a Notice of Borrowing which shall specify the appropriate
interest rate selected by the Co-Borrowers and, in connection with a Canadian
Term Loan, the designation of Mellon Bank Canada as the Lender.
(ii) Use of Proceeds of the Term Loan Facility #1. The proceeds of the Term
Loan Facility #1 shall be used by the Co-Borrowers for working capital in the
ordinary course of their businesses and for other lawful and permitted corporate
purposes to the extent not otherwise prohibited hereunder including, without
limitation (a) refinancing Consolidated Debt, (b) working capital in the
ordinary course of the Co-Borrowers', their Subsidiaries' and Affiliates'
businesses and (c) for the acquisition by DRS, DRS EO and/or DRS FPA, L.P. of
the scanning and staring infrared detector business and electro-optical business
of the Sellers in accordance with the terms, conditions and provisions of the
Purchase Agreement.
(iii) Amortization of the Term Loan Facility #1. Subject to the provisions
of Section 2.06 of this Loan Agreement, the Co-Borrowers shall repay to the
Agent for the account of the Lenders having a Term Loan #1 Commitment, the
outstanding principal balance of the Term Loan Facility #1 in consecutive
quarterly installments commencing on June 30, 1999 and continuing thereafter on
the last day of each succeeding calendar quarter, in an amount as set forth in
the following schedule (with the final unpaid principal amount of the Term Loan
Facility #1
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together with all accrued and unpaid interest, fees and other charges being due
and payable on the Term Loan #1 Maturity Date):
During Fiscal Year Quarterly Principal Payments:
------------------ -----------------------------
Closing Date through March 31, 1999 US$0.00
April 1, 1999 through March 31, 2000 US$1,000,000.00
April 1, 2000 through March 31, 2001 US$1,250,000.00
April 1, 2001 through March 31, 2002 US$1,750,000.00
April 1, 2002 through March 31, 2003 US$2,250,000.00
April 1, 2003 through October 19, 2003 US$1,666,666.67
Section 2.03 Term Loan Facility #2.
(i) Availability. (a) Subject to the terms and conditions set forth in this
Loan Agreement, each of the Lenders (other than a Canadian Lender) holding a
Term Loan #2 Commitment, hereby severally and not jointly agrees to make
available to the Co-Borrowers on the Closing Date, a term loan (hereinafter each
individually referred to as a "Term Loan #2" and collectively referred to as the
"Term Loans #2") in the principal amount which shall not exceed in the aggregate
at any time outstanding, such Lender's Pro Rata Share of the Term Loan #2
Commitments in effect at such time) in the principal amount which shall not
exceed in the aggregate at any time outstanding, such Lender's Pro Rata Share of
the Term Loan #2 Commitments in effect at such time. The Term Loans #2 shall be
evidenced by the Term Loan #2 Notes. The Co-Borrowers hereby acknowledge and
agree that they are jointly and severally liable for the Term Loans #2 made to
the Co-Borrowers.
(b) The Co-Borrowers may not reborrow any principal amount repaid or
prepaid on the Term Loan Facility #2.
(c) The Co-Borrowers shall deliver to the Agent at least two (2) days prior
to the Closing Date, a Notice of Borrowing which shall specify the appropriate
interest rate selected by the Co-Borrowers.
(ii) Use of Proceeds of the Term Loan Facility #2. The proceeds of the Term
Loan Facility #2 shall be used by the Co-Borrowers for working capital in the
ordinary course of their businesses and for other lawful and permitted corporate
purposes to the extent not otherwise prohibited hereunder including, without
limitation (a) refinancing Consolidated Debt, (b) working capital in the
ordinary course of the Co-Borrowers', their Subsidiaries' and Affiliates'
businesses and (c) for the acquisition by DRS, DRS EO and/or DRS FPA, L.P. of
the scanning and staring infrared detector business and electro-optical business
of the Sellers in accordance
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with the terms, conditions and provisions of the Purchase Agreement.
(iii) Amortization of the Term Loan Facility #2. Subject to the provisions
of Section 2.06 of this Loan Agreement, the Co-Borrowers shall repay to the
Agent for the account of the Lenders having a Term Loan #2 Commitment, the
outstanding principal balance of the Term Loan Facility #2 in consecutive
quarterly installments commencing on June 30, 1999 and continuing thereafter on
the last day of each succeeding calendar quarter, in an amount as set forth in
the following schedule (with the final unpaid principal amount of the Term Loan
Facility #2 together with all accrued and unpaid interest, fees and other
charges being due and payable on the Term Loan #2 Maturity Date):
During Fiscal Year Quarterly Principal Payments:
------------------ -----------------------------
Closing Date through March 31, 1999 US$0.00
April 1, 1999 through March 31, 2000 US$62,500.00
April 1, 2000 through March 31, 2001 US$62,500.00
April 1, 2001 through March 31, 2002 US$62,500.00
April 1, 2002 through March 31, 2003 US$62,500.00
April 1, 2003 through March 31, 2004 US$62,500.00
April 1, 2004 through March 31, 2005 US$6,093,750.00
April 1, 2005 through October 19, 2005 US$8,125,000.00
Section 2.04 Interest on the Loan Facilities.
(i) Rates of Interest. (a) All Revolving Credit Loans (other than Canadian
Bankers Acceptances which are described in Section 2.04A below) shall bear
interest computed daily on the outstanding principal balance thereof from the
date when made until paid in full at one or more of the interest rate options
selected by the Co-Borrowers (or the Canadian Borrower for Canadian Revolving
Credit Loans) from between the two (2) interest rate options set forth below.
Subject to the provisions of this Loan Agreement, the Co-Borrowers (or the
Canadian Borrower for Canadian Revolving Credit Loans) may select different
options to apply simultaneously to different portions of the Revolving Credit
Loans and may select different Funding Segments to apply simultaneously to
different parts of the Eurodollar Rate Portion of the Revolving Credit Loans.
Each selection of a rate option shall apply separately and without overlap to
the Revolving Credit Loans as a class. The aggregate number of Funding Segments
applicable to the Eurodollar Rate Portion of the Revolving Credit Loans at any
time shall not exceed twenty (20).
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Interest Rate Options For Revolving Credit Loans:
(1) Prime Rate Option: A fluctuating rate per annum for each day equal
to the Prime Rate of the Agent, in effect from time to time (such interest
rate to change immediately upon any change in the Prime Rate) plus the
Applicable Margin for such day; or
(2) Eurodollar Rate Option. A fixed rate per annum for each day during
a Eurodollar Interest Period equal to the Eurodollar Rate plus the
Applicable Margin for such day. The Agent shall give prompt notice to the
Co-Borrowers and to the Lenders of the Eurodollar Rate determined or
adjusted in accordance with the provisions hereof, which determination or
adjustment shall be conclusive (absent manifest error) if made in good
faith. The Eurodollar Rate shall be calculated in accordance with the
Eurodollar Reserve Percentage, if the Agent is required to hold such
reserves.
(b) The Term Loans #1 shall bear interest computed daily on the outstanding
principal balance thereof from the date made until paid in full at one or more
of the interest rate options selected by the Co-Borrowers from between the two
(2) interest rate options set forth below. The aggregate number of Funding
Segments applicable to the Eurodollar Rate Portion of the Term Loans #1 at any
time shall not exceed five (5).
Interest Rate Options For Term Loans #1:
(1) Prime Rate Option: A fluctuating rate per annum for each day equal
to the Prime Rate of the Agent, in effect from time to time (such interest
rate to change immediately upon any change in the Prime Rate) plus the
Applicable Margin for such day; or
(2) Eurodollar Rate Option. A fixed rate per annum for each day during
a Eurodollar Interest Period equal to the Eurodollar Rate plus the
Applicable Margin for such day. The Agent shall give prompt notice to the
Co-Borrowers and to the Lenders of the Eurodollar Rate determined or
adjusted in accordance with the provisions hereof, which determination or
adjustment shall be conclusive (absent manifest error) if made in good
faith. The Eurodollar Rate shall be calculated in accordance with the
Eurodollar Reserve Percentage, if the Agent is required to hold such
reserves.
(c) The Term Loans #2 shall bear interest computed daily on the outstanding
principal balance thereof from the date made until paid in full at one or more
of the interest rate options selected by the Co-Borrowers from between the two
(2) interest rate options set forth below. The aggregate number of Funding
Segments applicable to the Eurodollar Rate Portion of the Term Loans #2 at any
time shall not exceed five (5).
Interest Rate Options For Term Loans #2:
(1) Prime Rate Option: A fluctuating rate per annum for each day equal
to the Prime Rate of the Agent, in effect from time to time (such interest
rate to change
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immediately upon any change in the Prime Rate) plus two hundred
seventy-five basis points (2.75%); or
(2) Eurodollar Rate Option. A fixed rate per annum for each day during
a Eurodollar Interest Period equal to the Eurodollar Rate plus four hundred
twenty-five basis points (4.25%). The Agent shall give prompt notice to the
Co-Borrowers and to the Lenders of the Eurodollar Rate determined or
adjusted in accordance with the provisions hereof, which determination or
adjustment shall be conclusive (absent manifest error) if made in good
faith. The Eurodollar Rate shall be calculated in accordance with the
Eurodollar Reserve Percentage, if the Agent is required to hold such
reserves.
(d) The Applicable Margin for Prime Rate Loans, Eurodollar Rate Loans
and Canadian Bankers Acceptances with respect to the Revolving Credit Loan
Facility and the Term Loan Facility #1 for any day shall be the applicable
percentage set forth in the Leverage Matrix. For purposes of this Section
2.04(i)(d), the Co-Borrowers' Consolidated Funded Debt Leverage Ratio shall
be tested at the end of the periods covered by the quarterly and annual
consolidated financial statements which are to be provided to the Agent
pursuant to Section 5.02 of the Loan Agreement. Any change in the
Applicable Margin (both increases and decreases therein) shall be effective
on the first (1st) day of the Fiscal Quarter following the Fiscal Quarter
in which the Agent is entitled to receive said submitted financial
statements all as provided for in Article V hereof. For example, for
financial statements covering the first Fiscal Quarter of any Fiscal Year,
the effective date of any increase or decrease in the Applicable Margin
would be October 1st of said calendar year. For the period from the Closing
Date up through and including the date upon which the Agent receives the
March 31, 1999 Compliance Certificate attached to the Officer's Certificate
set forth on Exhibit "F" attached hereto and made a part hereof, the
Applicable Margin for Prime Rate Loans, Eurodollar Rate Loans and Canadian
Bankers Acceptances shall be the percentage described at Level VII on the
Leverage Matrix. Thereafter, the Applicable Margin for Prime Rate Loans,
Eurodollar Rate Loans and Canadian Bankers Acceptances shall be set and
established based upon the Co-Borrowers' Consolidated Funded Debt Leverage
Ratio tested in accordance with the terms, conditions and provisions set
forth in Section 8.03 hereof.
(e) Notwithstanding subsections (a), (b), (c) and (d) above,
interest in respect of any Loan shall not exceed the maximum rate
permitted by applicable Law.
(ii) Interest Payments. Subject to the terms, conditions and provisions of
Section 2.04(iv) below, (a) interest accrued on all Prime Rate Loans in any
calendar quarter shall be payable by the Co-Borrowers in arrears (1) on the last
day of each calendar quarter during the term of this Loan Agreement, commencing
on the last such day following the making of each such Prime Rate Loan, (2) upon
the prepayment thereof in full and (3) at maturity and (b) interest accrued on
each Eurodollar Rate Loan shall be payable by the Co-Borrowers in arrears (1) on
each Eurodollar Interest Payment Date applicable to that Loan, (2) upon
prepayment thereof in full or (3) at maturity.
(iii) Conversion or Continuation. (a) Subject to the terms, conditions and
provisions of Section 2.08 and Section 2.09 hereof, the Co-Borrowers shall have
the option (1) to convert at any time all or any part of outstanding Loans
which, in the aggregate, equal
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US$250,000.00 or an integral multiple of US$1,000.00 in excess of that amount
from Prime Rate Loans to Eurodollar Rate Loans; or (2) to convert at any time
all or any part of the outstanding Loans which, in the aggregate, equal
US$250,000.00 or an integral multiple of US$1,000.00 in excess of that amount
from Eurodollar Rate Loans to Prime Rate Loans on the expiration date of any
Eurodollar Interest Period applicable thereto; or (3) upon the expiration of any
Eurodollar Interest Period applicable to a Borrowing of Eurodollar Rate Loans,
to continue all or any portion of such Loans equal to US$250,000.00 or an
integral multiple of US$1,000.00 in excess of that amount as Eurodollar Rate
Loans of the same type, and the succeeding Eurodollar Interest Period of such
continued Loans shall commence on the expiration date of the Eurodollar Interest
Period applicable thereto; provided, however, that no outstanding Loan may be
continued as, or be converted into, a Eurodollar Rate Loan when any Event of
Default or Potential Event of Default has occurred and is continuing. Without
limiting the generality of the foregoing sentence, by giving a Notice of
Conversion/Continuation, the Canadian Borrower may, subject again to the terms,
conditions and provisions of Sections 2.08 and 2.09 hereof, elect from time to
time (A) to convert such Canadian Borrower's Prime Rate Loans or Eurodollar
Loans (on the maturity thereof) to Canadian Bankers Acceptances or (B) to
convert such Canadian Borrower's Canadian Bankers Acceptances (on the maturity
thereof) to Prime Rate Loans or Eurodollar Rate Loans; provided that a Canadian
Bankers Acceptance may be converted only on the last day of its term. By giving
a Notice of Continuation, the Canadian Borrower may renew any of such Canadian
Borrower's outstanding Canadian Bankers Acceptances for an additional term.
(b) In the event the Co-Borrowers shall elect to convert or continue a Loan
under this Section 2.04(iii), the Co-Borrowers (or for a Canadian Loan, the
Canadian Borrower) shall deliver a Notice of Conversion/Continuation to the
Agent no later than 10:00 A.M. (Philadelphia, Pennsylvania time) (1) at least
one (1) Business Day in advance of the proposed conversion date in the case of a
conversion to a Prime Rate Loan, (2) at least two (2) Business Days in advance
of a proposed conversion or continuation/rollover into or, of Canadian Bankers
Acceptances and (3) at least three (3) Business Days in advance of the proposed
conversion/continuation date in the case of a conversion to, or a continuation
of a Eurodollar Rate Loan. A Notice of Conversion/Continuation shall specify (A)
the proposed conversion/continuation date (which shall be a Business Day), (B)
the amount of the Loan to be converted/continued, (C) the nature of the proposed
conversion/continuation and (D) in the case of a conversion to, or continuation
of, a Eurodollar Rate Loan, the requested Eurodollar Interest Period. In lieu of
delivering the abovedescribed Notice of Conversion/Continuation, the
Co-Borrowers may give the Agent telephonic notice of any proposed
conversion/continuation by the time required under this Section 2.04(iii);
provided, however, that such notice shall be confirmed in writing by delivery to
the Agent promptly (but in no event later than the proposed
conversion/continuation date) of a Notice of Conversion/Continuation. Promptly
after receipt of a Notice of Conversion/ Continuation under this Section
2.04(iii) (or telephonic notice in lieu thereof), the Agent shall notify each
Lender by telex, telecopy, telegram, telephone or other similar form of
transmission, of the proposed conversion/continuation. In the event the
Co-Borrowers fail to provide the Agent with the requisite Notice of
Conversion/Continuation for a conversion to, or a continuation of, a Loan, said
affected Loan shall automatically continue as, or convert to, a Prime Rate Loan.
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(c) Any Co-Borrower (other than the Canadian Borrower) may convert
Revolving Credit Loans outstanding in U.S. Dollars to Revolving Credit Loans in
Canadian Dollars and vice versa by repaying such Loans in the first currency and
borrowing Loans in such different currency. If the Canadian Borrower shall fail
to timely give a Notice of Conversion/Continuation in respect of outstanding and
maturing Canadian Bankers Acceptances, such Canadian Borrower shall be deemed to
have given a Notice of Conversion/Continuation such that it will be deemed to
have requested a Prime Rate Loan to repay such maturing Canadian Bankers
Acceptances.
(d) Any Notice of Conversion/Continuation for conversion to, or
continuation of, a Loan (or telephonic notice in lieu thereof) shall be
irrevocable and the Co-Borrowers shall be bound to convert or continue in
accordance therewith.
(iv) Default Interest. Notwithstanding the rates of interest specified in
Section 2.04(i) hereof and the payment dates specified in Section 2.04(ii)
hereof, effective immediately upon the occurrence of any Event of Default under
Section 9.01 of this Loan Agreement, for as long thereafter as any such Event of
Default under Section 9.01 of this Loan Agreement shall be continuing and to the
extent permitted by law, the aggregate principal balance of all Loans then
outstanding and, to the extent permitted by applicable Law, any interest
payments on the Loans not paid when due, shall bear interest payable upon demand
at the Default Rate. The Co-Borrowers hereby acknowledge that: (a) such Default
Rate is a material inducement to the Lenders to make the Loan Facilities
available to the Co-Borrowers, (b) the Lenders would not have made the Loan
Facilities available to the Co-Borrowers in the absence of the agreement of the
Co-Borrowers to pay such Default Rate, (c) such Default Rate represents
compensation for increased risk to the Lenders that the Loan Facilities will not
be repaid and (d) such Default Rate is not a penalty and represents a reasonable
estimate of (1) the cost to the Agent and to the Lenders in allocating their
respective resources (both personnel and financial) to the on-going review,
monitoring, administration and collection of the Loan Facilities and (2)
compensation to the Lenders for losses that are difficult to ascertain.
(v) Computation of Interest. Except as otherwise described in the last
sentence of this Section 2.04(v), below, interest on Prime Rate Loans and
Eurodollar Rate Loans shall be computed on the basis of the actual number of
days elapsed in the period during which interest accrues and a year of 360 days.
In computing interest on any Loan, the date of the making of the Loan or the
first day of a Eurodollar Interest Period, as the case may be, shall be included
and the date of payment or the expiration date of a Eurodollar Interest Period,
as the case may be, shall be excluded; provided, however, that if a Loan is
repaid on the same day on which it is made, one day's interest shall be paid on
that Loan. For purposes of complying with the Interest Act (Canada) where any
interest is calculated pursuant to this Loan Agreement at a rate based upon a
360 day period (the "first rate"), the yearly rate or percentage of interest to
which the "first rate" is equivalent is the "first rate" multiplied by the
actual number of days in the applicable calendar year divided by 360.
(vi) Changes; Legal Restrictions. Except as provided in Section 2.08(iv)
hereof with respect to certain determinations on Eurodollar Interest Rate
Determination Dates, in
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the event that after the date hereof (a) the adoption of or any change in any
law, treaty, rule, regulation, guideline or determination of a court or
Governmental Authority or any change in the interpretation or application
thereof by a court or Governmental Authority or (b) compliance by any Lender
with any request or directive (whether or not having the force of law and
whether or not the failure to comply therewith would be unlawful) from any
central bank or other Governmental Authority or quasigovernmental authority:
(1) does or may impose, modify, or hold applicable, in the
determination of a Lender, any reserve, special deposit, compulsory loan,
FDIC insurance, CDIC insurance, capital allocation or similar requirement
against assets held by, or deposits or other liabilities (including those
pertaining to Letters of Credit) in or for the account of advances or loans
by, Commitments made, or other credit extended by, or any other acquisition
of funds by, a Lender or any applicable lending office or Eurodollar
Affiliate of such Lender (except, with respect to Prime Rate Loans, to the
extent that the reserve and FDIC insurance or CDIC insurance requirements
or requirements of the Office of the Superintendent of Financial
Institutions (Canada) are reflected in the definition of "Prime Rate" and,
with respect to a Eurodollar Rate Loan, to the extent that the reserve
requirements are reflected in the definition of "Eurodollar Rate"); or
(2) does impose on such Lender any other condition materially more
burdensome in nature, extent or consequence than those in existence as of
the Closing Date;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing or maintaining the Loans, its Revolving Credit Commitment, its
Term Loan #1 Commitment and its Term Loan #2 Commitment (if any) to the
Co-Borrowers or issuing for the account of any one or more of the Co-Borrowers
any Letter of Credit or to reduce any amount receivable thereunder, then, in any
such case, the Co-Borrowers shall pay to such Lender, within thirty (30) days
following demand, and delivery to the Co-Borrowers and the Agent of the
statement described in the next sentence, such amount or amounts (based upon an
allocation thereof by such Lender to the financing transactions contemplated by
this Loan Agreement and effected by this Section 2.04(vi)) as may be necessary
to compensate that Lender for any such additional cost incurred or reduced
amount received. Such Lender shall deliver to the Co-Borrowers a written
statement of the costs or reductions claimed and the basis therefor, and the
allocation made by such Lender of such costs and reductions shall be conclusive,
absent manifest error if made in good faith. If a Lender subsequently recovers
any amount previously paid by the Co-Borrowers pursuant to this Section 2.04
(vi), such Lender shall, within thirty (30) days after receipt of such recovery
and to the extent permitted by applicable Law, pay to the Co-Borrowers the
amount of any such recovery.
Section 2.04A Canadian Bankers Acceptances.
(i)(a) Acceptance and Purchase. Subject to the terms and conditions hereof,
each Canadian Lender severally agrees to the extent of its respective Pro Rata
Share of the Revolving Credit Commitments to accept and purchase Canadian
Bankers Acceptances drawn upon it by the Canadian Borrower denominated in
Canadian Dollars. The Canadian Borrower
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shall notify the Agent by irrevocable written notice (hereinafter each referred
to as a "Canadian Bankers Acceptance Notice") by 10:00 a.m. (Toronto, Ontario
time) two (2) Business Days prior to the date of any Borrowing (including a
conversion into or continuation/rollover of) by way of Canadian Bankers
Acceptances. Each Borrowing by way of Canadian Bankers Acceptances shall be in a
minimum aggregate face amount of C$500,000.00 and integral multiples of
C$100,000.00 in excess thereof. Each Canadian Bankers Acceptance Notice shall be
in the form of Exhibit "D", attached hereto and made a part hereof. In no event
shall the Dollar Equivalent of the aggregate face amount (without discount) of
all outstanding Canadian Bankers Acceptances exceed the Maximum Canadian
Exposure minus the sum of the outstanding principal amount of all Canadian Loans
(expressed in its Dollar Equivalent thereof), plus the Canadian Letter of Credit
Obligations (expressed in its Dollar Equivalent thereof).
(b) Term. Bankers Acceptances shall be issued and shall mature on a
Business Day. Each Bankers Acceptance shall have a term of thirty (30), sixty
(60), ninety (90) or one-hundred eighty (180) days and shall mature no later
than five (5) days prior to the Revolving Credit Termination Date, the Term Loan
#1 Maturity Date or the Term Loan #2 Maturity Date, as the case may be, and
shall be in form and substance reasonably satisfactory to the Canadian Lender
which is accepting such Bankers Acceptance.
(c) Canadian Bankers Acceptances in Blank. To facilitate the acceptance of
Canadian Bankers Acceptances under this Loan Agreement, the Canadian Borrower
shall, upon execution of this Loan Agreement and from time to time as required,
provide to the Agent drafts, in form satisfactory to the Agent, duly executed
and endorsed in blank by the Canadian Borrower in quantities sufficient for each
Canadian Lender to fulfill its obligations hereunder. In addition, the Canadian
Borrower hereby appoints each Canadian Lender as its attorney to complete the
relevant parts of Canadian Bankers Acceptances (pursuant to the Canadian Bankers
Acceptance Notice) with amount, term and other relevant details and to sign and
endorse on its behalf, in handwriting or by facsimile or mechanical signature as
and when deemed necessary by such Canadian Lender, blank forms of Canadian
Bankers Acceptances. The Canadian Borrower recognizes and agrees that all
Canadian Bankers Acceptances so completed, signed and/or endorsed on its behalf
by a Canadian Lender shall bind the Canadian Borrower as fully and effectually
as if signed in the handwriting of and duly issued by the proper signing
officers of the Canadian Borrower. Each Canadian Lender is hereby authorized to
issue such Canadian Bankers Acceptances endorsed in blank in such face amounts
as may be determined by such Canadian Lender provided that the aggregate amount
thereof is equal to the aggregate amount of Canadian Bankers Acceptances
required to be accepted by such Lender pursuant to Section 2.04A(i)(e) below. No
Canadian Lender shall be responsible or liable for its failure to accept a
Canadian Bankers Acceptance if the cause of such failure is, in whole or in
part, due to the failure of the Canadian Borrower to provide duly executed and
endorsed drafts to the Agent on a timely basis nor shall any Canadian Lender or
the Agent be liable for any damage, loss or other claim arising by reason of any
loss or improper use of any such instrument except loss or improper use arising
by reason of the gross negligence or willful misconduct of such Lender or the
Agent, its officers, employees, agents or representatives. Each Canadian Lender
shall maintain a record with respect to Canadian Bankers Acceptances (1)
received by it from the Agent in blank hereunder, (2) voided by it for any
reason, (3) accepted by it hereunder, (4) purchased by it hereunder and (5)
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canceled at their respective maturities. Each Canadian Lender further agrees to
retain such records in the manner and for the statutory periods provided in the
various Canadian provincial or federal statutes and regulations which apply to
such Lender. The Agent and each Canadian Lender shall hold all Canadian Bankers
Acceptances endorsed in blank and delivered to them in safekeeping in the same
manner as they would hold their own property of a similar kind.
(d) Execution of Bankers Acceptances. Drafts of the Canadian Borrowers to
be accepted as Bankers Acceptances hereunder shall be duly executed by one or
more duly authorized officers on behalf of the Canadian Borrower, subject to
Section 2.04A(i)(c) above. Notwithstanding that any Person whose signature
appears on any Canadian Bankers Acceptance as a signatory for the Canadian
Borrower may no longer be an authorized signatory for the Canadian Borrower at
the date of issuance of a Canadian Bankers Acceptance, such signature shall
nevertheless be valid and sufficient for all purposes as if such authority had
remained in force at the time of such issuance and any such Canadian Bankers
Acceptance so signed shall be binding on the Canadian Borrower.
(e) Issuance of Bankers Acceptances. Promptly following receipt of a
Canadian Bankers Acceptance Notice, the Agent shall so advise the Canadian
Lenders of the face amount of each Canadian Bankers Acceptance to be accepted by
it and the term thereof. The aggregate face amount of Canadian Bankers
Acceptances to be accepted by a Canadian Lender shall be determined by the Agent
by reference to the respective Pro Rata Shares of the Canadian Revolving Credit
Sublimit and the respective Term Loan #1 Commitments of the Canadian Lenders,
except that, if the face amount of a Bankers Acceptance, which would otherwise
be accepted by a Canadian Bank, would not be C$100,000.00 or an integral
multiple thereof, such face amount shall be increased or reduced by the Agent in
its sole and unfettered discretion to the nearest integral multiple of
C$100,000.00.
(f) Acceptances of Bankers Acceptances. Each Canadian Bankers Acceptance to
be accepted by a Canadian Lender shall be accepted at such Lender's office as
designated by said Canadian Lender from time to time.
(g) Purchase of Canadian Bankers Acceptances. On the relevant date of
borrowing, each Canadian Lender severally agrees to purchase from the Canadian
Borrower, at the face amount thereof discounted by the Discount Rate, any
Canadian Bankers Acceptance accepted by it and provide to the Agent, for the
account of the Canadian Borrower, the Discounted Proceeds in respect thereof
after deducting therefrom the amount of the Acceptance Fee payable by the
Canadian Borrower to such Canadian Lender under Section 2.04A(iii) in respect of
such Canadian Bankers Acceptance.
(h) Sale of Bankers Acceptances. Each Canadian Lender may at any time and
from time to time hold, sell, rediscount or otherwise dispose of any or all
Canadian Bankers Acceptances accepted and purchased by it.
(i) Waiver of Presentment and Other Conditions. The Canadian Borrower
waives presentment for payment and any other defense to payment of any amounts
due to a
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Canadian Lender in respect of a Canadian Bankers Acceptance accepted by such
Canadian Lender pursuant to this Agreement which might exist solely by reason of
such Canadian Bankers Acceptance being held, at the maturity thereof, by such
Canadian Lender in its own right. The Canadian Borrower shall not claim or
require any days of grace or require the Agent or any Canadian Lender to claim
or allow any days of grace for the payment of any Canadian Bankers Acceptance.
(ii) Refunding Canadian Bankers Acceptances. With respect to each Canadian
Bankers Acceptance, the Canadian Borrower, prior to the occurrence and
continuation of an Event of Default, may give irrevocable telephone or written
notice (or such other method of notification as may be agreed upon between the
Agent and the Canadian Borrower) to the Agent at or before 2:00 P.M. (Toronto,
Ontario time) two (2) Business Days prior to the maturity date of such Canadian
Bankers Acceptance followed by written confirmation electronically transmitted
to the Agent on the same day, of the Canadian Borrower's intention to issue one
or more Canadian Bankers Acceptances on such maturity date (each a "Refunding
Canadian Bankers Acceptance") to provide for the payment of such maturing
Canadian Bankers Acceptance (it being understood that payments by the Canadian
Borrower and fundings by the Canadian Lenders in respect of each maturing
Canadian Bankers Acceptance and each related Refunding Canadian Bankers
Acceptance shall be made on a net basis reflecting the difference between the
face amount of such maturing Canadian Bankers Acceptance and the Discounted
Proceeds (net of the applicable Acceptance Fee) of such Refunding Canadian
Bankers Acceptance). Any deficiency or shortfall owing in respect of maturing
Canadian Bankers Acceptances, after application of the Discounted Proceeds from
the Refunding Canadian Bankers Acceptances shall be immediately due and payable
by the Canadian Borrower to the relevant Canadian Lender. Any funding on account
of any maturing Canadian Bankers Acceptance must be made at or before 12:00 NOON
(Toronto, Ontario time) on the maturity date of such Canadian Bankers
Acceptance. If the Canadian Borrower fails to give such notice, the Canadian
Borrower shall be irrevocably deemed to have requested and to have been advanced
a Canadian Prime Rate Loan in the face amount of such maturing Canadian Bankers
Acceptance on the maturity date of such maturing Canadian Bankers Acceptance
from the Canadian Lender which accepted such maturing Canadian Bankers
Acceptance, which Canadian Prime Rate Loan shall thereafter bear interest as
such in accordance with the provisions hereof and otherwise shall be subject to
all provisions of this Agreement applicable to Canadian Prime Rate Loans until
paid in full.
(iii) Acceptance Fee. An Acceptance Fee shall be payable by the Canadian
Borrower to each Canadian Lender and each Canadian Lender shall deduct the
amount of such Acceptance Fee from the Discounted Proceeds (in the manner
specified in Section 2.04A(i)(g) in respect of each Canadian Bankers
Acceptance).
(iv) Cash Collateral. Subject to the terms and conditions of Section 11.05
of this Loan Agreement, upon the occurrence and during the continuance of any
Event of Default or Potential Event of Default, and in addition to any other
rights or remedies of any Canadian Lender and the Agent hereunder (a) the
Canadian Borrower shall, notwithstanding the maturity date of outstanding
Canadian Bankers Acceptances, pay to the Agent upon demand therefor an amount
equivalent to the amount required to pay in the aggregate the undiscounted face
amount
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of all outstanding Canadian Bankers Acceptances which shall be deposited into a
cash collateral account with the Agent as additional security for payment of the
undiscounted face amount of such Canadian Bankers Acceptances upon maturity
thereof, and (b) any Canadian Lender or the Agent as and by way of collateral
security (or such alternate arrangement as may be agreed upon by the Canadian
Borrower and such Canadian Lender or the Agent, as applicable) shall be entitled
to deposit and retain in an account to be maintained by the Agent (bearing
interest at the Agent's rates as may be applicable in respect of other deposits
of similar amounts for similar terms) amounts which are received by such
Canadian Lender or the Agent from the Canadian Borrower hereunder or as proceeds
of the exercise of any rights or remedies of any Canadian Lender or the Agent
hereunder against the Canadian Borrower, to the extent such amounts may be
required to satisfy any contingent or unmatured obligations or liabilities of
the Canadian Borrower to the Canadian Lenders or the Agent, or any of them
hereunder, in respect of Canadian Bankers Acceptances.
(v) Market Disruption for Canadian Bankers Acceptances. If any Canadian
Lender determines in good faith and acting reasonably, which determination shall
be final, conclusive and binding upon the Canadian Borrower, and notifies the
Canadian Borrower that, by reason of circumstances or changes affecting the
market for bankers acceptances it is no longer possible to establish the
Discount Rate or that the market for bankers acceptances no longer exists, is
too weak for its normal use by such Canadian Lender or is not capable, in the
normal course of business, to absorb Canadian Bankers Acceptances accepted by
such Canadian Lender pursuant to this Loan Agreement, then:
(a) the right of the Canadian Borrower to request Canadian Loans in
the form of Bankers Acceptances shall be suspended until such Canadian
Lender determines that the circumstances causing such suspension no longer
exist and such Canadian Lender so notifies the Canadian Borrower; and
(b) any Notice of Borrowing for any Canadian Loans in the form of
Canadian Bankers Acceptances which is outstanding shall be deemed to
constitute a request for a Canadian Loan by way of a Prime Rate Loan.
(vi) Notification of Suspension. The Canadian Lender shall promptly notify
the Canadian Borrower of the suspension of the Canadian Borrower's right to
request Canadian Loans in the form of Canadian Bankers Acceptances and of the
termination of any such suspension.
(vii) Depository Bills and Notes Act (Canada). Canadian Bankers Acceptances
accepted or purchased by any Canadian Lender under this Loan Agreement after
clearing services as provided for in the Depository Bills and Notes Act (Canada)
acceptable to such Canadian Lender are available may, at the option of such
Canadian Lender, be issued in the form of a "depository bill" and deposited with
a "clearing house", as each such term is defined in the Depository Bills and
Notes Act (Canada).
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(viii) Authorization and Power of Attorney with respect to Canadian Bankers
Acceptances. To facilitate the extension of Canadian Loans by way of Canadian
Bankers Acceptances, the Canadian Borrower hereby authorizes each Canadian
Lender and irrevocably appoints each Canadian Lender as the Canadian Borrower's
attorney from time to time:
(a) to complete and sign, either manually or by facsimile or
mechanical signature, a draft or bill of exchange to create a Canadian
Bankers Acceptance (with, in the Canadian Lender's sole discretion, the
inscription "This is a depository bill subject to the Depository Bills and
Notes Act");
(b) after the acceptance thereof by such Canadian Lender, to endorse,
either manually or by facsimile or mechanical signature, such Canadian
Bankers Acceptance in favor of the applicable purchaser or endorsee thereof
including, in such Canadian Lender's discretion, such Canadian Lender or a
"clearing house" (within the meaning of the Depository Bills and Notes
Act);
(c) to deliver such Canadian Bankers Acceptance to such purchaser or
to deposit such Canadian Bankers Acceptance with such clearing house; and
(d) to comply with the procedures and requirements established from
time to time by such Canadian lender or such clearing house in respect of
the delivery, transfer and collection of bankers acceptances and depository
bills in relation to each Canadian Bankers Acceptance accepted by the
Canadian Lender under this Loan Agreement.
All Canadian Bankers Acceptances so completed, signed, endorsed, delivered or
deposited by such Canadian Lender on behalf of the Canadian Borrower shall be
binding on the Canadian Borrower as if completed, signed, endorsed, delivered or
deposited by the Canadian Borrower. The records of such clearing house shall, in
the absence of manifest error, be conclusively binding on the Canadian Borrower.
No Canadian Lender shall be liable for any claim arising by reason of any loss
or improper use of such drafts or Canadian Bankers Acceptances or any actions or
omissions by any such clearing agency except for damages suffered by the
Canadian Borrower caused by the intentional misconduct or gross negligence of
such Canadian Lender. The Canadian Borrower shall, at the request of such
Canadian Lender, promptly become a participant (as defined by the Depository
Bills and Notes Act) for purposes of the issuance, acceptance, endorsement,
delivery, deposit and transfer of Canadian Bankers Acceptances.
Section 2.05 Fees.
(i) Unused Commitment Fee. From and after the Closing Date until the
Obligations are paid in full and the Revolving Credit Commitments are
terminated, the Co-Borrowers shall pay to the Agent, for the ratable accounts of
the applicable Lenders according to their Pro Rata Shares, an unused commitment
fee accruing at a rate per annum equal to the Unused Commitment Fee Rate in
effect from time to time multiplied by the average daily amount of the excess of
the Revolving Credit Commitments over the Dollar Equivalent of all Revolving
Credit Loans and Letter of Credit Obligations outstanding from time to time. All
such
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commitment fees payable under this Section 2.02(i) shall be payable quarterly in
arrears on the last day in each calendar quarter beginning after the Closing
Date. For the period from the Closing Date up through and including March 31,
1999, the Unused Commitment Fee Rate shall be the percentage described at Level
VII on the Leverage Matrix.
(ii) Letter of Credit Fees. The Co-Borrowers shall pay to the Agent, for
the account of the Issuing Bank in connection with the issuance, negotiation,
termination, draw under, transfer of and any other related Letter of Credit
activity, the customary fees as are established from time to time by the Issuing
Bank in connection with Letters of Credit, including, without limitation, the
fees for the issuance, administration, amendment, payment or cancellation of any
Letter of Credit, all as more fully set forth on Schedule 2.05(ii) and all as
more fully revised from time to time based upon the Leverage Matrix. For the
period from the Closing Date up through and including March 31, 1999, the annual
Letter of Credit fee shall be the percentage described at Level VII on the
Leverage Matrix.
(iii) Late Charge Fee. In the event that any payment, including, without
limitation, interest or principal, required to be made by the Co-Borrowers under
the Notes or under this Loan Agreement shall not be received by the Agent within
fifteen (15) days of when due, the Agent, on behalf of the Lenders, may charge,
and if so charged, the Co-Borrowers shall pay, a late charge of ($0.05) for each
dollar ($1.00) of each delinquent payment for the purpose of defraying the
expense incident to the handling of such delinquent payment. In no event shall
said late charge fee be less than ten dollars ($10.00).
(iv) Agent's Fee. The Co-Borrowers shall pay to the Agent, for the Agent's
own account and not for the Lenders, an annual fee agreed upon by and between
the Co-Borrowers and the Agent.
(v) Payment of Fees. The fees described in this Section 2.05 represent
compensation for services rendered and to be rendered separate and apart from
the lending of money or the provision of credit and do not constitute
compensation for the use, detention or forbearance of money, and the obligation
of the Co-Borrowers to pay each fee described herein shall be in addition to,
and not in lieu of, the obligation of the Co-Borrowers to pay interest, other
fees and expenses otherwise described in this Loan Agreement. Fees shall be
payable when due in Philadelphia, Pennsylvania in immediately available funds.
All fees shall be nonrefundable when paid, except as may be otherwise expressly
provided in this Loan Agreement. All fees and expenses specified or referred to
in this Loan Agreement due and owing to the Agent or to a Lender, including,
without limitation, those referred to in this Section 2.05 and in Section 11.3
hereof shall bear interest, if not paid when due, at the Default Rate (but not
to exceed the maximum rate permitted by applicable Law), shall constitute
Obligations and shall be secured by all of the Collateral. Except as described
in the last sentence of this Section 2.05(v), all fees described in this Section
2.05 which are expressed as a per annum charge shall be calculated on the basis
of the actual number of days elapsed in a 360day year. For purposes of complying
with the Interest Act (Canada) where any interest is calculated pursuant to this
Loan Agreement at a rate based upon a 360 day period (the "first rate"), the
yearly rate or percentage of interest to which the "first rate" is equivalent is
the "first rate" multiplied by the actual number of days in
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the applicable calendar year divided by 360.
Section 2.06 Prepayments.
(i) Voluntary Prepayments of the Revolving Credit Loans and the Term Loans
#1. The Co-Borrowers may, upon not less than two (2) Business Days' prior
written or telephonic notice confirmed promptly in writing to the Agent (which
notice the Agent shall promptly transmit by telegram, telecopy or telephone to
each Lender holding a Revolving Credit Commitment or a Term Loan #1 Commitment),
at any time and from time to time, prepay any Revolving Credit Loan or Term Loan
#1 which is being maintained as a Prime Rate Loan in whole or in part, without
prepayment premium or fee, in an aggregate minimum amount of US$1,000,000.00 and
integral multiples of US$1,000,000.00 in excess of that amount. The Co-Borrowers
may, upon not less than five (5) Business Days' prior written or telephonic
notice confirmed promptly in writing to the Agent (which notice the Agent shall
promptly transmit by telegram, telecopy or telephone to each Lender), at any
time and from time to time, prepay any Revolving Credit Loan or Term Loan #1
which is being maintained as a Eurodollar Rate Loans in whole or in part,
without prepayment premium or fee, in an aggregate minimum amount of
US$1,000,000.00 and integral multiples of US$1,000,000.00 in excess of that
amount, on the expiration date of the Eurodollar Interest Period applicable
thereto and otherwise only upon payment of the amounts described in Section
2.08(vi) hereof. Notwithstanding the foregoing, in the event that any
prepayments are made in connection with the termination of this Loan Agreement,
such prepayments shall be made only upon five (5) Business Days' prior written
notice to the Agent. Any notice of prepayment given to the Agent under this
Section 2.06(i) shall specify the date of prepayment and the aggregate principal
amount of the prepayment.
(ii) Voluntary Prepayments of the Term Loans #2. (a) At all times prior to
the repayment in full of the Term Loan Facility #1, the Co-Borrowers may, upon
not less than five (5) Business Days' prior written or telephonic notice
confirmed promptly in writing to the Agent (which notice the Agent shall
promptly transmit by telegram, telecopy or telephone to each Lender holding a
Term Loan #2 Commitment) prepay, in whole or in part, any one or all of the Term
Loans #2 only with the prior express written consent of the Lender holding said
Term Loan #2 Commitment. In the event the Co-Borrowers obtain such written
consent, then the Co-Borrowers may (1) upon not less than two (2) additional
Business Days' prior written or telephonic notice confirmed promptly in writing
to the Agent (which notice the Agent shall promptly transmit by telegram,
telecopy or telephone to each Lender holding a Term Loan #2 Commitment who has
agreed to accept a Term Loan #2 prepayment), at any time and from time to time,
prepay any Term Loan #2 which is being maintained as a Prime Rate Loan in whole
or in part, in an aggregate minimum amount of US$1,000,000.00 and integral
multiples of US$1,000,000.00 in excess of that amount and (2) upon not less than
four (4) additional Business Days' prior written or telephonic notice confirmed
promptly in writing to the Agent (which notice the Agent shall promptly transmit
by telegram, telecopy or telephone to each Lender holding a Term Loan #2
Commitment who has agreed to accept a Term Loan #2 prepayment), at any time and
from time to time, prepay any Term Loan #2 which is being maintained as a
Eurodollar Rate Loans in whole or in part, in an aggregate minimum amount of
US$1,000,000.00 and integral multiples of US$1,000,000.00 in excess of that
amount, on the expiration date of the
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Eurodollar Interest Period applicable thereto and otherwise only upon payment of
the amounts described in Section 2.08(vi) below. Notwithstanding the foregoing,
in the event that any prepayments are made in connection with the termination of
this Loan Agreement, such prepayments shall be made only upon five (5) Business
Days' prior written notice to the Agent. Any notice of prepayment given to the
Agent under this Section 2.06(i) shall specify the date of prepayment and the
aggregate principal amount of the prepayment.
(b) At all times after the repayment in full of the Term Loan Facility #1,
the Co-Borrowers may prepay, in whole or in part, the Term Loans #2 without the
prior express written consent of any of the Lenders holding Term Loan #2
Commitments. The Co-Borrowers may (1) upon not less than two (2) Business Days'
prior written or telephonic notice confirmed promptly in writing to the Agent
(which notice the Agent shall promptly transmit by telegram, telecopy or
telephone to each Lender), at any time and from time to time, prepay any Term
Loan #2 which is being maintained as a Prime Rate Loan in whole or in part, in
an aggregate minimum amount of US$1,000,000.00 and integral multiples of
US$1,000,000.00 in excess of that amount and (2) upon not less than five (5)
Business Days' prior written or telephonic notice confirmed promptly in writing
to the Agent (which notice the Agent shall promptly transmit by telegram,
telecopy or telephone to each Lender), at any time and from time to time, prepay
any Term Loan #2 which is being maintained as a Eurodollar Rate Loans in whole
or in part, in an aggregate minimum amount of US$1,000,000.00 and integral
multiples of US$1,000,000.00 in excess of that amount, on the expiration date of
the Eurodollar Interest Period applicable thereto and otherwise only upon
payment of the amounts described in Section 2.08(vi) below. Notwithstanding the
foregoing, in the event that any prepayments are made in connection with the
termination of this Loan Agreement, such prepayments shall be made only upon
five (5) Business Days' prior written notice to the Agent. Any notice of
prepayment given to the Agent under this Section 2.06(i) shall specify the date
of prepayment and the aggregate principal amount of the prepayment.
(c) Any prepayments of the Term Loans #2 as provided for in Sections
2.06(ii)(a) and (b) above shall be subject to the Co-Borrowers paying to the
Agent for the benefit of the Lenders holding Term Loan #2 Commitments a
prepayment premium and fee (in addition to the amounts described in Section
2.08(vi) below) in an amount calculated as follows: any prepayment of
outstanding principal of the Term Loans #2 on or prior to March 31, 2000 shall
require the payment of a prepayment premium and fee of one hundred twenty-five
basis points (1.25%) calculated on the amount of the prepayment. Any prepayment
of outstanding principal of the Term Loans #2 after March 31, 2000 shall not
require the payment of any prepayment premium or fee except for the amounts
described in Section 2.08(vi) below).
(d) All voluntary prepayments of the Term Loan Facility #1 shall be applied
in the inverse order of maturity until the Term Loan Facility #1 has been repaid
in full.
(e) All voluntary prepayments of the Term Loan Facility #2 shall be applied
in the inverse order of maturity until the Term Loan Facility #2 has been repaid
in full.
(f) All voluntary prepayments of the Term Loan Facilities shall be shared
by
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and among the holders of the Term Loan Facility #1 and the Term Loan Facility #2
in accordance with the following provisions:
(1) the amount of each voluntary prepayment on the Term Loan
Facilities in which a Lender holding a Term Loan #1 shall be entitled shall
be in an amount equal to (A) the principal amount of said prepayment minus
(B) the aggregate amount of said prepayment due and owing to the holders of
Term Loans #2 who gave their consent to such prepayment multiplied by (C)
said Lender's Term Loan #1 Commitment divided by (D) the total of all Term
Loan #1 Commitments; and
(2) the amount of each voluntary prepayment on the Term Loan
Facilities in which a Lender holding a Term Loan #2 shall be entitled shall
be in an amount equal (A) to the principal amount of said prepayment
multiplied by (B) said Lender's Term Loan #2 Commitment divided by (C) the
total of all Term Loan #2 Commitments.
(g) In the event that the Agent requests the consent of a Lender holding a
Term Loan #2 Commitment with respect to a voluntary prepayment of said Lender's
Term Loan #2 and the Agent does not receive a written denial thereof within two
(2) Business Days after such Lender's receipt of such request, then such Lender
shall be deemed to have given its consent to such voluntary prepayment.
(iii) Mandatory Prepayment of the Loans. (a) The Co-Borrowers shall make,
in addition to the required quarterly principal payments on the Term Loan
Facility #1 described in Section 2.02(iii) hereof and the Term Loan Facility #2
described in Section 2.03(iii) hereof, a mandatory prepayment of the Term Loan
Facilities on a pro rata basis (except as otherwise provided for in Section
2.06(iii)(b) below):
(1) once each year, in an amount equal to fifty percent (50%) of the
Excess Cash Flow for the prior Fiscal Year. The Excess Cash Flow shall be
determined from the annual financial statements to be delivered to the
Agent pursuant to Section 5.02 of this Loan Agreement. The mandatory
prepayment of principal, if any, shall be made on or before August 15th of
each Fiscal Year, with the first payment due and owing on August 15, 1999
for the prior 1999 Fiscal Year (which Fiscal Year ended on March 31, 1999);
(2) from time to time as Properties are damaged, destroyed or
condemned in an amount equal to the net insurance or condemnation proceeds
/ award (each to the extent that such net insurance or condemnation
proceeds / award are not reinvested by the Co-Borrowers in similar
Properties within twelve (12) months of the receipt of net proceeds from
the damage, destruction or condemnation); and
(3) from time to time in an amount equal to the net proceeds obtained
by the Co-Borrowers from the issuance of additional Consolidated Debt
and/or
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equity as permitted under the terms of Article VII of this Loan Agreement,
excluding, however, (A) all net proceeds realized from the conversion of
Consolidated Subordinated Debt into equity of the Co-Borrowers and (B) net
proceeds obtained by the Co-Borrowers from the issuance of additional
equity where such equity is used solely for acquisitions permitted under
Section 7.05 of this Loan Agreement.
(b) All mandatory prepayments of the Term Loan Facilities shall be applied
in the inverse order of maturity until the Term Loan Facilities have been repaid
in full; provided, however, any Lender holding a Term Loan #2 Commitment may, at
its sole and absolute discretion, decline any prepayment on the outstanding
principal balance of its Term Loan #2 Note until such time as the Term Loan
Facility #1 is repaid in full. Upon the repayment in full of the Term Loan
Facilities, all net proceeds obtained by the Co-Borrowers in the manner set
forth in Section 2.06(iii)(a)(1), (2) and (3) above shall be applied towards the
repayment of the outstanding principal balance of the Revolving Credit Loan
Facility.
(c) All mandatory prepayments of the Term Loan Facilities shall be shared
by and among the holders of the Term Loan Facility #1 and the Term Loan Facility
#2 in accordance with the following provisions:
(1) the amount of each mandatory prepayment on the Term Loan
Facilities in which a Lender holding a Term Loan #1 shall be entitled shall
be in an amount equal to (A) the principal amount of said prepayment minus
(B) the aggregate amount of said prepayment due and owing to the holders of
Term Loans #2 who gave their consent to such prepayment multiplied by (C)
said Lender's Term Loan #1 Commitment divided by (D) the total of all Term
Loan #1 Commitments; and
(2) the amount of each mandatory prepayment on the Term Loan
Facilities in which a Lender holding a Term Loan #2 shall be entitled shall
be in an amount equal (A) to the principal amount of said prepayment
multiplied by (B) said Lender's Term Loan #2 Commitment divided by (C) the
total of all Term Loan #2 Commitments.
(d) To the extent of any remaining monies available under Section
2.06(iii)(a), (b) and (c) above, after repayment in full of the Term Loan
Facilities and the Revolving Credit Loan Facility, all such monies shall be the
sole property of the Co-Borrowers and the Agent and the Lenders shall have no
rights or interests therein.
(e) In the event that the Agent requests the consent of a Lender holding a
Term Loan #2 Commitment with respect to a mandatory prepayment of said Lender's
Term Loan #2 and the Agent does not receive a written denial thereof within two
(2) Business Days after such Lender's receipt of such request, then such Lender
shall be deemed to have given its consent to such mandatory prepayment.
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Section 2.07 Payments; Collection of Accounts.
(i) Collection of Accounts (a) The Co-Borrowers are authorized to collect
the Accounts and any other proceeds of Collateral on behalf of and in trust for
the Agent and the Lenders, at the Co-Borrowers' expense, but such authority
shall automatically terminate upon the occurrence of an Event of Default. The
Agent may modify or terminate such authority at any time upon the occurrence of
an Event of Default and directly collect the Accounts and other monetary
obligations included in the Collateral. The Co-Borrowers shall, at the
Co-Borrowers' expense and in the manner requested by the Agent from time to
time, direct that remittances and all other proceeds of Accounts and other
Collateral shall be delivered to the Agent pursuant to the terms of the
Collateral Documents.
(ii) Manner and Time of Payment. All payments of principal, interest,
Reimbursement Obligations and fees hereunder or under any Letter of Credit
payable to the Agent and/or the Lenders shall be made without condition or
reservation or right, in the applicable currency and in immediately available
funds, delivered to the Agent not later than 10:00 A.M. (Philadelphia,
Pennsylvania time) on the date due, to such account of the Agent at the Agent's
Office or Mellon Canada's principal office in Toronto, Ontario, as the Agent may
designate, for the account of the Lenders. Funds received by the Agent after
that time and date shall be deemed to have been paid on the next succeeding
Business Day. The Agent shall send a monthly and/or quarterly invoice, as
applicable, to the Co-Borrowers reflecting the accrued interest due and owing
and all fees due and owing hereunder. The Co-Borrowers hereby agree that on the
Business Day that any payment of principal, interest and fees are due, the Agent
shall automatically charge a demand deposit account of the Co-Borrowers, which
account shall be maintained with the Agent at all times throughout the term of
the Loan Facilities. The Co-Borrowers' authorization of the Agent to charge such
account having sufficient funds on deposit shall constitute payment of the
amount so authorized notwithstanding the Agent's failure to charge said account.
Any failure or delay by the Agent in submitting invoices for interest and fee
payments shall not discharge or relieve the Co-Borrowers of the obligation to
make such payments into the demand deposit account. All payments actually
received by the Agent pursuant to the Loan Documents for the account of the
Lenders shall be paid to them promptly after receipt thereof by the Agent.
(iii) Apportionment of Payments. So long as there does not exist an Event
of Default, all payments of principal and interest in respect of outstanding
Loans, all payments of the fees described herein and all payments in respect of
any other obligation (other than any fees payable by the Co-Borrowers solely to
the Agent under any Swap Agreement) shall be allocated amongst the Agent and the
Lenders as they may be entitled thereto as provided for herein. After the
occurrence and during the continuance of an Event of Default, the Agent may, and
shall upon the direction of the Requisite Lenders, after providing notice to the
Co-Borrowers that payments and proceeds shall be so applied, apply all payments
remitted to the Agent and all amounts and proceeds of Collateral received by the
Agent, subject to the provisions of this Loan Agreement, (a) first, to pay
Obligations in respect of any fees, expense reimbursements or indemnities then
due to the Agent from the Co-Borrowers; (b) second, to pay Obligations in
respect of any fees, expense reimbursements or indemnities then due to any
Lender from the Co-Borrowers, (c) third, to pay interest due in respect of Loans
and Reimbursement Obligations, (d) fourth, to pay or
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prepay principal of the Term Loan Facilities on a pro rata basis; (e) fifth, to
pay or prepay principal of Revolving Credit Loans and Reimbursement Obligations,
and to pay (or to the extent such Obligations are contingent, prepay or provide
cash collateral in respect of) Letter of Credit Obligations; (f) sixth, to the
ratable payment of all other non-Swap Obligations and (g) seventh, to pay Swap
Obligations; provided, however, that if sufficient funds are not available to
fund all payments to be made in respect of the Obligations owing by the
Co-Borrowers described in any of the foregoing clauses (a) through (g), the
available funds shall be allocated within the last particular clause to the
payment of such Obligations ratably, based on the proportion of the Agent's and
each Lender's interest in the aggregate outstanding Obligations described in
such clause.
The Agent shall promptly distribute to each Lender at its primary address
set forth on the appropriate signature page hereof, or at such other address as
a Lender may request in writing, such funds as it may be entitled to receive,
provided that the Agent shall in any event not be bound to inquire into or
determine the validity, scope or priority of any interest or entitlement of any
Lender and may suspend all payments or seek appropriate relief (including,
without limitation, instructions from the Requisite Lenders or an action in the
nature of an interpleader) in the event of any doubt or dispute as to any
apportionment or distribution contemplated hereby. The order of priority herein
is set forth solely to determine the rights and priorities of the Lenders as
among themselves and at any time or from time to time may be changed by the
Lenders as they may elect, in writing in accordance with Section 11.08 hereof,
without necessity of notice to or consent of or approval by the Co-Borrowers or
any other Person.
(iv) Payments on Non-Business Days. Whenever any payment to be made by the
Co-Borrowers hereunder shall be stated to be due on a day which is not a
Business Day, payments shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the payment of
interest hereunder (at the otherwise applicable rate) and of any of the fees
specified in Section 2.05 hereof, as the case may be.
(v) Agent's or Lender's Accounting. The Agent shall maintain a loan account
(hereinafter referred to as the "Loan Account") on its books in which shall be
recorded (a) the names and addresses of the Lenders and the Commitments of and
principal amount of the Term Loan Facilities, the Revolving Credit Loan Facility
and the Letter of Credit Obligations owing to, each Lender from time to time;
(b) all other appropriate debits and credits as provided in this Loan Agreement,
including, without limitation, all interest, fees, expenses, charges and other
Obligations; and (c) all payments of Obligations made by the Co-Borrowers, or
for the Co-Borrowers' account. All entries in the Loan Account shall be made in
accordance with the Agent's customary accounting practices as in effect from
time to time. The Agent will render a statement of the Loan Account monthly to
the Co-Borrowers and will deliver a copy thereof to each Lender. The Agent will
notify each Lender monthly, if any Letter of Credit Obligations with respect to
Letters of Credit issued by the Issuing Bank are outstanding on such date, and
the principal amount of such Letter of Credit Obligation owing to each Lender on
such date. Each and every such statement shall be deemed final, binding and
conclusive upon the Co-Borrowers and the Lenders in all respects as to all
matters reflected therein (if made in good faith, absent manifest error), unless
the Co-Borrowers or any Lender, within twenty (20) days after the date
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such statement is rendered, delivers to the Agent written notice of any
objection which the Co-Borrowers or such Lender may have to any such statement.
In that event, only those items expressly objected to in such notice shall be
deemed to be disputed by the Co-Borrowers or the Lenders and all of the Agent's
other entries in the Loan Account evidencing Loans, Letters of Credit and other
financial accommodations made from time to time shall be final, binding and
conclusive upon the Co-Borrowers and the Lenders (if made in good faith, absent
manifest error) as to the existence and amount of the Obligations recorded in
the Loan Account.
Section 2.08 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding other provisions of this Loan Agreement to the contrary, if any,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
(i) Amount of Eurodollar Rate Loans. Each Eurodollar Rate Loan shall
be for a minimum amount of US$100,000.00 and in integral multiples of
US$1,000.00 in excess of that amount.
(ii) Determination of Eurodollar Interest Period. By giving notice as
set forth in Section 2.01(ii) and Section 2.04(iii) hereof (with respect to
a conversion into or a continuation of Eurodollar Rate Loans), the
Co-Borrowers shall have the option, subject to the other provision of this
Section 2.08, to specify an Eurodollar Interest Period to apply to the
Borrowing of Eurodollar Rate Loans described in such notice, subject to
availability. The determination of Eurodollar Interest Periods shall be
subject to the following provisions:
(a) In the case of immediately successive Eurodollar Interest
Periods applicable to a Borrowing of Eurodollar Rate Loans, each
successive Eurodollar Interest Period shall commence on the day on
which the next preceding Eurodollar Interest Period expires;
(b) If any Eurodollar Interest Period would otherwise expire on a
day which is not a Business Day, the Eurodollar Interest Period shall
be extended to expire on the next succeeding Business Day; provided,
however, that if any such Eurodollar Interest Period applicable to a
Borrowing of Eurodollar Rate Loans would otherwise expire on a day
which is not a Business Day but is a day of the month after which no
further Business Day occurs in that month, that Eurodollar Interest
Period Shall expire on the immediately preceding Business Day;
(c) The Co-Borrowers may not select a Eurodollar Interest Period
which terminates later than (1) October 19, 2003 with respect to any
Revolving Credit Loan, (2) October 19, 2003 with respect to any Term
Loan #1 and (3) October 19, 2005 with respect to any Term Loan #2.
(d) The Co-Borrowers may not select a Eurodollar Interest Period
with respect to any portion of principal of a Eurodollar Rate Loan
which extends beyond a date on which the Co-Borrowers are required to
make a scheduled payment of any portion of principal, it being
understood and agreed that any Eurodollar Rate Loan whose Eurodollar
Interest Period ends less than one month prior to such required
principal payment date shall be deemed converted to a Prime Rate Loan
as of the last day of such Eurodollar Interest Period for purposes of
determining whether
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any portion of principal of any Eurodollar Rate Loan is required in
order to make a mandatory payment of principal; and
(e) There shall be no more than thirty (30) Eurodollar Interest
Periods under this Loan Agreement in effect at any one time.
(iii) Determination of Interest Rate. As soon as practicable after
10:00 a.m. (Philadelphia, Pennsylvania time) on any Eurodollar Interest
Rate Determination Date, the Agent shall determine (which determination
shall, absent manifest error, be presumptively correct) the interest rate
which shall apply to the Eurodollar Rate Loans for which an interest rate
is then being determined for the applicable Eurodollar Interest Period and
shall promptly give notice thereof (in writing or by telephone confirmed in
writing) to the Co-Borrowers and to each Lender.
(iv) Interest Rate Unascertainable, Inadequate or Unfair. If, with
respect to any Eurodollar Interest Period, the Agent or any Lender
determines that (a) deposits in Dollars (in the applicable amounts) are not
being offered in the relevant market for such Eurodollar Interest Period;
(b) adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate; (c) a contingency has occurred which materially and
adversely affects the London interbank Eurodollar market as a whole; or (d)
the effective cost to such Lender of funding a proposed Funding Segment of
the Eurodollar Portion from a corresponding source of funds in the London
interbank eurodollar market shall exceed the Eurodollar Rate, applicable to
such Funding Segment, the Agent shall forthwith give notice thereof to the
Co-Borrowers, whereupon until the Agent notifies the Co-Borrowers that the
circumstances giving rise to such suspension no longer exist, (1) the right
of the Co-Borrowers to elect to have Loans bear interest based upon the
Eurodollar Rate shall be suspended and (2) each outstanding Eurodollar Rate
Loan shall be converted into a Prime Rate Loan on the last day of the then
current Eurodollar Interest Period therefor, notwithstanding any prior
election by the Co-Borrowers to the contrary.
(v) Illegality. (a) In the event that on any date any Lender shall
have determined (which determination shall, absent manifest error, be final
and conclusive and binding upon all parties) that the making or
continuation of any Eurodollar Rate Loan has become unlawful by compliance
by that Lender in good faith with any Law of any Governmental Authority
(whether or not having the force of Law and whether or not failure to
comply therewith would be unlawful), then, and in any such event, such
Lender shall promptly give notice (by telephone promptly confirmed in
writing) to the Co-Borrowers and the Agent (which notice the Agent shall
promptly transmit to each Lender) of that determination.
(b) Upon the giving of the notice referred to in Section 2.08(v)(a)
above, (1) the Co-Borrowers' right to request of such Lender and such
Lender's obligation to make Eurodollar Rate Loans shall be immediately
suspended, and such Lender shall make a Revolving Credit Loan, as part of
any requested Borrowing of Eurodollar Rate Loans, as a Prime Rate Loan,
which Prime Rate Loan shall, for all purposes, be considered a part of such
Borrowing, and (2) if the affected Eurodollar Rate Loan(s) are then
outstanding, the Co-Borrowers shall immediately (or, if permitted by
applicable Law, no later than the date permitted
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thereby, upon at least one (1) Business Day's written notice to the Agent
and the affected Lender) convert each such Revolving Credit Loan into a
Prime Rate Loan.
(c) In the event that such Lender determines at any time following its
giving of the notice referred to in Section 2.08(iv) and/or Section
2.08(v)(a) above that such Lender may lawfully make Eurodollar Rate Loans
of the type referred to in such notice, such Lender shall promptly give
notice (by telephone confirmed in writing) to the Co-Borrowers and the
Agent (which notice the Agent shall promptly transmit to each Lender) of
that determination, whereupon the Co-Borrowers' right to request of such
Lender, and such Lender's obligation to make, Eurodollar Rate Loans shall
be restored.
(vi) Compensation. In addition to such amounts as are required to be
paid by the Co-Borrowers pursuant to Sections 2.04(i), 2.04(iv) and 2.04(v)
above, the Co-Borrowers shall compensate each Lender, upon demand, for all
losses, expenses and liabilities (including, without limitation, any loss
or expense incurred by reason of the liquidation or reemployment of
deposits or other funds required by such Lender to fund or maintain such
Lender's Eurodollar Rate Loans to the Co-Borrowers) which losses, expenses
and liabilities such Lender may sustain (a) if for any reason, other than
the gross negligence or willful misconduct of the Agent or such Lender, a
Borrowing, conversion or continuation of Eurodollar Rate Loans does not
occur on a date specified therefor in a Notice of Borrowing or a Notice of
Conversion/Continuation or in a telephonic request for borrowing or
conversion/continuation or a successive Eurodollar Interest Period does not
commence after notice therefor is given pursuant to Section 2.04(iii)
above, (b) if any prepayment of Eurodollar Rate Loan (including, without
limitation, any prepayment pursuant to Section 2.06 above) occurs for any
reason on a date which is not the last day of the applicable Eurodollar
Interest Period, (c) as a consequence of any required conversion of a
Eurodollar Rate Loan to a Prime Rate Loan as a result of any of the events
indicated in Section 2.08(v) above or (d) as a consequence of any other
failure by the Co-Borrowers (other than the failure of the Agent to charge
any account having sufficient funds as authorized by the Co-Borrowers
pursuant to Section 2.08(ii) above) to repay Eurodollar Rate Loans when
required by the terms of this Loan Agreement. Such Lender shall deliver to
the Co-Borrowers a written statement as to such losses, expenses and
liabilities which statement shall be conclusive as to such amounts in the
absence of manifest error.
(vii) Eurodollar Rate Taxes. The Co-Borrowers agree that:
(a) provided the Co-Borrowers shall have received a written
request therefor, together with a certificate setting forth the basis
therefor and calculation thereof, the Co-Borrowers will pay, on the
later of (1) thirty (30) days following its receipt of such request
and certificate or (2) the Business Day immediately prior to the date
upon which penalties attach thereto, all present and future stamp and
other taxes, levies, or costs and charges whatsoever imposed,
assessed, levied or collected on or in respect of a Loan solely as a
result of the interest rate being determined by reference to the
Eurodollar Rate or the provisions of this Loan Agreement relating to
the Eurodollar Rate or the recording, registration, notarization or
other formalization of any thereof or any payments of principal,
interest or other amounts made on or in respect of a Loan made to the
Co-Borrowers when the interest rate is determined by reference
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to the Eurodollar Rate (all such taxes, levies, costs and charges
being herein collectively called "Eurodollar Rate Taxes"), excluding
any of the foregoing arising out of the gross negligence or willful
misconduct of any Lender; provided, however, that Eurodollar Rate
Taxes shall not include net income or franchise taxes imposed by any
Governmental Authorities. The Co-Borrowers shall also pay such
additional amounts equal to increases in Eurodollar Rate Taxes
attributable to payments made by the Co-Borrowers pursuant to this
clause (a). Promptly after the date on which payment of any such
Eurodollar Rate Tax is due pursuant to the preceding sentence, the
Co-Borrowers will, at the request of such Lender, furnish to such
Lender evidence, in form and substance satisfactory to such Lender,
that the Co-Borrowers have met their obligation under this Section
2.08(vii); and
(b) the Co-Borrowers will indemnify each Lender against, and
reimburse each Lender on demand for, any Eurodollar Rate Taxes paid by
such Lender in respect of a Loan made to the Co-Borrowers, as
determined by such Lender in its reasonable business judgment,
provided that the Lender shall have provided the Co-Borrowers with (1)
appropriate receipts for any payments or reimbursements made by the
Co-Borrowers pursuant to this clause (b) and (2) such information as
may reasonably be required to indicate the basis for such Eurodollar
Rate Taxes; provided, however, that if a Lender subsequently recovers,
or receives a net tax benefit with respect to, any amount of
Eurodollar Rate Taxes previously paid or indemnified by the
Co-Borrowers pursuant to this Section 2.08(vii)(a) or (b), such Lender
shall, within thirty (30) days after receipt of such refund, and to
the extent permitted by applicable Law, pay to the Co-Borrowers the
amount of any such recovery or net tax benefit. The amount of
Eurodollar Rate Taxes due pursuant to the provisions of this Section
2.08(b) shall only be payable to the extent such Eurodollar Rate Taxes
exceed the amount paid pursuant to Section 2.08(vii)(a) below.
(c) Notwithstanding anything contained in this Section 2.08 to
the contrary, the provisions of Section 2.11 hereof applicable to
Taxes shall be fully applicable, mutatis mutandis, to Eurodollar Rate
Taxes, and the Co-Borrowers shall not be required to pay any amount
under this Section 2.08 that would not be payable after taking into
account the provisions of such Section 2.11 below, including, without
limitation, any limitation on the amount payable to the Co-Borrowers
pursuant to subsections (iii) through (ix) inclusive of such Section
2.11 below.
(viii) Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of, any of its
branch offices, agencies or the office of a Eurodollar Affiliate of that
Lender; provided, however, no such Lender shall be entitled to receive any
greater amount under Section 2.04(vi) or Section 2.08(vii) above as a
result of the transfer of any such Eurodollar Rate Loan than such Lender
would be entitled to immediately prior thereto unless (a) such transfer
occurred at a time when circumstances giving rise to the claim for such
greater amount did not exist and were not reasonably foreseeable in the
view of such Lender and (b) such claim would have arisen even if such
transfer had not occurred.
(ix) Affiliates Not Obligated. Unless expressly provided herein, no
Eurodollar Affiliate or other Affiliate of any Lender shall be deemed a
party to this Loan Agreement or shall
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have any rights, liability or obligation under this Loan Agreement.
Section 2.09 Increased Capital. If either (i) the introduction of or any
change in or in the interpretation of any Law or regulation or (ii) compliance
by any Lender with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) affects or would affect
the amount of capital required or expected to be maintained by such Lender or
any corporation controlling such Lender and such Lender determines that the
amount of such capital is increased by or based upon the existence of such
Lender's Commitment and other commitments of this type or upon the existence of
Letters of Credit (or similar contingent obligations), then, upon demand by such
Lender, together with the certificate referred to in the last sentence of this
Section 2.09, the Co-Borrowers shall immediately pay to such Lender, from time
to time as specified by such Lender, additional amounts sufficient to compensate
such Lender for any loss in its net yield from the transactions contemplated by
this Loan Agreement in the light of such circumstances, to the extent that such
Lender determines such increase in capital to be allocable to the existence of
such Lender's Commitment or to the issuance or maintenance of any Letter of
Credit for the account of the Co-Borrowers. A certificate as to such amounts,
together with calculations evidencing such additional amount and the law, rule,
interpretation, regulation or guideline with respect thereto, submitted to the
Co-Borrowers by such Lender, shall, in the absence of manifest error, be
conclusive and binding for all purposes.
Section 2.10 Authorized Officers of the Co-Borrowers. The Co-Borrowers
shall notify the Agent in writing of the names of the officers and employees
authorized to request Loans and Letters of Credit and to request a
conversion/continuation of any Loan and shall provide the Agent with a specimen
signature of each such Authorized Officer. The Agent and each of the Lenders
shall be entitled to rely conclusively on such officer's or employee's authority
to request such Loan or Letter of Credit or such conversion/continuation until
the Agent receives written notice to the contrary. Neither the Agent nor any of
the Lenders shall have any duty to verify the authenticity of the signature
appearing on any written Notice of Borrowing or Notice of
Conversion/Continuation which it believes in good faith and absent gross
negligence has been signed or presented by the proper party or parties and, with
respect to an oral request for such a Loan or Letter of Credit or such
conversion/continuation, neither the Agent nor any of the Lenders shall have any
duty to verify the identity of any Person representing himself as one of the
officers or employees authorized to make such request on behalf of the
Co-Borrowers. Neither the Agent nor any Lender shall incur any liability to the
Co-Borrowers in acting upon any telephonic notice referred to above which the
Agent believes in good faith and absent gross negligence to have been given by a
duly Authorized Officer or other person authorized to borrow on behalf of the
Co-Borrowers or for otherwise acting in good faith under this Section 2.10.
Section 2.11 Taxes.
(i) Payments Net of Taxes. Provided that each Lender and the Agent shall
have complied with the provisions of Section 2.11(iii), all payments made by the
Co-Borrowers under this Loan Agreement or any other Loan Document shall be made
free and clear of, and without reduction or withholding for or on account of,
any present or future income, stamp or
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other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, including, without limitation, any taxes assessed by the
United States, any State in the United States, Canada and/or any Province in
Canada, and all liabilities with respect thereto, excluding
(a) in the case of the Agent and each Lender, net income or franchise
taxes imposed on the Agent or such Lender by the jurisdiction under the
laws of which the Agent or such Lender is organized or any political
subdivision or taxing authority thereof or therein or as a result of a
connection between such Lender and any jurisdiction (whether or not
attributable to the transactions contemplated hereby), and
(b) in the case of each Lender, net income or franchise taxes imposed
by any jurisdiction in which such Lender's lending offices which make or
book loans are located or any political subdivision or taxing authority
thereof or therein (all such nonexcluded taxes, levies, imposts, duties,
deductions, charges, fees or withholdings of such Governmental Authorities,
including, without limitation, any taxes assessed by the United States, any
State in the United States, Canada and/or any Province in Canada, being
hereinafter referred to as the "Taxes"). If any Taxes are required to be
withheld or deducted from any amounts payable to the Agent or any Lender
under this Loan Agreement or any other Loan Document, the Co-Borrowers
shall pay the relevant amount of such Taxes and the amounts so payable to
the Agent or such Lender shall be increased to the extent necessary to
yield to the Agent or such Lender (after payment of all Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Loan Agreement and the other Loan Documents. Whenever any
Taxes are paid by the Co-Borrowers with respect to payments made in
connection with this Loan Agreement or any other Loan Document, as promptly
as possible thereafter, the Co-Borrowers shall send to the Agent for its
own account or for the account of such Lender, as the case may be, a
certified copy of an original official receipt received by the Co-Borrowers
showing payment thereof.
(ii) Indemnity. Provided that each Lender and the Agent shall have complied
with the provisions of Section 2.11(iii) below, the Co-Borrowers hereby agree to
indemnify the Agent and each of the Lenders for the full amount of all Taxes
attributable to payments by or on behalf of the Co-Borrowers hereunder or under
any of the other Loan Documents paid by the Agent or such Lender (including any
incremental Taxes, interest or penalties that may become payable by the Agent or
such Lender as a result of any failure to pay such Taxes), whether or not such
Taxes were correctly or legally asserted, excluding any of the foregoing arising
out of the Agent's or any Lender's gross negligence or willful misconduct. The
amount of Taxes due pursuant to the preceding sentence shall only be payable to
the extent such Taxes exceed the amount of Taxes paid pursuant to Section
2.11(i) above. Such indemnification shall be made within thirty (30) days from
the date such Lender or the Agent, as the case may be, makes written demand
therefrom together with the calculation thereof and the basis therefor.
(iii) Withholding and Backup Withholding. (a) Each Lender (other than the
Canadian Lenders providing Canadian Loans) that is incorporated or organized
under the Laws of any jurisdiction other than the United States or any State
thereof agrees that, on or prior to the
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date any payment is due to be made to it hereunder or under any other Loan
Document in connection with its Revolving Credit Commitment, Term Loan #1
Commitment and Term Loan #2 Commitment for Loans and Letters of Credit which are
to be booked in the United States, as directed by the Co-Borrowers, it will
furnish to the Co-Borrowers and the Agent:
(1) two valid, duly completed copies of United States Internal Revenue
Service Form 4224 or United States Internal Revenue Form 1001 or successor
applicable form, as the case may be, certifying in each case that such
Lender is entitled to receive payments under this Loan Agreement and the
other Loan Documents without deduction or withholding of any United States
federal income taxes; and
(2) a valid, duly completed Internal Revenue Service Form W8 or W9 or
successor applicable form, as the case may be, to establish an exemption
from United States backup withholding tax.
Each Lender which so delivers to the Co-Borrowers and the Agent a Form 1001 or
4224 and Form W8 or W9, or successor applicable forms agrees to deliver to the
Co-Borrowers and the Agent two further copies of the said Form 1001 or 4224 and
Form W8 or W9, or successor applicable forms, or other manner of certification,
as the case may be, on or before the date that any such form expires or becomes
obsolete or otherwise is required to be resubmitted as a condition to obtaining
an exemption from withholding tax, or after the occurrence of any event
requiring a change in the most recent form previously delivered by it, and such
extensions or renewals thereof as may reasonably be requested by the
Co-Borrowers and the Agent, certifying in the case of a Form 1001 or Form 4224
that such Lender is entitled to receive payments under this Loan Agreement or
any other Loan Document without deduction or withholding of any United States
federal income taxes, unless a change of Law has occurred prior to the date on
which any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such letter or form with respect to it and such Lender advises
the Co-Borrowers and the Agent that it is not capable of receiving payments
without any deduction or withholding of United States federal income tax, and in
the case of a Form W8 or W9, establishing an exemption from United States backup
withholding tax. If the form provided by the Lender or the Agent (other than in
the event of a change in law) indicates a withholding tax in excess of zero,
then such withholding tax shall be considered excluded from Taxes and no payment
shall be due under this Section 2.11 with respect to such withholding tax.
(b) Each Canadian Lender that is incorporated or organized under the Laws
of any jurisdiction other than Canada or any Province of Canada agrees that, on
or prior to the date any payment is to be made to it hereunder or under any
other Loan Document in connection with its Revolving Credit Commitment and Term
Loan #1 Commitment for Loans and Letters of Credit which are to be booked in
Canada, as directed by the Co-Borrowers, it will furnish or will have previously
furnished to the Canadian Borrower and the Agent a Certificate of Residency, in
a form reasonably acceptable to the Agent.
(iv) Any Lender or the Agent claiming amounts payable under this Section
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2.11 or Section 2.08(vii) of this Loan Agreement shall use reasonable efforts to
mitigate taxes (e.g., changing the jurisdiction of its lending office) if such
efforts would reduce the amounts payable under this Section 2.11 or Section
2.08(vii) of this Loan Agreement.
(v) Upon the payment in full to a Lender or the Agent with respect to Taxes
or Eurodollar Rate Taxes under this Section 2.11 or Section 2.08(vii) the
Co-Borrowers shall be subrogated to all rights of the applicable Lender or the
Agent to seek recovery or reimbursement from any Person of such amounts.
Provided a Lender has complied with the terms of this Section 2.11 and Section
11.02 of this Loan Agreement, there shall be no right of the Co-Borrowers to
recover or receive reimbursement against or from said Lender or the Agent for
foreign tax credits in respect of said Lender's taxable income in respect of
such Taxes or Eurodollar Rate Taxes. Each Lender and the Agent shall reasonably
assist the Co-Borrowers to recover amounts paid pursuant to this Section 2.11 or
Section 2.08(vii) from the relevant taxing authority. If a Lender or the Agent
subsequently recovers, or receives a net tax benefit with respect to any amount
of Taxes or Eurodollar Rate Taxes paid or indemnified by the Co-Borrowers, then
such Lender or the Agent, as applicable, shall pay to the Co-Borrowers the
amount of any such recovery or net tax benefit within thirty (30) days of the
receipt of such refund.
(vi) Unless the Co-Borrowers have given their prior written consent, none
of the Lenders or the Agent shall be entitled to a payment under this Section
2.11 or Section 2.08(vii) of this Loan Agreement with respect to Taxes or
Eurodollar Rate Taxes which resulted directly from the Agent's or a Lender's
change in account, branch or office.
(vii) None of the Lenders or the Agent shall be entitled to a payment under
this Section 2.11 or Section 2.08(vii) to the extent such payment arises out of
the Lender's or the Agent's gross negligence or willful misconduct.
(viii) No amounts will be payable under this Section 2.11 to the extent
that such amounts have been covered pursuant to another section of this Loan
Agreement.
(ix) All payments made pursuant to this Section 2.11 or Section 2.08(vii)
shall be treated by the relevant parties as additional interest hereunder.
Section 2.12 Security for the Loan Facilities. As security for the due and
punctual payment and performance of the Obligation of the Co-Borrowers under the
Loan Documents, the Co-Borrowers shall execute, or cause to be executed, and
deliver to the Agent, for the benefit of all of the Lenders, the Collateral
Documents.
Section 2.13 Currency Fluctuations.
(i) Not later than 1:00 P.M. (Philadelphia, Pennsylvania time) on the last
Business Day of each calendar month (hereinafter referred to as the "Calculation
Date"), the Agent shall determine the Exchange Rate as of such date. The
Exchange Rate so determined shall become effective on the first Business Day
immediately following such determination
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(hereinafter referred to as a "Reset Date") and shall remain effective until the
next succeeding Reset Date.
(ii) Not later than 4:00 P.M. (Philadelphia, Pennsylvania time) on each
Reset Date, the Agent shall determine the Dollar Equivalent of the outstanding
Canadian Loans, Canadian Bankers Acceptances (without discount) and Canadian
Letters of Credit denominated in Canadian Dollars.
(iii) If, on any Reset Date and on the Term Loan #1 Maturity Date and the
Revolving Credit Termination Date, the aggregate outstanding amount (expressed
in U.S. Dollars) of all Canadian Loans, Canadian Letter of Credit Obligations
and the aggregate face amount of all outstanding Canadian Bankers Acceptances
(without discount) exceeds the sum of the sum of the Canadian Term Loan Sublimit
and the Canadian Revolving Credit Sublimit expressed in U.S. Dollars
(hereinafter such sum being referred to as the "Maximum Canadian Exposure") by
more than US$100,000.00, then (i) the Agent shall give notice thereof to the
Canadian Borrower and the Canadian Lenders and (ii) within two (2) Business Days
thereafter, the Canadian Borrower shall repay or prepay Canadian Loans in
accordance with this Agreement in an aggregate principal amount such that, after
giving effect thereto, the aggregate outstanding amount (expressed in U.S.
Dollars) of all Canadian Loans, Canadian Letter of Credit Obligations and the
aggregate face amount (without discount) of all outstanding Canadian Bankers
Acceptances no longer exceeds the Maximum Canadian Exposure; provided that
nothing herein shall diminish the Canadian Borrower's obligation to repay in
full all Obligations in respect of the Term Loan on the Term Loan Maturity Date
and to repay in full all Obligations in respect of the Revolving Credit Loans
owed by the Canadian Borrower on the Revolving Credit Termination Date.
(iv) Without limiting Section 2.13(iii), if, on any day prior to the Term
Loan Maturity Date, the aggregate outstanding amount (expressed in U.S. Dollars)
of all Canadian Loans, the Canadian Letter of Credit Obligations and the
aggregate face amount of all outstanding Canadian Bankers Acceptances (without
discount) exceeds the Maximum Canadian Exposure by five percent (5%) or more,
then (a) the Agent shall give notice thereof to the Canadian Borrower and the
Canadian Lenders and (b) within two (2) Business Days thereafter, the Canadian
Borrower shall repay or prepay Canadian Loans in accordance with this Agreement
in an aggregate principal amount such that, after giving effect thereto, the
aggregate outstanding amount (expressed in U.S. Dollars) of all Canadian Loans,
the Canadian Letter of Credit Obligations and the aggregate face amount of all
outstanding Canadian Bankers Acceptances (without discount) no longer exceeds
the Maximum Canadian Exposure. Nothing set forth in this Section 2.13 shall be
construed to require the Agent to calculate daily compliance under this Section
2.13.
(v) To the extent the repayments and prepayments referenced in Sections
2.13(iii) and 2.13(iv) are such that, after giving effect thereto, the Canadian
Letter of Credit Obligations and the aggregate face amount of all outstanding
Canadian Bankers Acceptances (without discount) still exceeds the Maximum
Canadian Exposure (expressed in U.S. Dollars), then the Canadian Borrower shall
immediately upon demand provide cash collateral to the Agent
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required to obtain such results.
Section 2.14 Joint and Several Liability. The Co-Borrowers hereby
acknowledge, covenant and agree that all Obligations, liabilities and covenants
made, incurred and undertaken by them under this Loan Agreement and the other
Loan Documents are on a joint and several basis, including, without limitation,
all obligations to pay principal, interest, fees and expenses.
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ARTICLE III
CONDITIONS TO THE LOAN FACILITIES
Section 3.01 Conditions Precedent to the Effectiveness of this Loan
Agreement. This Loan Agreement shall become effective on the Closing Date when
the following conditions precedent have been satisfied (unless waived by the
Requisite Lenders or unless the deadline for delivery has been extended by the
Agent):
(i) Certain Documents. The Agent shall have received on or before the
Closing Date all of the following, all of which, except as otherwise
specifically described below, shall be in form and substance satisfactory to the
Requisite Lenders and in sufficient copies for each of the Lenders:
(a) This Loan Agreement, together with all Exhibits and Schedules
attached hereto;
(b) A Notice of Borrowing pursuant to Section 2.01, Section 2.02 and
Section 2.03 hereof dated the Closing Date and executed by the
Co-Borrowers;
(c) A Revolving Credit Loan Note made payable to Mellon Bank, N.A.;
(d) A Revolving Credit Loan Note made payable to Mellon Bank Canada;
(e) A Term Loan #1 Note made payable to Mellon Bank, N.A.;
(f) A Term Loan #1 Note made payable to Mellon Bank Canada;
(g) A Term Loan #2 Note made payable to Mellon Bank, N.A.;
(h) The Security Agreements;
(i) The Pledge of Stock Agreements;
(j) The Agreement of Guaranty;
(k) Each existing and new UCC-1 Financing Statement filing or
financing statement registration under the Personal Property Security Acts
of Ontario and Nova Scotia signed by the Co-Borrowers;
(l) Opinions addressed to the Agent and each Lender, dated the Closing
Date, of counsel to the Co-Borrowers, the Corporate Guarantors, the
Partnership Guarantor and other applicable Persons covering the matters
addressed in Exhibit "K" hereto and
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such other matters as may be requested by the Agent, all in form and
substance reasonably satisfactory to the Agent; and
(m) Certificates of the Secretary or Assistant Secretary of the
Co-Borrowers, their Subsidiaries and Affiliates dated the Closing Date
certifying (1) the names and true signatures of the incumbent officers of
the Co-Borrowers, their Subsidiaries and Affiliates authorized to sign this
Loan Agreement and all other Loan Documents executed by the Co-Borrowers,
their Subsidiaries and Affiliates in connection with this Loan Agreement,
(2) the ByLaws of the Co-Borrowers, their Subsidiaries and Affiliates as in
effect on the date of such certification, (3) the resolutions of the
Co-Borrowers', their Subsidiaries' and Affiliates' respective Board of
Directors approving and authorizing the execution, delivery and performance
of this Loan Agreement and all other Loan Documents executed by the
Co-Borrowers, their Subsidiaries and Affiliates in connection therewith, or
filed by the Co-Borrowers, their Subsidiaries and Affiliates and (4) that
there have been no changes in the Certificate of Incorporation of the
Co-Borrowers, their Subsidiaries and Affiliates since the date of the most
recent certification thereof by the office of the appropriate Governmental
Authority delivered to the Agent prior to the Closing Date;
(n) The Certificates of Incorporation of the Co-Borrowers, their
Subsidiaries and Affiliates, as amended, modified or supplemented to the
Closing Date, which shall be certified to be true, correct and complete by
the office of the appropriate Governmental Authority delivered to the Agent
prior to the Closing Date;
(o) Good Standing Certificates or Certificates of Status certified by
the office of the appropriate Governmental Authority, relating to the
Co-Borrowers, their Subsidiaries and Affiliates for each of the states,
provinces and countries in which the Co-Borrowers, their Subsidiaries and
Affiliates are qualified to conduct business;
(p) Projected consolidated balance sheets, income statements and cash
flow projections for the Co-Borrowers, their Subsidiaries and Affiliates
for the Fiscal Years 1999 through 2006 and such other financial information
(including any annual or quarterly financial statements of the
Co-Borrowers, their Subsidiaries and Affiliates) as the Agent or the
Requisite Lenders may reasonably request;
(q) Evidence of the insurance required by the terms of the Collateral
Documents, containing the endorsements required by such Collateral
Documents and this Loan Agreement;
(r) A contemporaneous search of UCC, Personal Property Security Act
(and corresponding personal property security registries in Nova Scotia,
Canada) real property, tax, judgment and litigation dockets and records and
other appropriate registers shall have revealed no filings or recordings in
effect with respect to (1) the Collateral purported to be covered by the
Collateral Documents and (2) the Co-Borrowers, their Subsidiaries and
Affiliates, except such as are acceptable to the Agent (it being understood
that such acceptance does not limit the obligations of the Co-Borrowers
with respect to the priority of the Liens in favor of the
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Agent) and the Agent shall have received a copy of the search reports
received as a result of the search;
(s) The partnership agreement for the Partnership Guarantor shall be
certified to be true, correct and complete by the Partnership Guarantor as
of the Closing Date;
(t) Such additional documentation as the Agent or the Requisite
Lenders may reasonably require.
(ii) Fees and Expenses Paid. The Co-Borrowers shall have paid to the Agent,
for its own account and for the account of each Lender, as applicable, all fees
and expenses due and payable under this Loan Agreement, if any, on or before the
Closing Date.
(iii) Representations and Warranties. All of the representations and
warranties of the Co-Borrowers, their Subsidiaries and Affiliates contained in
subsections (i) through (xxxvii) of Section 4.01 hereof and in any other Loan
Document (other than for changes permitted or contemplated by this Loan
Agreement and/or the Agreement of Guaranty) shall be true and correct in all
material respects on and as of the Closing Date as though made on and as of that
date (except any such representations and warranties stated to be given on a
specific date other than the Closing Date).
(iv) No Default. No Event of Default or Potential Event of Default
hereunder or under the other Loan Documents shall have occurred and be
continuing on the Closing Date.
(v) No Injunction. No Requirements of Law shall prohibit, and no order,
judgment or decree of any Governmental Authority shall and, except as set forth
on Schedule 4.01(vii) hereto, no litigation shall be pending or threatened which
in the reasonable judgment of the Agent or Requisite Lenders would, enjoin,
prohibit restrain, impose or result in the imposition of any material adverse
condition upon the consummation of the transactions contemplated hereby.
(vi) Collateral Information . The Agent shall have received complete and
accurate information from the Co-Borrowers with respect to the name and the
location of the principal place of business and chief executive office for the
Co-Borrowers, their Subsidiaries and Affiliates.
(vii) Consents. The Co-Borrowers, the Corporate Guarantors and the
Partnership Guarantor shall have received all consents and authorizations
required pursuant to any material contractual obligation with any other Person
and shall have obtained all consents and authorizations of, and effected all
notices to and filings with, any Governmental Authority, in each case, as may be
necessary to allow the Co-Borrowers, the Corporate Guarantor and the Partnership
Guarantor lawfully (a) to execute, deliver and perform, in all material
respects, their respective obligations under this Loan Agreement, the other Loan
Documents to which they are, or are to be, a party and each other agreement or
instrument to be executed and delivered by them pursuant thereto or in
connection therewith and (b) to create and perfect or continue the
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perfection of the Liens on the Collateral to be owned by them in the manner and
for the purpose contemplated by the Collateral Documents.
(viii) No Material Adverse Effect. No Material Adverse Effect shall have
occurred since the date of the most recent annual "audited" financial report of
the Co-Borrowers, their Subsidiaries and Affiliates delivered to the Agent and
the Requisite Lenders through the Closing Date, as to the condition (financial
or otherwise), operations, performance, properties or prospects of the
Co-Borrowers, their Subsidiaries and Affiliates.
Section 3.02 Conditions Precedent to All Loans and Letters of Credit. The
obligation of each Lender to make any Loan requested to be made by it, and of
the Issuing Bank to issue any Letter of Credit, on any date, is subject to the
following conditions precedent as of such date:
(i) Notice of Borrowing. With respect to a request for a Revolving Credit
Loan, the Agent shall have received in accordance with the provisions of Section
2.0l(ii) hereof, on or before any Borrowing Date, an original or facsimile, duly
executed, Notice of Borrowing. With respect to a request for a Term Loan #1,
including a Canadian Term Loan, the Agent shall have received in accordance with
the provisions of Section 2.02(ii) hereof, on or before the Closing Date, an
original or facsimile, duly executed, Notice of Borrowing. With respect to a
request for a Term Loan #2, the Agent shall have received in accordance with the
provisions of Section 2.03(ii) hereof, on or before the Closing Date, an
original or facsimile, duly executed, Notice of Borrowing.
(ii) Application for Letters of Credit. With respect to a request
for the issuance of a Letter of Credit, the Agent shall have received in
accordance with the provisions of Section 2.01(vi) hereof, on or before the date
of issuance, an original and duly executed Letters of Credit Reimbursement
Agreement.
(iii) Additional Matters. As of the Borrowing Date for any Loan or the date
of issuance of any Letter of Credit:
(a) Representations and Warranties.All of the representations and
warranties of the Co-Borrowers, their Subsidiaries and Affiliates contained
in Sections 4.01(i) through (xxxvii) hereof and in any other Loan Document
(other than representations and warranties which expressly speak only of a
different date and other than for changes permitted or contemplated by this
Loan Agreement) shall be true and correct in all material respects on and
as of such Borrowing Date, as though made on and as of such date;
(b) No Default. No Event of Default or Potential Event of Default
shall have occurred and be continuing or would result from the making of
the requested Loan or the issuance of the requested Letter of Credit;
(c) No Injunction. No law or regulations shall prohibit, and no order,
judgment or decree of any Governmental Authority shall, and, except as set
forth on Schedule 4.01(vii) hereto, no litigation shall be pending or
threatened which in the judgment of the Agent
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or the Requisite Lenders would, enjoin, prohibit, restrain, impose or
result in the imposition of any material adverse condition upon, (1) any
Lender from making the Loan requested to be made on the Borrowing Date or
(2) the Issuing Bank, as the case may be, from issuing the Letter of Credit
requested to be issued on the Borrowing Date; and
(d) No Material Adverse Change. No Material Adverse Effect shall have
occurred after the Closing Date.
Each submission by the Co-Borrowers to the Agent of a Notice of Borrowing
with respect to a Loan and the acceptance by the Co-Borrowers of the proceeds of
each such Loan made hereunder, or the request for the issuance of a Letter of
Credit and the issuance of such Letter of Credit, shall constitute a
representation and warranty by the Co-Borrowers as of the Borrowing Date in
respect of such Loan and the date of issuance of any Letter of Credit that all
the conditions contained in this Section 3.02 have been satisfied.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties on the Closing Date. In order
to induce the Agent and the Lenders to enter into this Loan Agreement, the
Co-Borrowers hereby represent and warrant to the Agent and the Lenders that the
following statements are true, correct and complete on and as of the Closing
Date:
(i) Organization; Corporate Powers. Each of the Co-Borrowers and
their Subsidiaries (a) is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its respective incorporation
or formation, (b) is duly qualified to conduct business as a foreign corporation
and is in good standing under the Laws of each jurisdiction in which it owns or
leases real property or in which the nature of its business requires it to be so
qualified and (c) has all requisite power and authority to own, operate and
encumber its property and assets and to conduct its business as presently
conducted and as proposed to be conducted in connection with and following the
consummation of the transactions contemplated by the Loan Documents. The
Certificate of Authority to Conduct Business in the Commonwealth of Virginia has
been revoked for DRS. DRS is diligently proceeding to have its Certificate of
Authority to Conduct Business in the Commonwealth of Virginia reinstated and, as
of the Closing Date, has made proper application therefor. In addition, DRS
Ahead Technology, Inc is not presently in good standing under the law of the
State of Wisconsin solely for failure to file its 1998 annual report with the
appropriate Governmental Authorities. DRS Ahead Technology, Inc. is diligently
proceeding to have its good standing reinstated with the State of Wisconsin. In
addition, DRS Photronics, Inc is not presently in good standing under the law of
the State of New York solely for failure to file its 1998 annual report with the
appropriate Governmental Authorities. DRS Photronics, Inc. is diligently
proceeding to have its good standing reinstated with the State of New York.
(ii) Authority. (a) Each of the Co-Borrowers and Corporate Guarantors has
the requisite corporate power and authority (1) to execute, deliver and perform
each of the Loan Documents executed by it, or to be executed by it and (2) to
file the Loan Documents filed by it, or to be filed by it, with the appropriate
Governmental Authority.
(b) The Partnership Guarantor has the requisite power and authority (1) to
execute, deliver and perform each of the Loan Documents executed by it, or to be
executed by it and (2) to file the Loan Documents filed by it, or to be filed by
it, with the appropriate Governmental Authority.
(c) The execution, delivery and performance (or filing, as the casemay be)
of each of the Loan Documents to which it is a party and the consummation of the
transactions contemplated thereby, have been duly authorized by the Board of
Directors of said Co-Borrower or Corporate Guarantor and no further corporate
proceedings on the part of said Co-Borrower or Corporate Guarantor are necessary
to consummate such transactions.
(d) Each of the Loan Documents to which said Co-Borrower, Corporate
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Guarantor or Partnership Guarantor is a party has been duly executed and
delivered (or filed, as the case may be) by said Co-Borrower, Corporate
Guarantor or Partnership Guarantor and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
(iii) Subsidiaries and Ownership of Capital Stock. As of the Closing Date,
DRS has twenty-one (21) direct and indirect Subsidiaries. In addition, DRS FPA,
L.P. and the Partnership Guarantor are Affiliates of DRS. Except for DRS, the
Pledge of Stock Agreements set forth the number of authorized, issued and
outstanding shares of each class of capital stock of the Co-Borrowers and their
Subsidiaries. Except for DRS, 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 Co-Borrowers and their Subsidiaries 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, except as set forth on Schedule 4.01(iii) attached hereto.
The outstanding capital stock of all of the Co-Borrowers and their Subsidiaries
has been duly authorized, validly issued, fully paid and nonassessable and is
not Margin Stock; provided upon the liquidation or dissolution of DRS Flight
Safety the equity owners of DRS Flight Safety (and not the Agent or any of the
Lenders) would be liable for the unsatisfied obligations of DRS Flight Safety to
the extent the assets are insufficient to cover the liabilities.
(iv) No Conflict. The execution and delivery by the Co-Borrowers, the
Corporate Guarantors and the Partnership Guarantor of each Loan Document and the
performance of each of the transactions contemplated thereby do not and will not
(a) to the best knowledge of the Co-Borrowers, constitute a tortious
interference with any Contractual Obligation of the Co-Borrowers, the Corporate
Guarantors and/or the Partnership Guarantor, (b) conflict with or violate the
Co-Borrowers', their Subsidiaries' and/or Affiliates' and/or the Corporate
Guarantors' Certificates of Incorporation or ByLaws, (c) conflict with or
violate the Partnership Guarantor's partnership agreement, (d) conflict with,
result in a breach of or constitute (with or without notice or lapse of time or
both) a default under any Requirement of Law, subject to clause (a) above, or
require termination of any Contractual Obligation, the consequences of which
conflict or default or termination are reasonably likely to have a Material
Adverse Effect, (e) result in or require the creation or imposition of any Lien
whatsoever upon any of the properties or assets of the Co-Borrowers (other than
Liens in favor of the Agent permitted pursuant to Section 7.02(ii) hereof) or
(f) require any approval of stockholders, other than as otherwise obtained.
(v) Governmental Consents. The execution, delivery and performance of each
Loan Document and 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 filings, consents or
notices which have been, or will in due course, be made, obtained or given.
(vi) Governmental Regulation. The Co-Borrowers, their Subsidiaries and
Affiliates are not subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, the
Investment Company Act of 1940 or any other Law such that the Co-Borrowers',
their Subsidiaries' and/or Affiliates' ability to incur indebtedness is limited
or its ability to consummate the transactions contemplated hereby is materially
impaired.
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(vii) Litigation; Adverse Effects. (a) Except as set forth in Schedule
4.01(vii) attached hereto, there is no claim, request for equitable adjustment,
termination for convenience or default, action, suit, proceeding, audit,
governmental investigation or arbitration, at law or in equity, or before or by
or against any Governmental Authority, pending, or to the knowledge of the
Co-Borrowers, threatened against the Co-Borrowers, their Subsidiaries or
Affiliates or any Property of the Co-Borrowers, their Subsidiaries or Affiliates
which is reasonably likely to (1) result in any Material Adverse Effect, (2)
materially and adversely affect the ability of the Co-Borrowers, their
Subsidiaries and Affiliates to perform their respective obligations under the
Law, any material Contractual Obligation and/or the Loan Documents or (3)
materially and adversely affect the ability of the Co-Borrowers, their
Subsidiaries and/or Affiliates to perform their collective Obligations or the
Lenders' ability to enforce such Obligations.
(b) The Co-Borrowers, their Subsidiaries or Affiliates are not (1) in
violation of any applicable Law which violation has or is reasonably likely to
have a Material Adverse Effect or (2) subject to or in default with respect to
any final judgment, writ, injunction, decree, rule or regulation of any court or
Governmental Authority which has or is reasonably likely to have a Material
Adverse Effect. Except as set forth in Schedule 4.01(vii) attached hereto, there
is no action, suit, proceeding or investigation pending or, threatened against
or affecting the Co-Borrowers, their Subsidiaries or Affiliates challenging the
validity or the enforceability of any of the Loan Documents.
(viii) No Material Adverse Change. Since June 30, 1998, no material adverse
change has occurred in the condition (financial or otherwise), operations or
performance of the Co-Borrowers, their Subsidiaries or Affiliates, or the
ability of the Co-Borrowers, their Subsidiaries or Affiliates to perform their
Obligations under the Loan Documents.
(ix) Payment of Taxes. All tax returns and reports of the Co-Borrowers,
their Subsidiaries and Affiliates required to be filed, have been timely filed
(or appropriate extensions of time for the filing of same have been timely
requested), 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 Generally Accepted Accounting Principles, such taxes as are
being contested in good faith by appropriate proceedings or such filings or
taxes the failure to file or to make payment of which when due and payable would
not have, in the aggregate, a Material Adverse Effect. The Co-Borrowers have no
knowledge of any proposed written tax assessment against the Co-Borrowers, their
Subsidiaries and Affiliates that is reasonably likely to have a Material Adverse
Effect, which is not being actively contested in good faith by the Co-Borrowers,
their Subsidiaries and Affiliates.
(x) Material Adverse Agreements. The Co-Borrowers, their Subsidiaries and
Affiliates are not a party to or subject to any Contractual Obligation or other
restriction contained in their respective Certificates of Incorporation, ByLaws,
partnership agreements or similar governing documents which is reasonably likely
to have a Material Adverse Effect.
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(xi) Performance. The Co-Borrowers, their Subsidiaries and Affiliates are
not in default in the performance, observance or fulfillment of any of the
material obligations, covenants or conditions contained in any Contractual
Obligation applicable to them, 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, in each case, except where the consequences, direct or
indirect, of such default or defaults, if any, are not reasonably likely to have
a Material Adverse Effect.
(xii) Securities Activities. The Co-Borrowers, their Subsidiaries and
Affiliates are not engaged principally in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
(xiii) Requirements of Law. The Co-Borrowers, their Subsidiaries and
Affiliates have no actual knowledge of any noncompliance with respect to all
Requirements of Law applicable to the Co-Borrowers, their Subsidiaries and
Affiliates and their respective businesses, and to the Co-Borrowers' knowledge,
the Co-Borrowers, their Subsidiaries and Affiliates are not charged with, under
investigation with respect to, any violation of any such Requirements of Law,
except where a non-compliance or violation of all Requirements of Law would not
reasonably be likely to result in a Material Adverse Effect.
(xiv) Patents, Trademarks, Permits, etc. The Co-Borrowers, their
Subsidiaries and Affiliates own, are licensed to use or otherwise have the
lawful right to use, or have all permits and other governmental approvals,
patents, trademarks, trade names, copyrights, technology, knowhow and processes
used in or necessary for the conduct of their respective businesses as currently
conducted, except as would not reasonably be likely to have a Material Adverse
Effect. To the Co-Borrowers' knowledge, the use of such permits and other
governmental approvals, patents, trademarks, trade names, copyrights,
technology, know how and processes by the Co-Borrowers, their Subsidiaries and
Affiliates does not infringe on the rights of any Person, subject to such claims
and infringements and do not, in the aggregate, give rise to any liability on
the part of the Co-Borrowers, their Subsidiaries and Affiliates which has or is
reasonably likely to have a Material Adverse Effect. As of the Closing Date, the
Co-Borrowers, their Subsidiaries and Affiliates have no filings or registrations
for patents, trademarks or tradenames in the United States Patent and Trademark
Office or the Canadian Intellectual Property Office (for patents, trademarks,
copyrights or otherwise), except for the following patents, patent applications
and licenses all of which have been filed in the United States Patent and
Trademark Office: (i) one registered patent held by DRS Ahead Technology, Inc.
for a "microglide burnish head" and (ii) all patents, patent applications and
licenses described and listed on Schedule "B" of that certain Amended and
Restated Patent Security Agreement and Mortgage dated October 20, 1998 executed
by DRS Ahead Technology, Inc. and DRS FPA, L.P., as the debtors, in favor of the
Agent, on behalf of and for the benefit of the Lenders.
(xv) Environmental Matters. Except as disclosed in Schedule 4.01(xv)
attached hereto and except where the failure to comply with the provisions of
clauses (a) through (k) below does not result in a Material Adverse Effect, (a)
the operations of the Co-Borrowers, their Subsidiaries and Affiliates comply in
all substantial respects with all applicable environmental, health and safety
Requirements of Law; (b) the Co-Borrowers, their Subsidiaries and Affiliates
have obtained all environmental, health and safety Permits necessary for their
respective operations,
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and all such Permits are in good standing, and theCo-Borrowers, their
Subsidiaries and Affiliates are in material compliance with all terms and
conditions of such Permits; (c) the Co-Borrowers', their Subsidiaries' and
Affiliates' respective present Properties and operations, and to the best of the
Co-Borrowers' knowledge, the Co-Borrowers', their Subsidiaries' and Affiliates'
respective past Properties and operations, are not the subject of any order from
or agreement with any Governmental Authority or private party or any judicial or
administrative proceeding or investigations respecting any environmental, health
or safety Requirements of Law, and are not the subject of any Remedial Action or
other Liabilities and Costs arising from the Release or threatened Release of an
Environmental Concern Material into the Environment; (d) the Co-Borrowers, their
Subsidiaries and Affiliates have not filed any notice under any Requirement of
Law indicating past or present treatment, storage or disposal of an
Environmental Concern Material in violation of any Environmental Law; (e) the
Co-Borrowers, their Subsidiaries and Affiliates have not filed any notice under
any applicable Requirement of Law reporting a Release of an Environmental
Concern Material into the Environment in violation of any Environmental Law; (f)
there is not now, nor has there ever been, on or in the Property of the
Co-Borrowers, their Subsidiaries and/or Affiliates in violation of any
Environmental Law: (1) any generation, treatment, recycling, storage or disposal
of any Environmental Concern Material, (2) any underground storage tanks or
surface impoundments, (3) any asbestoscontaining material, or (4) any
polychlorinated biphenyls (PCB's) used in hydraulic oils, electrical
transformers or other equipment; (g) the Co-Borrowers, their Subsidiaries and/or
Affiliates have not received any notice or claim to the effect that it is or may
be liable to any Person as a result of the Release or threatened Release of a
Environmental Concern Material into the Environment, or as a result of exposure
to asbestos or to cotton dust, which may result in any liability; (h) after due
inquiry, no Environmental Lien has attached to any Property of the Co-Borrowers,
their Subsidiaries and/or Affiliates; (i) the Co-Borrowers, their Subsidiaries
and Affiliates have not entered into any negotiations or agreements with any
Person (including, without limitation, the prior owner(s) of any Property owned
or leased by the Co-Borrowers, their Subsidiaries and/or Affiliates) relating to
any Remedial Action or environmentally related Claim; (j) the Co-Borrowers,
their Subsidiaries and Affiliates have no material contingent liability in
connection with any Release or threatened Release of any Environmental Concern
Material into the Environment; and (k) none of the products that the
Co-Borrowers, their Subsidiaries and/or Affiliates manufacture, distribute or
sell, or, to the best of the Co-Borrowers', their Subsidiaries' or Affiliates'
knowledge, ever have manufactured, distributed or sold, contains an
asbestos-containing material.
(xvi) ERISA. As of the Closing Date, the Co-Borrowers, their Subsidiaries,
Affiliates and any ERISA Affiliate do not maintain or contribute to any Plan
other than a Plan listed on Schedule 4.01(xvi) attached hereto. Except as
otherwise provided on Schedule 4.01(xvi), each Plan which is intended to be a
qualified plan has been determined by the IRS to be qualified under Section
401(a), and each trust related to any such Plan has been so determined to be
exempt from federal income tax under Section 501(a) of the Code prior to its
amendment by the Tax Reform Act of 1986, and such Plan and trust are being
operated in all material respects in compliance with and will be timely amended
in accordance with the Tax Reform Act of 1986 and the Omnibus Budget
Reconciliation Act of 1987 as interpreted by the regulations promulgated
thereunder. Except as otherwise provided on Schedule 4.01(xvi) attached hereto,
the Co-Borrowers, their Subsidiaries, Affiliates and any ERISA Affiliate do not
maintain or contribute to any employee welfare benefit plan within the meaning
of Section 3(1) of ERISA which provides lifetime benefits to retirees other
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than as may be required by the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and interpreted by regulations promulgated thereunder. The
Co-Borrowers, their Subsidiaries, Affiliates and all of their ERISA Affiliates
are in compliance in all material respects with the responsibilities,
obligations or duties imposed on them by ERISA or regulations promulgated
thereunder with respect to all Plans. No material accumulated funding deficiency
(as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code) exists
in respect to any Benefit Plan. The Co-Borrowers, their Subsidiaries, Affiliates
any ERISA Affiliate and any fiduciary of any Plan (a) have not engaged in a
nonexempt "prohibited transaction" described in Section 406 of ERISA or Section
4975 of the Code or (b) have not taken any action which would constitute or
result in a Termination Event with respect to any Plan such that actions under
(a) or (b) or both would result in a material obligation to pay money. The
Co-Borrowers, their Subsidiaries, Affiliates and any ERISA Affiliate have not
incurred any material liability to the PBGC which remains outstanding other than
the liability to pay the PBGC insurance premiums for the current year. Schedule
B to the most recent annual report filed with the IRS with respect to each
Benefit Plan (which has been furnished to the Agent) is complete and accurate in
all material respects. Except as provided on Schedule 4.01(xvi) attached hereto,
since the date of each such Schedule B, there has been no material adverse
change in the funding status or financial condition of the Benefit Plan relating
to such Schedule B which would result in a Material Adverse Effect. The
Co-Borrowers, their Subsidiaries, Affiliates and any ERISA Affiliate have not
failed to make a required installment under subsection (m) of Section 412 of the
Code or any other payment required under Section 412 of the Code on or before
the due date for such installment or other payment which would in the aggregate
have a Material Adverse Effect. The Co-Borrowers, their Subsidiaries, Affiliates
and any ERISA Affiliate are not required to provide security to a Plan under
Section 401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the plan year. The Co-Borrowers, their
Subsidiaries, Affiliates and any ERISA Affiliate are not contributing and have
not ever contributed to or been obligated to contribute to any Multiemployer
Plan, and no employees or former employees of the Co-Borrowers, their
Subsidiaries, Affiliates or any ERISA Affiliate have been covered by any
Multiemployer Plan in respect of their employment by the Co-Borrowers or any
ERISA Affiliate, and, accordingly, the representations and warranties in this
Section 4.01(xvi) do not apply to Multiemployer Plans.
(xvii) Solvency. The Co-Borrowers, their Subsidiaries and Affiliates taken
as a whole are Solvent after giving effect to the transactions contemplated by
(a) the Purchase Agreement, (b) this Loan Agreement and the other Loan
Documents, (c) the payment and accrual of all costs payable on the Closing Date
with respect to any of the foregoing and (d) all obligations, if any, under any
Plan or the equivalent for unfunded past service liability and any other
unfunded medical (including postretirement) and death benefits.
(xviii) Notes Qualification. As of the date on which this representation
and warranty is made, the offering and issuance of the Notes are exempt from
registration under Section 5 of the Securities Act and the Notes issued by the
Canadian Borrower to the Canadian Lenders are exempt from the prospectus filing
and renewal requirements of the applicable Securities Acts of the Provinces of
Ontario and Nova Scotia, Canada or has been registered pursuant to a
registration statement filed pursuant to the Securities Act and, if so
registered, is qualified under the Trust Indenture Act of 1939, as amended.
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(xix) Assets and Properties. Substantially all of the assets and properties
owned by, leased to or used by the Co-Borrowers, their Subsidiaries and
Affiliates (a) are in good operating condition and repair, (ordinary wear and
tear excepted), (b) are free and clear of any known defects (except such defects
as do not substantially interfere with the continued use thereof in the conduct
of normal operations) and (c) are able to serve the function for which they are
currently being used, in each case where the failure of such asset to meet such
requirements would not have or is not reasonably likely to have a Material
Adverse Effect.
(xx) Joint Venture; Partnership. Except as set forth in Schedule 4.01(xx)
attached hereto, as of the Closing Date the Co-Borrowers, their Subsidiaries and
Affiliates are not engaged in any joint venture or partnership with any other
Person.
(xxi) Insurance. The Co-Borrowers, their Subsidiaries and Affiliates
maintain with financially sound and reputable insurers not related to or
affiliated with the Co-Borrowers, their Subsidiaries and Affiliates, insurance
with respect to its Properties and businesses, insured against such liabilities,
casualties and contingencies and in such types and amounts as is customary in
the case of corporations engaged in the same or a similar business or having
similar properties similarly situated. Schedule 4.01(xxi) attached hereto sets
forth a list of all insurance currently maintained by or in respect of the
Co-Borrowers, their Subsidiaries and Affiliates setting forth the identity of
the insurance carrier, the type of coverage, the amount of coverage and the
deductible. There are no claims, actions, suits, proceedings against, arising
under or based upon any of such insurance policies except as set forth in
Schedule 4.01(xxi) attached hereto.
(xxii) Title to Property. The Co-Borrowers, their Subsidiaries and
Affiliates have good and marketable title in fee simple to all respective
Property owned or purported to be owned by them, including, without limitation
to all Property reflected in the most recent consolidated balance sheet referred
to in Section 4.01(xxiii) hereof or submitted pursuant to Article V (except as
sold or otherwise disposed of in the ordinary course of business after the date
of such balance sheet), in each case free and clear of all Liens, other than
Liens permitted under the terms of Section 7.02(ii) of this Loan Agreement.
(xxiii) Audited Financial Statements. The Co-Borrowers have heretofore
furnished to the Agent a consolidated and consolidating "audited" balance sheet
of DRS, its Subsidiaries and Affiliates dated as of March 31, 1998, and the
related statements of income, cash flows and changes in stockholders' equity for
the 1998 Fiscal Year then ended, as examined and reported on by their
Independent Certified Public Accountant, who delivered an unqualified opinion in
respect thereof, all as set forth in the Form 10-K. Such financial statements
(including the notes thereto) present fairly the financial condition of DRS, its
Subsidiaries and Affiliates as of the end of such 1998 Fiscal Year and the
results of their operations and their cash flows for the 1998 Fiscal Year then
ended, all in conformity with Generally Accepted Accounting Principles.
(xxiv) Interim Financial Statements. The Co-Borrowers have heretofore
furnished to the Agent interim balance sheets of DRS, its Subsidiaries and
Affiliates as of the end of their first Fiscal Quarter of the 1999 Fiscal Year
which began on April 1, 1998, together with the related statements of income and
cash flows for the applicable fiscal periods ending on each such date, all as
set forth in the Form 10-Q. Such financial statements present fairly the
financial condition of
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DRS, its Subsidiaries and Affiliates as of the end of such Fiscal Quarter and
the results of their operations and their cash flows for the fiscal periods then
ended, all in conformity with Generally Accepted Accounting Principles (except
to the extent set forth in the notes to said financial statements), subject to
normal and recurring yearend audit adjustments.
(xxv) Absence of Undisclosed Liabilities. Except as provided on Schedule
4.01 (xxv) attached hereto and made a part hereof, the Co-Borrowers, their
Subsidiaries and Affiliates have no liability or obligation of any nature
whatever (whether absolute, accrued, contingent or otherwise, whether or not
due), forward or longterm commitments or unrealized or anticipated losses from
unfavorable commitments, except (a) as disclosed in the financial statements
referred to in Sections 4.01(xxiii) and (xxiv) above, (b) matters that,
individually or in the aggregate could not have a Material Adverse Effect and
(c) Contractual Obligations incurred in the ordinary course of the
Co-Borrowers', their Subsidiaries' and Affiliates' businesses.
(xxvi) Margin Regulations. No part of the proceeds of the Loan Facilities
will be used for the purpose of buying or carrying any Margin Stock, as such
term is used in Regulation U of the Federal Reserve Board, as amended from time
to time, or to extend credit to others for the purpose of buying or carrying any
Margin Stock. The Co-Borrowers, their Subsidiaries and Affiliates are not
engaged in the business of extending credit to others for the purpose of buying
or carrying Margin Stock. Neither the making of any Loan nor any use of proceeds
of any such Loan will violate or conflict with the provisions of Regulation T, U
or X of the Federal Reserve Board, as amended from time to time.
(xxvii) Labor Matters. Except as set forth on Schedule 4.01(xxvii) attached
hereto, the Co-Borrowers, their Subsidiaries and Affiliates are not a party to
any labor union or collective bargaining agreements. The Co-Borrowers, their
Subsidiaries and Affiliates are in compliance with all applicable laws
respecting employment and employment practices, including, without limitation,
laws, regulations, and judicial and administrative decisions relating to wages,
hours, conditions of work, collective bargaining, health and safety, payment of
social security, payroll, withholding and other taxes, worker's compensation,
insurance requirements, as well as requirements of ERISA and the Consolidated
Omnibus Budget Reconciliation Act, except to the extent that noncompliance would
not have a Material Adverse Effect. There is no (a) unfair labor practice
complaint pending or, to the best knowledge of the Co-Borrowers, their
Subsidiaries and Affiliates, threatened against the Co-Borrowers, their
Subsidiaries and Affiliates before the National Labor Relations Board, any court
or any other Governmental Authority nor any pending or, to the best knowledge of
the Co-Borrowers, their Subsidiaries and Affiliates, threatened sexual
harassment, or wrongful discharge claim, (b) labor strike, dispute, slowdown, or
stoppage pending or, to the best knowledge of the Co-Borrowers, their
Subsidiaries and Affiliates, threatened against the Co-Borrowers, their
Subsidiaries and Affiliates or (c) representation petition, respecting the
employees of the Co-Borrowers, their Subsidiaries and Affiliates filed or
threatened to be filed with the National Labor Relations Board.
(xxviii) Brokerage Commissions. No other Person is entitled to receive from
the Co-Borrowers, their Subsidiaries and/or Affiliates any brokerage commission,
finder's fee or similar fee or payment in connection with the consummation of
the transactions contemplated by this Loan Agreement. No brokerage or other fee,
commission or compensation is to be paid by the
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Lender by reason of any act, alleged act or omission of the Co-Borrowers, their
Subsidiaries and/or Affiliates with respect to the transactions contemplated
hereby.
(xxix) Books and Records. All of the Co-Borrowers (except DRS Flight
Safety) maintain their books and records relative to their assets, Properties
and business transactions at DRS's chief executive offices located at 5 Sylvan
Way, Parsippany, New Jersey 07054. DRS Flight Safety maintains its books and
records relative to its assets, Properties and business transactions at its
chief executive offices located at 115 Emily Street, Carleton Place, Ontario,
Canada K7C 4J5. DRS EO maintains its books and records relative to its assets,
Properties and business transactions at its chief executive offices located at
2000 East El Segundo Blvd., El Segundo, California 90245. DRS FPA, L.P.
maintains its books and records relative to its assets, Properties and business
transactions at its chief executive offices located at 13588 North Central
Expressway, Dallas, Texas 75243. Each of DRS Technologies (UK) Limited, DRS
Technologies (Europe) Ltd., DRS Hadland Ltd., DRS Ahead Technology, Inc.
(Bulgaria) JSC, DRS Hadland Photonics GmbH and Diagnostic/Retrieval Systems
(DRS) Technologies Parsippany B.V. maintains its books and records with respect
to its assets, Properties and business transactions at the address listed on
Schedule 4.01(xxix) attached hereto and made a part hereof. All of the Corporate
Guarantors maintain their respective books and records at their respective chief
executive offices described in the Agreement of Guaranty.
(xxx) Business Name. The only name by which the Co-Borrowers, their
Subsidiaries and Affiliates are known or under which they are conducting their
businesses are set forth on Schedule 4.01(xxx) attached hereto and made a part
hereof.
(xxxi) Location of Collateral. Except as set forth (a) on Schedule
4.01(xxxi) attached hereto and made a part hereof and (b) in the Security
Agreements, as of the Closing Date, none of the Collateral pledged to the Lender
as collateral security pursuant to this Loan Agreement, the Collateral Documents
or any other Loan Documents, is or will be located in, at or on any location or
property other than as set forth on Schedule 4.01(xxxi) (except Inventory
temporarily in transit or Collateral located at Properties other than those
described on Schedule 4.01(xxxi) for which the Agent has received the requisite
notice described in Section 5.04 hereof). None of the Collateral (including,
without limitation, Inventory) is now or will hereafter be located in the
Province of Quebec, Canada. During the six (6) month period immediately
preceding the Closing Date, none of the Collateral was located in, at or on any
location or property other than those sites listed on Schedule 4.01(xxxi)
attached hereto and in the Security Agreements (except Inventory temporarily in
transit).
(xxxii) Accounts Receivable. The most recent list of Accounts Receivable of
the Co-Borrowers, their Subsidiaries and Affiliates delivered to the Agent is
complete in all material respects, and contains an aging thereof that is
accurate in all material respects. The Accounts Receivable of the Co-Borrowers,
their Subsidiaries and Affiliates have arisen in the ordinary course of their
businesses and reflect bona fide obligations for the payment of goods or
services provided by the Co-Borrowers or their predecessors subject to reserves
for uncollectable amounts (including, without limitation, markdown allowances
and chargebacks) established in the ordinary course of business. As of the
Closing Date, all Accounts Receivable are collectable in the ordinary course of
the Co-Borrowers', their Subsidiaries' and Affiliates' businesses, subject to
reserves for
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uncollectable amounts (including, without limitation, markdown allowances and
chargebacks) established in the ordinary course of business; are subject to no
counter-claims or set-offs of any nature whatsoever (other than those arising
out of customer deposits) that would have a Material Adverse Effect; and require
no further act on the Co-Borrowers', their Subsidiaries' and Affiliates' part to
make such Accounts owing by the account debtors. None of the Accounts Receivable
includes consignments or sales on any basis other than that of absolute sale in
the ordinary and usual course of business, except as otherwise set forth on said
list. No agreement has been made under which any deductions or discounts may be
claimed as to any such account except regular discounts in the usual course of
business.
(xxxiii) Inventory. Subject to the second sentence of this Section
4.01(xxxiii), the Inventory of the Co-Borrowers, their Subsidiaries and
Affiliates (a) does not contain a misbranded hazardous substance or a barred
hazardous substance, (b) is suitable and useful for the purposes of the
Co-Borrowers', their Subsidiaries' and Affiliates' businesses, (c) is not
obsolete, spoiled, contaminated or damaged and (d) consists of items of a
quality and quantity useable or saleable in the ordinary course of the
Co-Borrowers' business, except that which would not have a Material Adverse
Effect. The value of obsolete items, items below standard quality and items in
the process of repair have been written down to realizable market value, or
adequate reserves have been provided therefor, and the values carried on the
balance sheet are set at the lower of cost or market, in accordance with
Generally Accepted Accounting Principles.
(xxxiv) Pledge of Collateral. The Co-Borrowers, their Subsidiaries and
Affiliates have good and marketable title to the Collateral pledged by them, and
all such Collateral is free and clear of all Liens except for (a) Permitted
Encumbrances and (b) as specifically permitted or contemplated by the terms and
provisions of this Loan Agreement and the Collateral Documents relating to such
Collateral.
(xxxv) Year 2000 Problem. The Year 2000 Problem will not result in a
Material Adverse Effect.
(xxxvi) Reprogramming of Computer Systems. Any reprogramming required to
permit the proper functioning, in and following the year 2000, of the
Co-Borrowers', their Subsidiaries' and/or Affiliates' (a) computer systems and
(b) equipment containing embedded microchips (including systems and equipment
supplied by others or with which the Co-Borrowers', their Subsidiaries' and/or
Affiliates' systems interface) will be completed prior to December 31, 1999. The
testing of all such systems and equipment, as so reprogrammed, will be completed
by December 31, 1999. The cost to the Co-Borrowers, their Subsidiaries and
Affiliates of such reprogramming, as projected, will not result in an Event of
Default or a Material Adverse Effect. Except for such reprogramming referred to
in the preceding sentence (as may be necessary), the computer and management
information systems of the Co-Borrowers, their Subsidiaries and Affiliates are
and, with upgrading and maintenance in the ordinary course of business, will
continue to be adequate for the conduct of their respective businesses without
Material Adverse Effect."
(xxxvii) Plan for Year 2000 Compliance. (a) The Co-Borrowers, their
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Subsidiaries and Affiliates (1) have undertaken, or will undertake, on a timely
basis, a detailed inventory, review and assessment of all areas within their
respective businesses and operations that could be adversely affected by their
failure to be Year 2000 Compliant on a timely basis, (2) have developed, or will
develop, on a timely basis, a detailed plan and timeline for becoming Year 2000
Compliant on a timely basis and (3) have implemented or will implement that plan
in accordance with that timetable in all material respects. The Co-Borrowers,
their Subsidiaries and Affiliates reasonably anticipate that they will be Year
2000 Compliant on a timely basis.
(b) The Co-Borrowers, their Subsidiaries and Affiliates have made or
will make written inquiry of each of their material suppliers, vendors and
customers as to whether such Persons will, on a timely basis, be Year 2000
Compliant in all material respects.
Section 4.02. Subsequent Funding Representations and Warranties. In order
to induce the Agent and the Lenders to enter into this Loan Agreement and to
make the Loans and issue the Letters of Credit, the Co-Borrowers hereby
represent and warrant to the Agent and the Lenders that the statements set forth
in paragraphs (i) through (xxxvii) of Section 4.01 hereof (except (i) to the
extent that such statements (a) are made expressly only as of the Closing Date
or (b) other than for changes permitted or contemplated by this Loan Agreement),
are true, correct and complete in all material respects on and as of the
Borrowing Date in respect of each Borrowing after the Closing Date and the date
of issuance of each Letter of Credit (the making of each Revolving Credit Loan
and the issuance of each Letter of Credit being referred to as a "Subsequent
Funding").
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ARTICLE V
REPORTING COVENANTS
On and after the Closing Date and so long as the Co-Borrowers shall have
any Obligation hereunder or any Lender shall have any Commitment hereunder,
unless the Requisite Lenders shall give their prior express written consent to
the effect otherwise, then:
Section 5.01. Statement of Accounting. The Co-Borrowers, their Subsidiaries
and Affiliates shall make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect their transactions and
dispositions of their assets and shall maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary (a) to permit preparation of financial
statements in conformity with Generally Accepted Accounting Principles and any
other accounting principles applicable thereto and (b) to maintain
accountability for assets and (iii) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences; provided, however, that with respect
to DRS Flight Safety all transactions, books and records are maintained in
accordance with generally accepted accounting principles as in effect from time
to time in Canada as said principles are developed, modified and set forth in
the opinions and pronouncements and/or Handbook of the Canadian Institute of
Chartered Accountants.
Section 5.02 Reporting and Information Requirements. The Co-Borrowers
shall deliver or cause to be delivered to the Agent the following financial
statements, data, reports and information, at the Co-Borrowers' own cost and
expense:
(i) Annual Audited Consolidated and Consolidating Financial Statements of
the Co-Borrowers, their Subsidiaries and Affiliates. As soon as available, but
in any event within ninety (90) days after the close of each Fiscal Year of the
Co-Borrowers, "audited" consolidated statements of income, retained earnings and
a statement of cash flows for the Co-Borrowers, their Subsidiaries and
Affiliates for such Fiscal Year and a consolidated balance sheet for the
Co-Borrowers, their Subsidiaries and Affiliates as of the close of such Fiscal
Year, and notes to each, all as set forth in the Form 10-K filed with the United
States Securities and Exchange Commission. Such consolidated financial
statements shall be accompanied by an opinion of the Independent Certified
Public Accountant, which opinion shall be free of exceptions or qualifications
which is of "going concern" or like nature or which relates to a more limited
scope of examination. Such opinion shall in any event contain a written
statement of such accountants substantially to the effect that (a) such
accountants examined the financial statements in accordance with Generally
Accepted Auditing Standards and accordingly made such tests of accounting
records and such other auditing procedures as such accountants considered
necessary under the circumstances and (b) in the opinion of such accountants
such financial statements present fairly the financial position and cash flows
of the Co-Borrowers, their Subsidiaries and Affiliates as of the end of such
Fiscal Year, and the results of the Co-Borrowers', their Subsidiaries' and
Affiliates' operations and the changes in their financial position for such
Fiscal Year, in conformity with Generally Accepted Accounting Principles applied
on a basis consistent with that of the preceding Fiscal Year. In addition to the
delivery of the annual "audited" consolidated financial statements, the
Co-Borrowers shall also
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deliver to the Agent and each of the Lenders, at the same time, an "unaudited"
management prepared consolidating statement of income for the Co-Borrowers,
their Subsidiaries and Affiliates for such Fiscal Year and a consolidating
balance sheet for the Co-Borrowers, their Subsidiaries and Affiliates as of the
close of such Fiscal Year, all prepared and certified to the Agent and the
Lenders by the Co-Borrowers' chief accounting officer in her capacity as an
Authorized Officer.
(ii) Annual Operating Plan. As soon as available, but in any event within
ninety (90) days after the close of each Fiscal Year of the Co-Borrowers, a copy
of the Co-Borrowers', their Subsidiaries' and Affiliates' annual operating plan
for the then current Fiscal Year.
(iii) Quarterly Cons olidated and Consolidating Financial Statements of the
Co-Borrowers, their Subsidiaries and Affiliates. As soon as available, but in
any event within forty-five (45) days after the close of each of the first three
Fiscal Quarters of each Fiscal Year of the Co-Borrowers, "unaudited"
consolidated statements of income and a statement of cash flows for the
Co-Borrowers, their Subsidiaries and Affiliates for such Fiscal Quarter and for
the period from the beginning of such Fiscal Year to the end of such Fiscal
Quarter, and an "unaudited" balance sheet of the Co-Borrowers, their
Subsidiaries and Affiliates as of the close of such Fiscal Quarter, all as set
forth in the Form 10-Q filed with the United States Securities and Exchange
Commission. In addition to the delivery of the quarterly consolidated financial
statements, the Co-Borrowers shall also deliver to the Agent and the Lenders, at
the same time, an "unaudited" management prepared consolidating statement of
income for the Co-Borrowers, their Subsidiaries and Affiliates for such Fiscal
Quarter and for the period from the beginning of such Fiscal Year to the end of
such Fiscal Quarter and an "unaudited" consolidating balance sheet of the
Co-Borrowers, their Subsidiaries and Affiliates as of the close of such Fiscal
Quarter, all as certified by the chief accounting officer of the Co-Borrowers in
her capacity as an Authorized Officer as presenting fairly the financial
position of the Co-Borrowers, their Subsidiaries and Affiliates as of the end of
such dates and fiscal periods and the results of the Co-Borrowers', their
Subsidiaries' and Affiliates' operations and the changes in the Co-Borrowers',
their Subsidiaries' and Affiliates' financial position and cash flows for such
fiscal periods, in conformity with Generally Accepted Accounting Principles
applied in a manner consistent with that of the most recent audited financial
statements furnished to the Agent, subject to normal and recurring yearend audit
adjustments.
(iv) Contract Backlog Report. As soon as available, but in any event within
forty-five (45) days after the close of each Fiscal Quarter of each Fiscal Year
of the Co-Borrowers, a contract backlog report for the Co-Borrowers, their
Subsidiaries and Affiliates signed by an Authorized Officer of the Co-Borrowers.
(v) Compliance Certificates. Together with each delivery of any financial
statement pursuant to this Section 5.02(i) and Section 5.02(iii) above, an
Officer's Certificate of the Co-Borrowers substantially in the form of Exhibit
"F" attached hereto, (a) stating that the officer signatory thereto in his or
her capacity as an Authorized Officer has reviewed the terms of this Loan
Agreement and the principal Loan Documents, and has made, or caused to be made
under his or her supervision, a review in reasonable detail of the transactions
and condition of the Co-Borrowers, their Subsidiaries and Affiliates, 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 signer does not have knowledge of the existence
as at the date
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of the Officer's Certificate, of any condition or event which constitutes an
Event of Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence thereof
and what action the Co-Borrowers have taken, are taking and propose to take with
respect thereto; and (b) demonstrating in reasonable detail compliance during
and at the end of such accounting periods with the financial covenants contained
in Article VIII of this Loan Agreement.
(vi) Monthly Accounts Receivable Aging Reports, etc. As soon as
available, but in any event within thirty (30) days after the close of each
month during each Fiscal Year, a monthly accounts receivable aging report in
summary form only, setting forth the amounts due and owing to each of the
Co-Borrowers, their Subsidiaries and Affiliates, respectively, as of the close
of the preceding month.
(vii) Borrowing Base Certificates. As soon as available, but in any event
within thirty (30) days after the close of the prior month during each Fiscal
Year, a Borrowing Base Certificate signed by an Authorized Officer of the
Co-Borrowers. In addition, the Co-Borrowers may deliver to the Agent, at any
time during a calendar month, additional Borrowing Base Certificates at the time
of each request for a Borrowing.
(viii) Other Reports and Information. Promptly upon their becoming
available to the Co-Borrowers, a copy of (a) all reports, financial statements
and other information distributed generally by the Co-Borrowers, their
Subsidiaries and/or Affiliates to their respective stockholders, partners,
bondholders or the financial community and (b) all accountants' management
letters pertaining to, all other reports submitted by accountants in connection
with any audit of, and all other material reports, if any, from outside
accountants with respect to, the Co-Borrowers, their Subsidiaries and/or
Affiliates.
(ix) Further Information. The Co-Borrowers shall promptly furnish to the
Agent such business, financial or other information concerning the Co-Borrowers,
their Subsidiaries and Affiliates in such form as the Agent and said Lenders may
reasonably request from time to time.
(x) Notice of Event of Default. Promptly upon becoming aware of any Event
of Default or Potential Event of Default, the Co-Borrowers shall give the Agent
written notice thereof, together with a written statement of the President or
chief accounting officer of the Co-Borrowers in her capacity as an Authorized
Officer setting forth the details thereof and any action with respect thereto
taken or contemplated to be taken by the Co-Borrowers.
(xi) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, the Co-Borrowers shall give the Agent written notice concerning any
material adverse change in the business, assets, operations or financial
condition of the Co-Borrowers, their Subsidiaries and/or Affiliates taken as a
whole, including, without limitation, (a) any loss from casualty or theft in
excess of $1,000,000.00 whether or not insured, affecting any Property of the
Co-Borrowers, their Subsidiaries and Affiliates, setting forth the details
thereof and any action with respect thereto taken or contemplated to be taken by
the Co-Borrowers, (b) any loss of funding for the continuation of a multi-year
and/or cost-plus contract with any Person whereby any one of the Co-Borrowers,
their Subsidiaries or Affiliates is the contractor and said contract has a
remaining value in excess of
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US$7,500,000.00, (c) any modification of a contract with any Person where any
one of the Co-Borrowers, their Subsidiaries or Affiliates is the contractor,
under the "changes clause" of said contract resulting in the deletion of at
least fifty percent (50%) of the work originally intended to be performed under
such contract resulting in said contract as changed having a remaining value in
excess of US$3,775,000.00, (d) the termination for default of any contract with
any Governmental Authority and (e) the termination for convenience of any
contract with any Governmental Authority whereby any one of the Co-Borrowers,
their Subsidiaries or Affiliates is the service provider and said contract has a
remaining value in excess of US$7,500,000.00.
(xii) Notice of Material Proceedings. Promptly upon becoming aware thereof,
the Co-Borrowers shall give the Agent written notice of the commencement,
existence or threat of any action, suit, claim, request for equitable
adjustment, proceeding, audit, governmental investigation or arbitration against
or by or otherwise affecting the Co-Borrowers, their Subsidiaries and/or
Affiliates (including without limitation, litigation, arbitration or
administration proceedings) which, if adversely decided, would have a Material
Adverse Effect on the business, assets, operations or financial condition of the
Co-Borrowers, their Subsidiaries and/or Affiliates taken as a whole or on the
ability of the Co-Borrowers, their Subsidiaries and/or Affiliates to perform
their obligations under this Loan Agreement or the other Loan Documents.
(xiii) Notice of Pension-Related Events. The Co-Borrowers shall give the
Agent the following:
(a) As soon as possible, and in any event within ten (10) days after
the Co-Borrowers, their Subsidiaries, their Affiliates or an ERISA
Affiliate knows or has reason to know that a Termination Event has
occurred, a written statement of the chief accounting officer of the
Co-Borrowers describing such Termination Event and the action, if any,
which the Co-Borrowers, their Subsidiaries, their Affiliates. or an ERISA
Affiliate has taken, is taking or proposes to take with respect thereto,
and when known, any action taken or threatened by the IRS, the DOL or PBGC
with respect thereto;
(b) As soon as possible, and in any event within fifteen (15)
days,after the Co-Borrowers, their Subsidiaries, their Affiliates or an
ERISA Affiliate knows or has reason to know that a nonexempt prohibited
transaction (as defined in Section 406 of ERISA and Section 4975 of the
Code) has occurred, a statement of the chief accounting officer of the
Co-Borrowers describing such transaction;
(c) Within ten (10) days after the filing thereof with the DOL, IRS
orPBGC, copies of each annual report, filed with respect to each Benefit
Plan;
(d) Within ten (10) days after the filing thereof with the IRS, a
copyof each funding waiver request filed with respect to any Benefit Plan
and all communications received by the Co-Borrowers, their Subsidiaries,
their Affiliates, or an ERISA Affiliate with respect to such request;
(e) Within thirty (30) days after a written request from the
Agent, information describing an amendment of any existing Benefit Plan
which will result in a material
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increase in the benefits under such Benefit Plan or a notification of any
such increase, or the establishment of any new Plan or the commencement of
contributions to any Plan to which the Co-Borrowers, their Subsidiaries,
their Affiliates or an ERISA Affiliate was not previously contributing in a
material amount;
(f) Promptly upon, and in any event within fifteen (15) Business Days
after, receipt by the Co-Borrowers, their Subsidiaries, their Affiliates or
an ERISA Affiliate of the PBGC's intention to terminate a Benefit Plan or
to have a trustee appointed to administer a Benefit Plan, copies of each
such notice;
(g) Promptly upon, and in any event within ten (10) Business Days
after, receipt by the Co-Borrowers, their Subsidiaries, their Affiliates or
an ERISA Affiliate of an unfavorable determination letter from the IRS
regarding the qualification of a Plan under Section 401(a) of the Code;
(h) Promptly upon, and in any event within fifteen (15) Business Days
after, receipt by the Co-Borrowers, their Subsidiaries, their Affiliates or
an ERISA Affiliate of a notice from a Multiemployer Plan regarding the
imposition of withdrawal liability; and
(i) Promptly upon, and in any event within fifteen (15) Business Days
after, the Co-Borrowers, their Subsidiaries, their Affiliates or any ERISA
Affiliate fails to make a required installment under subsection (m) of
Section 412 of the Code or any other payment required under Section 412 of
the Internal Revenue Code on or before the due date for such installment or
payment, a notification of such failure provided that such installment
payment is an amount which is material.
(xiv) Notice of Other Material Defaults. Promptly upon becoming aware of
any material default by the Co-Borrowers, their Subsidiaries and/or Affiliates
under any Contractual Obligation to which the Co-Borrowers, their Subsidiaries
and/or Affiliates or by which the Co-Borrowers, their Subsidiaries and/or
Affiliates or their respective properties may be bound (the result of which
could reasonably be expected to have a Material Adverse Effect), the
Co-Borrowers shall give the Agent written notice thereof, together with a
written statement of the President or chief accounting officer of the
Co-Borrowers in her capacity as an Authorized Officer setting forth the details
thereof and any action with respect thereto taken or contemplated to be taken by
the Co-Borrowers, their Subsidiaries and/or Affiliates.
(xv) Notice of Material Claims. The Co-Borrowers shall promptly notify the
Agent of all written claims, complaints, orders, citations or notices, whether
formal or informal, received by the Co-Borrowers, their Subsidiaries or
Affiliates from a Governmental Authority or other Person relating to any Law,
including, without limitation, any Environmental Law or health and safety law,
which could reasonably be expected to have a Material Adverse Effect. Such
notices shall include, among other information, the name of the party who filed
the claim, the potential amount of the claim, and the nature of the claim.
Section 5.03 Environmental Notices. (i) The Co-Borrowers shall notify the
Agent, in writing, promptly, and in any event within five (5) Business Days
after obtaining knowledge, of
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any: (a) notice or claim to the effect that the Co-Borrowers, their Subsidiaries
and/or Affiliates are or may be liable to any Person as a result of the Release
or threatened Release of any Environmental Concern Material into the Environment
which may have a Material Adverse Effect; (b) notice that the Co-Borrowers,
their Subsidiaries or Affiliates are under investigation by any Governmental
Authority evaluating whether any Remedial Action is needed to respond to the
Release or threatened Release of any Environmental Concern Material into the
Environment which may have a Material Adverse Effect; (c) notice that any
Property of the Co-Borrowers, their Subsidiaries or Affiliates is subject to an
Environmental Lien which could reasonably be expected to have a Material Adverse
Effect; (d) notice of violation to the Co-Borrowers, their Subsidiaries or
Affiliates or awareness by the Co-Borrowers, their Subsidiaries or Affiliates of
a condition which might reasonably result in a notice of violation of any
environmental, health or safety Requirement of Law, which could have a Material
Adverse Effect; (e) commencement or threat of any judicial or administrative
proceeding alleging a violation of any environmental, health or safety
Requirement of Law which may have a Material Adverse Effect; (f) new or proposed
changes to any existing environmental, health or safety Requirement of Law that
could have a Material Adverse Effect on the operations of the Co-Borrowers,
their Subsidiaries or Affiliates; or (g) any proposed acquisition of stock,
assets, real estate, or leasing of property, or any other action by the
Co-Borrowers, their Subsidiaries or Affiliates that could subject the
Co-Borrowers, their Subsidiaries or Affiliates to environmental, health or
safety Liabilities and Costs that could have a Material Adverse Effect.
(ii) Upon written request of the Agent, no more frequently than once a
year, the Co-Borrowers shall submit to the Agent a report prepared by an
Authorized Officer of the Co-Borrowers providing an update of the status of each
material health or safety compliance hazard or liability issue identified in any
notice or report required pursuant to Section 5.03(i) hereof.
Section 5.04 Notice of Name Changes and Location Changes. The Co-Borrowers
shall (i) immediately notify the Agent if any of the Co-Borrowers, their
Subsidiaries or Affiliates is known by or conducting business under any names
other than the names described in Section 4.01(xxx) hereof, (ii) notify the
Agent within fifteen (15) days if the Co-Borrowers, their Subsidiaries or
Affiliates are conducting any of their businesses or operations at or out of
offices or locations other than those described in Section 4.01(xxix) and (xxxi)
hereof and (iii) notify the Agent at least fifteen (15) days prior to the date
upon which the Co-Borrowers intend to change the location of their chief
executive offices, principal places of business or location of Collateral from
those locations set forth Schedule 4.01(xxxi) attached hereto.
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ARTICLE VI
AFFIRMATIVE COVENANTS
The Co-Borrowers covenant and agree that, on and after the Closing Date and
so long as any Lender shall have any Commitment hereunder and until payment in
full of all of the obligations, unless the Requisite Lenders shall otherwise
give prior express written consent:
Section 6.01 Corporate Existence, etc. The Co-Borrowers, their Subsidiaries
and Affiliates shall at all times maintain their respective status as a
corporation and/or partnership, as applicable, duly organized, validly existing
and in good standing under the Laws of their respective jurisdiction of
incorporation and/or formation and preserve and keep in full force and effect
their rights and franchises unless the failure to maintain such rights and
franchises would not have a Material Adverse Effect.
Section 6.02 Corporate Powers, etc. The Co-Borrowers, their Subsidiaries
and Affiliates shall qualify and remain qualified to conduct business in each
jurisdiction in which the nature of their respective businesses or the ownership
of their respective Properties or both requires it to be so qualified, unless
the failure to maintain such qualification would not have a Material Adverse
Effect. The Co-Borrowers, their Subsidiaries and Affiliates shall transact
business in their own names and trade names and shall invoice all accounts in
their own respective names and trade names.
Section 6.03 Compliance with Laws, etc. The Co-Borrowers, their
Subsidiaries and Affiliates shall comply with all Requirements of Law, and all
restrictive covenants affecting the Co-Borrowers, their Subsidiaries and
Affiliates or the respective businesses, Properties, assets or operations of the
Co-Borrowers, their Subsidiaries and Affiliates except to the extent that
non-compliance with this Section 6.03 would not result in a Material Adverse
Effect.
Section 6.04 Payment of Taxes and Claims. The Co-Borrowers, their
Subsidiaries and Affiliates shall pay or cause to be paid (i) all taxes,
assessments and other governmental charges imposed upon them or on any of their
respective properties or assets or in respect of any of their respective
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 material in the aggregate to the
Co-Borrowers, their Subsidiaries and Affiliates which have become due and
payable and which by Law have or may become a Lien (other than a Customary
Permitted Lien) upon the Co-Borrowers', their Subsidiaries' and/or Affiliates'
Property, prior to time when any penalty or fine shall be incurred with respect
thereto; provided, however, 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 adequate reserves shall have
been set aside therefor in accordance with Generally Accepted Accounting
Principles.
Section 6.05. Maintenance of Properties; Insurance. The Co-Borrowers, their
Subsidiaries and Affiliates shall maintain or cause to be maintained in good
repair, working order and condition, excepting ordinary wear and tear, all of
their respective Properties material to their operations and
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will make or cause to be made all appropriate repairs, renewals and replacements
thereof, consistent with past practice. The Co-Borrowers, their Subsidiaries and
Affiliates shall maintain or cause to be maintained with financially sound and
reputable insurers reasonably acceptable to the Agent, the insurance policies
and programs listed on Schedule 6.05 attached hereto or substantially similar
programs or policies and amounts or other programs, policies and amounts
acceptable to the Agent. Not later than thirty (30) days later than the renewal,
replacement or material modification of any policy or program, the Co-Borrowers
shall deliver or cause to be delivered to the Agent a certificate of insurance
setting forth for each such policy or program: (i) the amount of such policy,
(ii) the risks insured against by such policy, (iii) the name of the insurer and
each insured party under such policy and (iv) the policy number of such policy.
Section 6.06. Inspection of Property; Books and Records; Discussions.
Except for information and records which the Co-Borrowers may not under
applicable Law disseminate or disclose to the Agent and/or the Lenders, the
Co-Borrowers, their Subsidiaries and Affiliates shall permit any authorized
representative(s) designated by the Agent and/or the Lenders to visit, to
conduct a field audit or to otherwise inspect any of the Co-Borrowers', their
Subsidiaries' and/or Affiliates' respective Properties, including their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss the Co-Borrowers', their Subsidiaries' and/or
Affiliates' respective affairs, finances and accounts with the Agent's and the
Lenders' officers, employees, representatives or independent certified public
accountants, upon reasonable notice and during normal business hours. All
information furnished to the Agent and/or the Lenders shall be received and
maintained by the Agent and the Lenders in strict confidence and in accordance
with applicable Law, and they shall not disseminate said information to any
Person except where required by and in accordance with applicable Law or where
contemplated by the Loan Documents. The Agent and the Lenders agree that it
shall not take any action or omit to take any action which would cause or result
in the violation of Law (including without limitation, any export control law)
by the Co-Borrowers, their Subsidiaries and Affiliates. Each such visitation and
inspection by or on behalf of the Agent and/or the Lenders after the occurrence
and during the continuance of an Event of Default shall be at the Co-Borrowers'
own reasonable cost and expense. The Co-Borrowers shall, and shall cause their
Subsidiaries and Affiliates, to keep proper books and records and account in
accordance with sound and accepted accounting practices, consistently applied
(and all Requirements of Law).
Section 6.07. Litigation, Claims, etc. The Co-Borrowers shall provide the
Agent with (i) a litigation status report with respect to any suit at law or in
equity asserted against it of the type referred to in Schedule 4.01(vii)
attached hereto, in form and substance satisfactory to the Agent, promptly after
the close of each calendar quarter; (ii) notice of any suit at law or in equity
or claim brought or asserted against the Co-Borrowers, their Subsidiaries and/or
Affiliates promptly after learning thereof with respect to any suit or claim
involving money or property valued in excess of $1,000,000.00 or any such suits
or claims which in the aggregate involve money or property valued in excess of
$1,000,000.00; and (iii) prompt notice of any investigation or proceeding before
or by any Governmental Authority, the effect of which is reasonably likely to
have a Material Adverse Effect.
Section 6.08 Labor Disputes. The Co-Borrowers shall notify the Agent in
writing, promptly, but in any event within two (2) Business Days after learning
thereof, of any material
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labor dispute to which the Co-Borrowers, their Subsidiaries and/or Affiliates
may become a party, any strikes or walkouts relating to any of their Properties
and the expiration of any labor contract to which they are a party or by which
they are bound.
Section 6.09 Maintenance of Licenses, Permits, etc. The Co-Borrowers (i)
shall maintain in full force and effect, and shall cause each of their
Subsidiaries and Affiliates, to maintain in full force and effect, all licenses,
permits, governmental approvals, franchises, authorizations or other rights
necessary for the operation of the Co-Borrowers', their Subsidiaries' and/or
Affiliates' businesses, except where the failure to obtain any of the foregoing
would not have or is not reasonably likely to have a Material Adverse Effect and
(ii) shall notify the Agent in writing, promptly after learning thereof, of the
suspension, cancellation, revocation or discontinuance of or of any pending or
threatened action or proceeding seeking to suspend, cancel, revoke or
discontinue any such license, permit, governmental approval, franchise
authorization or right, where the result thereof could reasonably be expected to
have a Material Adverse Effect.
Section 6.10 Use of Proceeds. The Co-Borrowers shall not use the proceeds
of any Loans hereunder directly or indirectly for any unlawful purpose, in any
manner inconsistent with Section 2.01(iv), Section 2.02(ii) and Section 2.03(ii)
hereof, or inconsistent with any other provision of any Loan Document.
Section 6.11 Continuation of or Change in Business. The Co-Borrowers, their
Subsidiaries and Affiliates shall continue to engage in their collective
businesses substantially as conducted and operated during the present and
preceding Fiscal Year, and the Co-Borrowers, their Subsidiaries and Affiliates
shall not engage in any other material business other than the business of high
technology products and services for military and commercial customers in the
United States and abroad.
Section 6.12 Additional Corporate Guarantors and/or Partnership Guarantors.
The Co-Borrowers shall cause any Subsidiaries and/or Affiliates which are
acquired or formed after the Closing Date to execute the Agreement of Guaranty.
Section 6.13 Minimum Asset Coverage. The Co-Borrowers, their Subsidiaries
and Affiliates shall maintain at all times during the term of the Loan
Facilities the sum of the following assets as reflected on their consolidated
balance sheet, as of the date of determination, in excess of all Consolidated
Senior Debt as also reflected on their consolidated balance sheet, as of the
same date of determination: (i) Accounts Receivable, (ii) Inventory and (iii)
Cash and Cash Equivalents which are domiciled in either or both of the United
States or Canada.
Section 6.14 Minimum Required Interest Rate Hedge Protection. The
Co-Borrowers shall maintain for at least three (3) consecutive years during the
term of the Term Loan Facilities, a Swap Agreement in place covering at least
fifty percent (50%) of the aggregate outstanding principal balance of the Term
Loan Facilities, from time to time.
Section 6.15 Year 2000. The Co-Borrowers shall, and shall cause each
Subsidiary and Affiliate to, take all action necessary to assure that such
Person's computer-based systems are able to effectively process data including
dates prior to, on, and after January 1, 2000 such that
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there will be no Material Adverse Effect. At the request of the Agent, the
Borrower shall provide the Agent with assurance reasonably acceptable to the
Agent of the Co-Borrowers' or any Subsidiary's or Affiliate's Year 2000
capability.
Section 6.16 Year 2000 Compliance. Each of the Co-Borrowers, its
respective Subsidiaries and Affiliates has completed or accomplished or will
complete or accomplish by the indicated dates, the following:
(i) By December 31, 1999, prepare a comprehensive, detailed inventory and
assessment of the extent to which such Co-Borrower, Subsidiary or Affiliate is
not Year 2000 Compliant;
(ii) By December 31, 1999, make detailed inquiry of all material suppliers,
vendors and customers of such Co-Borrower, Subsidiary or Affiliate to ascertain
whether such entities are aware of the need to be Year 2000 Compliant and are
taking all appropriate steps to become Year 2000 Compliant on a timely basis;
(iii) By December 31, 1999, prepare a detailed project plan and timetable
for ensuring that such Co-Borrower, Subsidiary or Affiliate is Year 2000
Compliant on a timely basis;
(iv) By December 31, 1999, fix all code dates for, or replace with Year
2000 Compliant technology, all adversely affected material computer applications
and embedded microchips, and commence testing thereof; and
(v) By December 31, 1999, complete testing and installation of all
necessary software and embedded microchip technology such that such Co-Borrower,
Subsidiary or Affiliate is Year 2000 Compliant.
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ARTICLE VII
NEGATIVE COVENANTS
The Co-Borrowers covenant and agree that, on and after the Closing Date and
so long as any Lender shall have any obligation hereunder and until payment in
full of all of the Obligations, unless the Requisite Lenders shall otherwise
give prior written consent thereto:
Section 7.01. Consolidated Debt. The Co-Borrowers, their Subsidiaries and
Affiliates shall not directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to, any Consolidated
Debt, except for:
(i) the Obligations;
(ii) accounts payable (including royalties and similar payments) owing to
and letters of credit in favor of trade creditors arising from current
liabilities for goods and services purchased in the normal course of the
Co-Borrowers', their Subsidiaries' and/or Affiliates' respective businesses;
(iii) the permitted existing Consolidated Debt as described on Schedule
7.01(iii) attached hereto, and extensions, renewals, replacements and
refinancing thereof, not exceeding the principal amount outstanding on the date
of such extension, renewal, replacement or refinancing, provided that the terms
are no less advantageous to the Co-Borrowers, their Subsidiaries and/or
Affiliates than the predecessor obligation; provided, however, in any event, the
Co-Borrowers shall be permitted to refinance any of the existing Consolidated
Senior Debt described on Schedule 7.01(iii) with proceeds of the Revolving
Credit Facility;
(iv) Consolidated Debt in respect of guarantees permitted by Section 7.11
hereof; and
(v) Consolidated Debt in connection with purchase money Liens permitted by
Section 7.02(ii)(e) hereof; and
(vi) Consolidated Funded Debt having in the aggregate an outstanding
principal balance of not more than US$5,000,000.00, which Consolidated Debt was
acquired by the Co-Borrowers, their Subsidiaries and/or Affiliates in connection
with the acquisition (whether a stock acquisition or asset acquisition) of any
Subsidiary, Affiliate or any other Person.
Section 7.02. Sales of Assets; Liens.
(i) Sales. The Co-Borrowers, their Subsidiaries and Affiliates shall not
sell, assign, transfer, lease, convey, abandon or otherwise dispose of,
voluntarily or involuntarily, any Properties, whether now owned or hereafter
acquired, or any income or profits therefrom, except:
(a) sales of Inventory in the ordinary course of business; and/or
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(b) sales of any Properties having net sales proceeds of up to
US$1,250,000.00 per year in the aggregate (and the Agent and the Lenders
agree to release their security interest in the Collateral which is sold
for no consideration).
(ii) Liens. The Co-Borrowers, their Subsidiaries and Affiliates shall not
directly or indirectly create, incur, assume or permit to exist any Lien on or
with respect to any of their respective Properties except:
(a) Liens securing the Obligations;
(b) any interest or title of a lessor or secured by a lessor's
interest under any lease permitted by this Loan Agreement;
(c) Liens existing on the date of this Loan Agreement securing any of
the existing Consolidated Debt described on Schedule 7.01(iii) attached
hereto (but said Liens may not be increased in principal amount);
(d) Customary Permitted Liens;
(e) purchase money Liens securing Consolidated Debt (including the
interest of a lessee under a Capitalized Lease) in the aggregate principal
amount outstanding at any time not to exceed US$2,500,000.00; and
(f) Liens securing Consolidated Debt permitted under Section 7.01(vi)
above.
Section 7.03. Loans, Advances and Investments. The Co-Borrowers, their
Subsidiaries and Affiliates shall not, at any time make or suffer to exist or
remain outstanding, any loan or advance to, or purchase, acquire or own
(beneficially or of record) any stock, bonds, notes or securities of, or any
partnership interest (whether general or limited) in, or any other interest in,
or make any capital contribution to or other investment in, any other Person, or
agree, become or remain liable (contingent or otherwise) to do any of the
foregoing, except:
(i) Loans and investments existing on the date hereof and listed in
Schedule 7.03 attached hereto and extensions, renewals and refinancing thereof
on terms no less favorable than those existing immediately before such
extension, renewal or refinancing);
(ii) Accounts receivable owing to the Co-Borrowers, their Subsidiaries and
Affiliates arising from sales of inventory under usual and customary terms in
the ordinary course of business and loans and advances extended by the
Co-Borrowers, their Subsidiaries and/or Affiliate to subcontractors or suppliers
(excluding subcontractors or suppliers who are Subsidiaries or Affiliates) under
usual and customary terms in the ordinary course of business;
(iii) Loans from a Co-Borrower, a Subsidiary or an Affiliate to another
Co-Borrower, Subsidiary or Affiliate;
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(iv) Loans or advances not to exceed US$500,000.00 in the aggregate at any
time outstanding made to officers, partners or other employees of the
Co-Borrowers, their Subsidiaries and/or Affiliates;
(v) Investments in Cash or Cash Equivalents;
(vi) Investments in all existing and any new Subsidiaries or Affiliates who
are conducting business similar to or the same as the Co-Borrowers, their
Subsidiaries or Affiliates; provided, that, the Co-Borrowers shall deliver to
the Agent at least ten (10) Business Days prior to the actual closing date of
the formation or acquisition of said new Subsidiaries or Affiliates, a proforma
compliance certificate in the form set forth in Exhibit "F-1" attached hereto,
taking into consideration the effect of said acquisition or formation; and
(vii) Loans not to exceed US$2,000,000.00 in the aggregate at any time
outstanding to Persons whom the Co-Borrowers, their Subsidiaries and/or
Affiliates have identified to the Lender in writing are targets of a proposed or
contemplated acquisition by the Co-Borrowers, their Subsidiaries and/or
Affiliates.
Section 7.04. Restricted Junior Payments. The Co-Borrowers, their
Subsidiaries and Affiliates shall not declare or make any Restricted Junior
Payment, except (i) they may make any distribution (whether direct or indirect
and whether in the form of cash, property, securities or otherwise) to
shareholders, employees or other permitted distributees under DRS's 1996 Omnibus
Plan and other benefit or retirement plans maintained and created by the
Co-Borrowers, their Subsidiaries and Affiliates, (ii) they may distribute shares
of their capital stock to any Person or the owners of said Person in connection
with an acquisition of said Person and (iii) they may make any distribution
(whether direct or indirect and whether in the form of cash, property,
securities or otherwise) to any Person during the period that the Co-Borrowers,
their Subsidiaries and Affiliates have achieved and continue to maintain a
Consolidated Funded Debt Leverage Ratio equal to or less than 3.0 -to- 1.0.
Section 7.05. Restriction on Fundamental Changes. The Co-Borrowers, their
Subsidiaries and Affiliates shall not enter into any merger or consolidation, or
liquidate, windup or dissolve (or suffer any liquidation or dissolution), or
convey, lease, sell, transfer or otherwise dispose of, in one transaction or
series of transactions, all or any substantial part of their respective
businesses, properties or assets, whether now or hereafter acquired except (i)
as permitted by Section 7.02(i) hereof, (ii) mergers of any Subsidiary or
Affiliate into (a) any of the Co-Borrowers or (b) another Subsidiary or
Affiliate, (iii) the merger of NAI Technologies, Inc., a New York corporation,
with a principal place of business located at 82 New York Avenue, Huntington,
New York 11743, with and into DRS, with DRS being the surviving entity and (iv)
any merger, consolidation or acquisition during the period that the
Co-Borrowers, their Subsidiaries and Affiliates have obtained and continue to
maintain a Consolidated Funded Debt Leverage Ratio equal to or less than 3.0
- -to- 1.0 provided that each of the following conditions are satisfied: (a) the
target Person must be in the same line of business as the Co-Borrowers, (b) all
of the financial covenants set forth in Article VIII of this Loan Agreement must
be complied with on both a projected and an historical pro forma basis, (c) DRS
or any other Co-Borrower must be the surviving Person and (d) costs and expenses
incurred, and debt assumed, in connection with any acquisitions may not exceed
US$20,000,000.00
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individually or US$40,000,000.00 in the aggregate during the term of this Loan
Agreement.
Section 7.06. ERISA. The Co-Borrowers, their Subsidiaries and Affiliates
shall not, and the Co-Borrowers shall not permit any of its ERISA Affiliates to,
do any of the following to the extent that such act or failure to act would
result in the aggregate, after taking into account any other such acts or
failure to act, in an obligation to pay a sum of money that is material to the
business of the Co-Borrowers, their Subsidiaries and Affiliates:
(i) Engage, or permit an ERISA Affiliate to engage, in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of the Code for
which a class exemption is not available or a private exemption has not been
obtained from the DOL;
(ii) Permit to exist any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived;
(iii) Fail, or permit an ERISA Affiliate to fail, to pay timely required
contributions or annual installments due with respect to any waived funding
deficiency to any Plan;
(iv) Terminate, or permit an ERISA Affiliate to terminate, any Benefit Plan
which would result in any liability of the Co-Borrowers, their Subsidiaries,
Affiliates or an ERISA Affiliate under Title IV of ERISA; or
(v) Fail, or permit any ERISA Affiliate to fail, to pay any required
installment under section (m) of Section 412 of the Code or any other payment
required under Section 412 of the Code on or before the due date for such
installment or other payment.
Section 7.07 Amendment of Articles of Incorporation or ByLaws. The
Co-Borrowers, their Subsidiaries and Affiliates shall not materially amend,
modify or supplement their respective articles of incorporation, bylaws or
partnership agreements, except upon at least ten (10) days' prior express
written notice to the Agent.
Section 7.08 Margin Regulations. No portion of the proceeds of any credit
extended under this Loan Agreement shall be used in any manner which might cause
the extension of credit or the application of such proceeds to violate
Regulation U or Regulation X or any other regulation of the Federal Reserve
Board or to violate the Securities Exchange Act or the Securities Act, in each
case as in effect on the date or dates of such Borrowing and such use of
proceeds.
Section 7.09 Cancellation of Consolidated Debt; Prepayment. The
Co-Borrowers, their Subsidiaries and Affiliates shall not cancel any Claim or
Consolidated Debt (except for adequate consideration and in the ordinary course
of their respective businesses) and shall not prepay any long-term Consolidated
Subordinated Debt; provided, however, that the foregoing shall not prohibit the
prepayment of the Obligations or the refinance of any Consolidated Subordinated
Debt in amounts and on terms and conditions equal to or better than the existing
terms and conditions.
Section 7.10 Environmental Liabilities. The Co-Borrowers, their
Subsidiaries and Affiliates shall not become subject to any Liabilities and
Costs which the Agent deems has or is
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likely to have a Material Adverse Effect arising out of or related to (i) the
Release or threatened Release at any location of any Environmental Concern
Material into the Environment, or any Remedial Action in response thereto, or
(ii) any violation of any Environmental, health or safety Requirement of Law;
provided, however, that this covenant shall not be violated so long as (a) the
Co-Borrowers, their Subsidiaries and Affiliates shall have notified the Agent of
the assertion of such liability or required expenditures promptly upon receiving
written notice of such assertion, (b) the Co-Borrowers shall have continued to
furnish the Agent with such information concerning such asserted liability or
required expenditure as the Agent shall have reasonably requested, or as
otherwise provided herein, (c) the Co-Borrowers, their Subsidiaries and
Affiliates shall be diligently pursuing indemnification for such liability or
required expenditures from any Person which has an obligation to provide such
indemnification, and (d) the Agent is satisfied that the imposition of such
liability during the pendency of the Co-Borrowers', their Subsidiaries' or
Affiliates' pursuit of indemnification will not materially impair the
Co-Borrowers', its Subsidiaries' or its Affiliates' ability to perform its
financial obligations under this Loan Agreement.
Section 7.11 Guaranties. The Co-Borrowers, their Subsidiaries and
Affiliates shall not assume, guaranty, endorse or otherwise be or become
directly or contingently responsible or liable, for obligations or liabilities
of any Person, except for:
(i) guaranties existing on the Closing Date as described on Schedule
7.11(i) attached hereto;
(ii) guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and
(iii) guaranties of direct obligations of any of the Co-Borrowers, their
Subsidiaries and/or Affiliates.
Section 7.12 No Negative Pledges to Other Person. Except with respect to
the negative pledge executed by DRS Hadland, Inc. and DRS Hadland Photonics GmbH
in connection with certain financing provided by Midland Bank to DRS Hadland
Ltd., the Co-Borrowers, their Subsidiaries and Affiliates shall not grant to
another Person a covenant commonly referred to as a "negative pledge" with
respect to their respective assets and Properties.
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ARTICLE VIII
FINANCIAL COVENANTS
The Co-Borrowers covenant and agree that, on and after the Closing Date so
long as any Lender has any Commitment hereunder and until payment in full of all
the Obligations unless the Requisite Lenders shall otherwise give prior written
consent thereto:
Section 8.01 Minimum Consolidated Net Worth. The Co-Borrowers, their
Subsidiaries and Affiliates shall maintain at all times during the term of the
Loan Facilities (which covenant may be tested by the Agent at any time but in
any event shall always be tested as of the end of the periods covered by the
annual consolidated and consolidating financial statements which are to be
provided to the Agent pursuant to Section 5.02 of this Loan Agreement), a
minimum Consolidated Net Worth of at least the amount set forth below for each
corresponding test date:
Fiscal Year Minimum Consolidated Net Worth
----------- ------------------------------
Closing Date through
March 31, 1999 the greater of (i) US$40,000,000.00 or
(ii) ninety percent (90%) of the actual
Consolidated Net Worth as of said
March 31, 1999
Thereafter *
* For each Fiscal Year after the Fiscal Year ending on March 31, 1999, the
Co-Borrowers, their Subsidiaries and Affiliates shall maintain a Minimum
Consolidated Net Worth of not less than the minimum actual Consolidated Net
Worth for the immediately preceding Fiscal Year plus (a) fifty percent (50%) of
the Consolidated Net Income (profits but not losses) of the Co-Borrowers, their
Subsidiaries and Affiliates for each said Fiscal Year then ended and (b) one
hundred percent (100%) of the net proceeds received by any one or more of the
Co-Borrowers, their Subsidiaries or Affiliates from the equity issuance of their
capital stock to Persons other than the Co-Borrowers, their Subsidiaries or
Affiliates and from the conversion of any Consolidated Subordinated Debt into
equity; provided, however, that the reduction to Consolidated Net Worth up to a
maximum of US$20,000,000.00 as a result of a charge for in-process research and
development expense related to the transactions contemplated by the Purchase
Agreement shall not result in a reduction to Consolidated Net Worth for the
purpose of calculating the Consolidated Net Worth under this Section 8.01. In
addition, any increase in Consolidated Net Worth which results from the pending
merger of NAI Technologies, Inc. with DRS shall be included in the calculation
of Consolidated Net Worth under this Section 8.01.
Section 8.02 Maximum Consolidated Senior Debt Leverage Ratio. The
Co-Borrowers, their Subsidiaries and Affiliates shall have on the last day of
each Fiscal Quarter and each Fiscal Year (which covenant shall be tested at the
end of the periods covered by the quarterly and annual consolidated and
consolidating financial statements which are to be provided to the Agent
pursuant to Section 5.02 of this Loan Agreement) a Consolidated Senior Debt
Leverage Ratio equal to or
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less than the ratios set forth below for each corresponding test date:
Fiscal Quarter Test Dates Maximum Permitted Ratio*
------------------------- ------------------------
December 31, 1998 5.0 - to - 1.0
March 31, 1999; June 30, 1999; 3.75 - to - 1.0
September 30, 1999;
December 31, 1999
March 31, 2000; June 30, 2000; 3.25 - to - 1.0
September 30, 2000; and
December 31, 2000
March 31, 2001; June 30, 2001; 2.75 - to - 1.0
September 30, 2001;
December 31, 2001; March 31, 2002;
June 30, 2002; September 30, 2002; and
December 31, 2002
March 31, 2003 and each June 30th; 2.25 - to - 1.0
September 30th, December 31st; and
March 31st thereafter
* For purposes of this Section 8.02, the Consolidated Senior Debt Leverage
Ratio shall be calculated using Consolidated EBITDA of the prior twelve (12)
consecutive months and Consolidated Senior Debt as of the actual day of the
calculation. Consolidated EBITDA shall be a pro forma historical Consolidated
EBITDA to account for any mergers or acquisitions. For the test dates of
December 31, 1998, March 31, 1999 and June 30, 1999 Consolidated EBITDA shall be
calculated not on a rolling four (4) quarters basis but rather shall be
calculated as the sum of (i) Consolidated EBITDA for the Co-Borrowers, their
Subsidiaries and Affiliates for the twelve (12) month period ended on such test
date (excluding the operations acquired from the Sellers) plus (ii) the
annualized Consolidated EBITDA for the operations acquired from the Sellers
based upon the cumulative actual operating results for the Fiscal Quarter ended
on such test date and all prior Fiscal Quarters since the Closing Date.
Commencing on September 30, 1999 and continuing at all times thereafter, the
Consolidated Senior Debt Leverage Ratio shall be tested for the period of four
(4) consecutive Fiscal Quarters immediately preceding said date of determination
taken together as one (1) accounting period.
Section 8.03 Maximum Consolidated Funded Debt Leverage Ratio. The
Co-Borrowers, their Subsidiaries and Affiliates shall have on the last day of
each Fiscal Quarter and each Fiscal Year (which covenant shall be tested at the
end of the periods covered by the quarterly and annual consolidated and
consolidating financial statements which are to be provided to the Agent
pursuant to Section 5.02 of this Loan Agreement) a Consolidated Funded Debt
Leverage Ratio equal to or less than the ratios set forth below for each
corresponding test date:
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Fiscal Quarter Test Dates Maximum Permitted Ratio*
------------------------- ------------------------
December 31, 1998 5.75 - to - 1.0
March 31, 1999; June 30, 1999; 4.5 - to - 1.0
September 30, 1999;
December 31, 1999
March 31, 2000; June 30, 2000; 4.0 - to - 1.0
September 30, 2000; and
December 31, 2000
March 31, 2001; June 30, 2001; 3.5 - to - 1.0
September 30, 2001;
December 31, 2001; March 31, 2002;
June 30, 2002; September 30, 2002; and
December 31, 2002
March 31, 2003 and each June 30th; 3.0 - to - 1.0
September 30th, December 31st; and
March 31st thereafter
* For purposes of this Section 8.03, the Consolidated Funded Debt Leverage
Ratio shall be calculated using Consolidated EBITDA of the prior twelve (12)
consecutive months and Consolidated Funded Debt as of the actual day of the
calculation. Consolidated EBITDA shall be a pro forma historical Consolidated
EBITDA to account for any mergers or acquisitions. For the test dates of
December 31, 1998, March 31, 1999 and June 30, 1999 Consolidated EBITDA shall be
calculated not on a rolling four (4) quarters basis but rather shall be
calculated as the sum of (i) Consolidated EBITDA for the Co-Borrowers, their
Subsidiaries and Affiliates for the twelve (12) month period ended on such test
date (excluding the operations acquired from the Sellers) plus (ii) the
annualized Consolidated EBITDA for the operations acquired from the Sellers
based upon the cumulative actual operating results for the Fiscal Quarter ended
on such test date and all prior Fiscal Quarters since the Closing Date.
Commencing on September 30, 1999 and continuing at all times thereafter, the
Consolidated Funded Debt Leverage Ratio shall be tested for the period of four
(4) consecutive Fiscal Quarters immediately preceding said date of determination
taken together as one (1) accounting period.
Section 8.04 Minimum Consolidated Fixed Charge Coverage Ratio. The
Co-Borrowers, their Subsidiaries and Affiliates shall have on the last day of
each Fiscal Quarter and each Fiscal Year (which covenant shall be tested at the
end of the periods covered by the quarterly and annual consolidated and
consolidating financial statements which are to be provided to the Agent
pursuant to Section 5.02 of this Loan Agreement) a Consolidated Fixed Charge
Coverage Ratio equal to or greater than the ratios set forth below for each
corresponding test date:
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Fiscal Quarter Test Dates Minimum Permitted Ratio*
------------------------- ------------------------
December 31, 1998 1.0 - to - 1.0
March 31, 1999; June 30, 1999; 1.0 - to - 1.0
September 30, 1999;
December 31, 1999
March 31, 2000; June 30, 2000; 1.0 - to - 1.0
September 30, 2000; and
December 31, 2000
March 31, 2001; June 30, 2001; 1.0 - to - 1.0
September 30, 2001;
December 31, 2001; March 31, 2002;
June 30, 2002; September 30, 2002; and
December 31, 2002
March 31, 2003 and each June 30th; 1.0 - to - 1.0
September 30th, December 31st; and
March 31st thereafter
* For purposes of this Section 8.04, the Consolidated Fixed Charge Coverage
Ratio for the test dates of December 31, 1998, March 31, 1999 and June 30, 1999
shall be calculated not on a rolling four (4) quarters basis and not on an
annualized basis but rather on a cumulative basis for the prior Fiscal Quarters
ended since the Closing Date. Commencing on September 30, 1999 and continuing at
all times thereafter, the Consolidated Fixed Charge Coverage Ratio shall be
tested for the period of four (4) consecutive Fiscal Quarters immediately
preceding said date of determination taken together as one (1) accounting
period.
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ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 9.01 Events of Default. The occurrence of any of the following
events with the passing of any applicable notice and cure periods shall
constitute an "Event of Default" under this Loan Agreement (hereinafter referred
to as an "Event of Default"):
(i) Any representation or warranty made by any one or more of the
Co-Borrowers, the Partnership Guarantor, the Corporate Guarantors or any other
Person in any of the Loan Documents furnished in connection with the Loan
Facilities, shall prove to have been false, incorrect or misleading in any
substantial and material respect on the date as of which made;
(ii) Any one or more of the Co-Borrowers shall have failed to make any
payment of any installment of interest on any of the Notes, the Letters of
Credit Reimbursement Agreement and/or under this Loan Agreement on their
respective due dates;
(iii) Any one or more of the Co-Borrowers shall have failed to make any
payment of principal on any of the Notes, the Letters of Credit Reimbursement
Agreement and/or under this Loan Agreement on their respective due dates;
(iv) Any one or more of the Co-Borrowers, the Partnership Guarantor and/or
the Corporate Guarantors shall have failed to duly observe or perform any
covenant, condition or agreement with respect to the payment of monies on the
part of the Co-Borrowers, the Partnership Guarantor and/or the Corporate
Guarantors to be observed or performed pursuant to the terms of the Loan
Documents, other than the payment of principal and interest which shall be
governed by Section 9.01(ii) and (iii) above, and such default shall have
remained uncured for a period of thirty (30) days after written notice thereof
to the Co-Borrowers, the Partnership Guarantor and/or the Corporate Guarantors
by the Agent;
(v) Any one or more of the Co-Borrowers, the Partnership Guarantor and/or
the Corporate Guarantors shall have failed to duly observe or perform any
covenant, condition or agreement on the part of the Co-Borrowers, the
Partnership Guarantor and/or the Corporate Guarantors to be observed or
performed pursuant to the terms of the Loan Documents other than the payment of
monies which shall be governed by Section 9.01 (ii), (iii) and (iv) above, and
such default shall have remained uncured for a period of thirty (30) days after
written notice thereof to the Co-Borrowers, the Partnership Guarantor and/or the
Corporate Guarantors by the Agent;
(vi) Any one or more of the Co-Borrowers, the Partnership Guarantor and/or
the Corporate Guarantors shall have applied for or consented to the appointment
of a custodian, receiver, trustee or liquidator of all or a substantial part of
their respective assets; a custodian shall have been appointed with or without
consent of the Co-Borrowers, the Partnership Guarantor and/or the Corporate
Guarantors; the Co-Borrowers, the Partnership Guarantor and/or the Corporate
Guarantors shall generally not be paying their respective Debts as they become
due; the Co-Borrowers, the Partnership Guarantor and/or the Corporate Guarantors
shall have made a general assignment for the benefit of their respective
creditors; the Co-Borrowers, the Partnership
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Guarantor and/or the Corporate Guarantors, shall have filed a voluntary petition
(or assignment) in bankruptcy, or a petition or an answer seeking reorganization
or an arrangement with their respective creditors, or shall have taken advantage
of any insolvency law, or shall have filed an answer admitting the material
allegations of a petition in bankruptcy, reorganization or insolvency
proceeding; or a petition in bankruptcy shall have been filed against any one or
more of the Co-Borrowers, the Partnership Guarantor and/or the Corporate
Guarantors and shall not have been dismissed for a period of sixty (60)
consecutive days, or an Order for Relief or Receiving Order or Interim Order
shall have been entered against the Co-Borrowers, the Partnership Guarantor
and/or the Corporate Guarantors under either the Bankruptcy Code or the
Bankruptcy Act; or an order, judgment or decree shall have been entered without
the application, approval or consent of the Co-Borrowers, the Partnership
Guarantor and/or the Corporate Guarantors by any court of competent jurisdiction
appointing a receiver, trustee, custodian or liquidator of the Co-Borrowers, the
Partnership Guarantor and/or the Corporate Guarantors of a substantial part of
their respective assets and such order, judgment or decree shall have continued
unstayed and in effect for any period of sixty (60) consecutive days;
(vii) A writ of execution or attachment or any similar process
shall be issued or levied against all or any part of or interest in any of the
Properties of any one or more of the Co-Borrowers, the Partnership Guarantor
and/or the Corporate Guarantors or any judgment involving monetary damages shall
be entered against any one or more of the Co-Borrowers, the Partnership
Guarantor and/or the Corporate Guarantors which shall become a lien on any one
or more of the Co-Borrowers', the Partnership Guarantor's and/or the Corporate
Guarantors' Properties or any portion thereof or interest therein and such
execution, attachment or similar process is not released, bonded, satisfied,
vacated or stayed within thirty (30) days after its entry or levy, and said writ
of execution, attachment, levy or judgment shall involve monetary damages
aggregating more than US$1,000,000.00;
(viii) Seizure or foreclosure of any of the Properties of any one or more
of the Co-Borrowers, the Partnership Guarantor and/or the Corporate Guarantors
pursuant to process of law or by respect of legal selfhelp, involving monetary
damages aggregating more than US$1,000,000.00, unless said seizure or
foreclosure is stayed or bonded within thirty (30) days after the occurrence of
same;
(ix) The voluntary permanent closing of business or ceasing of operations
of any one or more of the Co-Borrowers, the Partnership Guarantor and/or the
Corporate Guarantors, the result of which would have a Material Adverse Effect;
(x) Default by any one or more of the Co-Borrowers, the Partnership
Guarantor and/or the Corporate Guarantors in any of the terms or conditions of
any agreement (excluding the Loan Documents) covering the payment of borrowed
money from the Agent and/or any other creditor (which with respect to any other
creditor shall be in an amount involving not less than US$1,000,000.00), which
default has been declared by the Agent or said other creditor, and said
Consolidated Debt with respect to any other creditor has been accelerated;
(xi) The occurrence of a material adverse change in the business, financial
condition, financial performance, properties or operations of any one or more of
the Co-Borrowers,
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the Partnership Guarantor and the Corporate Guarantors taken as a whole; or
(xii) The occurrence of a Reportable Event, the result of which would have
a Material Adverse Effect.
Section 9.02 Rights and Remedies.
(i) Acceleration. Upon the occurrence and during the continuance
of any Event of Default described in the foregoing Section 9.01(vi) hereof, the
Commitments shall automatically and immediately terminate and the unpaid
principal amount of and any and all accrued interest on the Loans and all
Reimbursement Obligations shall automatically become immediately due and
payable, with all additional interest from time to time accrued thereon and
without presentment, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of acceleration), all
of which are hereby expressly waived by the Co-Borrowers, their Subsidiaries and
Affiliates, and the obligation of each of the Lenders to make any additional
Revolving Credit Loans or issue any additional Letters of Credit hereunder shall
thereupon terminate. Upon the occurrence and during the continuance of any other
Event of Default described in Section 9.01 above, the Agent shall, at the
request, or may with the consent, of the Requisite Lenders, by written notice to
the Co-Borrowers, (a) declare that the Commitments are terminated, whereupon the
Commitments and the obligation of each Lender to make any Loan or the Issuing
Bank to issue any Letters of Credit hereunder shall immediately terminate and/or
(b) declare the unpaid principal amount of and any and all accrued and unpaid
interest on the Loans and all Reimbursement Obligations to be, and the same
shall thereupon be, immediately due and payable with all additional interest
from time to time accrued thereon and without presentment, demand, or protest or
other requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and of acceleration), all of which are hereby expressly waived by the
Co-Borrowers.
(ii) Deposit for Letters of Credit. Upon demand by the Agent or the Issuing
Bank after the occurrence and during the continuance of any Event of Default,
the Co-Borrowers shall deposit with the Agent for the benefit of the Issuing
Bank with respect to each Letter of Credit then outstanding for the account of
the Co-Borrowers, promptly upon the demand of the Agent, Cash or Cash
Equivalents in an amount equal to the greatest amount for which all such Letter
of Credit may be drawn. Such deposit shall be held by the Agent for the benefit
of the Issuing Bank as security for, and to provide for the payment of, the
Reimbursement Obligations.
(iii) Rights Under Loan Documents. Upon the occurrence and during the
continuance of any Event of Default, the Agent may and upon the direction of the
Required Lenders, shall take any lawful action against the Co-Borrowers, the
Corporate Guarantors and/or the Partnership Guarantor to collect the payments
then due and thereafter to become due under the Loan Documents, including,
without limitation, any rights under the Collateral Documents.
(iv) Set-off. Upon the occurrence and during the continuance of any Event
of Default, without prior notice or other action (any such notice being
expressly waived by the Co-Borrowers; however the Agent and each Lender shall
give the Co-Borrowers notice within three (3)
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days after the Agent and/or the Lender has set off any amounts) the Agent and
each Lender may set-off any money owed by the Agent and said Lender in any
capacity to the Co-Borrowers or any Property of the Co-Borrowers in the
possession of the Agent and said Lender against any of the monetary obligations
of the Co-Borrowers to the Agent and said Lender under the Loan Documents, and
the Agent and said Lender shall be deemed to have exercised such right of
set-off and to have made a charge against any such money or property
immediately, even though the actual book entries may be made at some time
subsequent thereto.
Section 9.03 Application of Proceeds. (i) All payments and proceeds
received under Section 9.02 of this Loan Agreement shall be applied in the
following order of priority:
(a) First, to the payment of all reasonable fees, costs and expenses
(including reasonable attorney's fees and expenses) incurred by the Agent,
any Lender and/or their agents or representatives in connection with the
realization of such payments or proceeds;
(b) Next, to the payment in full of all unpaid principal, accrued
interest and other sums, if any, due and owing under the Term Loan
Facilities on a pro rata basis;
(c) Next, to the payment in full of all unpaid principal,
accruedinterest and other sums, if any, due and owing under the Revolving
Credit Facility;
(d) Next, to any Swap Obligations;
(e) Next, the balance, if any, or such payments, proceeds, or
amountsto the Co-Borrowers, or, if otherwise determined by a court of
competent jurisdiction, to whomever may be entitled thereto.
(ii) If the amount of the proceeds received from the sale or other
disposition of the Collateral shall be insufficient to satisfy in full the
amounts referred to in clauses (a) and (d) above, then the Co-Borrowers shall
remain and be jointly and severally liable for any such deficiency.
Section 9.04 No Notices. In order to entitle the Agent to exercise any
remedy available to it under Section 9.02 of this Loan Agreement, it shall not
be necessary for the Agent to give any notice, other than such notice as may be
required expressly in this Loan Agreement or by applicable Law.
Section 9.05 Agreement to Pay Attorneys' Fees and Expenses. Upon the
occurrence and during the continuance of an Event of Default, as a result of
which the Agent and/or any Lender shall require and employ attorneys or incur
other expenses for the collection of payments due or to become due or the
enforcement or performance or observance of any obligation or agreement on the
part of the Co-Borrowers contained herein, the Co-Borrowers shall, on demand,
pay to the Agent and/or the applicable Lender, the reasonable fees of such
attorneys and such other expenses so incurred by them.
Section 9.06 No Additional Waiver Implied by One Waiver. In the event that
any agreement contained in this Loan Agreement should be breached by any party
and thereafter
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waived by the other parties, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach hereunder.
Section 9.07 Failure to Exercise Rights. Nothing herein contained shall
impose upon the Agent and the Lenders any obligation to enforce any terms,
covenants or conditions contained in this Loan Agreement and the other Loan
Documents. Failure of the Agent and/or the Lenders, in any one or more
instances, to insist upon strict performance by the Co-Borrowers of any terms,
covenants or conditions of this Loan Agreement and the other Loan Documents,
shall not be considered or taken as a waiver or relinquishment by the Agent and
the Lenders of its right to insist upon and to enforce in the future, by
injunction or other appropriate legal or equitable remedy, strict compliance by
the Co-Borrowers with all the terms, covenants and conditions of this Loan
Agreement and the other Loan Documents. The consent of the Agent and/or the
Lenders to any act or omission by the Co-Borrowers shall not be construed to be
a consent to any other or subsequent act or omission or to waive the requirement
for the Agent's or the Lender's consent to be obtained in any future or other
instance.
Section 9.08 Waiver Of Jury Trial. THE CO-BORROWERS, THE AGENT AND THE
LENDERS HEREBY WAIVE ANY AND ALL RIGHTS THAT THEY MAY NOW OR HEREAFTER HAVE
UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE, TO A TRIAL BY JURY
OF ANY AND ALL ISSUES ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR
PROCEEDING BETWEEN THE CO-BORROWERS, THE AGENT AND THE LENDERS OR THEIR
SUCCESSORS AND ASSIGNS, OUT OF OR IN ANY WAY CONNECTED WITH THIS LOAN AGREEMENT
AND THE OTHER LOAN DOCUMENTS. IT IS INTENDED THAT SAID WAIVER SHALL APPLY TO ANY
AND ALL DEFENSES, RIGHTS, AND/OR COUNTERCLAIMS IN ANY ACTION OR PROCEEDING. THE
CO-BORROWERS, THE AGENT AND THE LENDERS RECOGNIZE THAT ANY DISPUTE ARISING IN
CONNECTION WITH THE REVOLVING CREDIT FACILITY IS LIKELY TO BE COMPLEX AND
CONSEQUENTLY THEY WISH TO STREAMLINE AND MINIMIZE THE COST OF THE DISPUTE
RESOLUTION PROCESS BY AGREEING TO WAIVE THEIR RIGHTS TO A JURY TRIAL.
Section 9.09 Remedies Cumulative. No remedy herein conferred upon or
reserved to the Agent and/or the Lenders is intended to be exclusive of any
other remedy or remedies; but each and every such remedy shall be cumulative,
and shall be in addition to every other remedy given hereunder, or now or
hereafter existing at law or in equity or by statute. No express or implied
waiver by the Agent and/or the Lender of any Event of Default hereunder shall in
any way be, or be construed to be, a waiver of any future or subsequent Event of
Default. No delay or omission to exercise any right or power accruing upon any
Event of Default continuing as aforesaid, shall impair any such right or power
or shall be construed to be a waiver of any such Event of Default, or
acquiescence therein; and every such right and power may be exercised from time
to time and as often as may be deemed expedient.
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ARTICLE X
THE AGENT
Section 10.01 Appointment. (i) Each Lender hereby irrevocably designates
and appoints Mellon Bank N.A. as the Agent of such Lender under this Loan
Agreement and the Loan Documents. Each Lender hereby irrevocably authorizes the
Agent to take such action on its behalf under the provisions of this Loan
Agreement and the other Loan Documents and to exercise such powers as are set
forth herein or therein together with such other powers as are incidental
thereto. Each Lender hereby irrevocably authorizes the Agent to execute and
deliver each of the Loan Documents and to accept delivery of such of the other
Loan Documents as may not require execution by the Agent. Each Lender agrees
that the rights and remedies granted to the Agent under the Loan Documents shall
be exercised exclusively by the Agent, and that no Lender shall have any right
individually to exercise any such right or remedy, except to the extent
expressly provided herein or therein. The Agent agrees to act as such on the
express conditions contained in this Article X.
(ii) The provisions of this Article X are solely for the benefit of the
Agent and the Lenders, and the Co-Borrowers shall not have any rights to rely on
or enforce any of the provisions hereof. In performing its functions and duties
under this Loan Agreement, the Agent shall act solely as agent of the Lenders
and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for the Co-Borrowers.
Section 10.02 General Nature of the Agent's Duties. Notwithstanding
anything to the contrary elsewhere in this Loan Agreement or in any other Loan
Document:
(i) The Agent shall have no duties or responsibilities except those
expressly set forth in this Loan Agreement and the other Loan Documents, and no
implied duties or responsibilities on the part of the Agent shall be read into
this Loan Agreement or any Loan Document or shall otherwise exist.
(ii) The duties and responsibilities of the Agent under this Loan Agreement
and the other Loan Documents shall be mechanical and administrative in nature,
and the Agent shall not have a fiduciary relationship in respect of any Lender.
(iii) The Agent is and shall be solely the agent of the Lenders. The Agent
does not assume, and shall not at any time be deemed to have, any relationship
of agency or trust with or for, or any other duty or responsibility to, the
Co-Borrowers, the Subsidiaries or their Affiliates or any other Person (except
only for its relationship as agent for, and its express duties and
responsibilities to the Lenders as provided in this Loan Agreement and the other
Loan Documents).
(iv) The Agent shall be under no obligation to take any action hereunder or
under any other Loan Document if the Agent believes in good faith that taking
such action may conflict with any Law or any provision of this Loan Agreement or
any other Loan Document, or
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may require the Agent to qualify to do business in any jurisdiction where it is
not then so qualified.
Section 10.03 Exercise of Powers. The Agent shall take any action of the
type specified in this Loan Agreement or any other Loan Document as being within
the Agent's rights, powers or discretion in accordance with directions from the
Requisite Lenders (or, to the extent this Loan Agreement or such other Loan
Document expressly requires the direction or consent of some other Person or set
of Persons, then instead in accordance with the directions of such other Person
or set of Persons). In the absence of such directions, the Agent shall have the
authority (but under no circumstances shall be obligated), in its sole
discretion, to take any such action, except to the extent this Loan Agreement or
such Loan Document expressly requires the direction or consent of the Requisite
Lenders (or some other Person or set of Persons), in which case the Agent shall
not take such action absent such direction or consent. Any action or inaction
pursuant to such direction, discretion or consent shall be binding on all the
Lenders. The Agent shall not have any liability to any Person as a result of (i)
the Agent acting or refraining from acting in accordance with the directions of
the Requisite Lenders (or other applicable Person or set of Persons), (ii) the
Agent refraining from acting in the absence of instructions to act from the
Requisite Lenders (or other applicable Person or set of Persons), whether or not
the Agent has discretionary power to take such action, or (iii) the Agent taking
discretionary action it is authorized to take under this Section (subject, in
the case of this clause (iii), to the provisions of Section 10.04(i) hereof).
Section 10.04 General Exculpatory Provisions. Notwithstanding anything to
the contrary elsewhere in this Loan Agreement or any other Loan Document:
(i) The Agent shall not be liable for any action taken or omitted to be
taken by it under or in connection with this Loan Agreement or any other Loan
Documents, unless caused by its own gross negligence or willful misconduct.
(ii) The Agent shall not be responsible for (a) the execution, delivery,
effectiveness, enforceability, genuineness, validity or adequacy of this Loan
Agreement or any other Loan Document, (b) any recital, representation, warranty,
document, certificate, report or statement in, provided for in, or received
under or in connection with, this Loan Agreement or any other Loan Document, (c)
any failure of the Co-Borrowers, their Subsidiaries or Affiliates or any Lender
to perform any of their respective obligations under this Loan Agreement or any
other Loan Document, (d) the existence, validity, enforceability, perfection,
recordation, priority, adequacy or value, now or hereafter, of any Lien or other
direct or indirect security afforded or purported to be afforded by any of the
Loan Documents or otherwise from time to time or (e) caring for, protecting,
insuring, or paying any taxes, charges or assessments with respect to any
Collateral.
(iii) The Agent shall not be under any obligation to ascertain, inquire or
give any notice relating to (a) the performance or observance of any of the
terms or conditions of this Loan Agreement or any other Loan Document on the
part of the Co-Borrowers, their Subsidiaries or Affiliates (b) the business,
operations, condition (financial or otherwise) or prospects of the
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Co-Borrowers, their Subsidiaries or Affiliates or (c) except to the extent set
forth in Section 10.05(vi) below, the existence of any Event of Default or any
Potential Event of Default.
(iv) The Agent shall not be under any obligation, either initially or on a
continuing basis, to provide any Lender with any notices, reports or information
of any nature, whether in its possession presently or hereafter, except for such
notices, reports and other information expressly required by this Loan Agreement
or any other Loan Document to be furnished by the Agent to such Lender, of which
the Agent has actual receipt or possession.
Section 10.05 Administration by the Agent.
(i) The Agent may rely upon any notice or other communication of any nature
(written or oral, including but not limited to telephone conversations, whether
or not such notice or other communication is made in a manner permitted or
required by this Loan Agreement or any Loan Document) purportedly made by or on
behalf of the proper party or parties, and the Agent shall not have any duty to
verify the identity or authority of any Person giving such notice or other
communication.
(ii) The Agent may consult with legal counsel (including, without
limitation, in-house counsel for the Agent or in-house or other counsel for the
Co-Borrowers or any Lender), independent certified public accountants and any
other experts selected by it from time to time, and the Agent 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) The Agent may conclusively rely upon the truth of the statements and
the correctness of the opinions expressed in any certificates or opinions
furnished to the Agent in accordance with the requirements of this Loan
Agreement or any other Loan Document. Whenever the Agent shall deem it necessary
or desirable that a matter be proved or established with respect to the
Co-Borrowers or any Lender, such matter may be established by a certificate of
the Co-Borrowers or any Lender, as the case may be, and the Agent may
conclusively rely upon such certificate (unless other evidence with respect to
such matter is specifically prescribed in this Loan Agreement or another Loan
Document).
(iv) The Agent may fail or refuse to take any action unless it shall be
indemnified to its satisfaction from time to time against any and all amounts,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature which may be imposed on,
incurred by or asserted against the Agent by reason of taking or continuing to
take any such action.
(v) The Agent may perform any of its duties under this Loan Agreement or
any other Loan Document by or through agents or attorneysinfact. The Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneysinfact selected by it with reasonable care.
(vi) The Agent shall not be deemed to have any knowledge or notice of the
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occurrence of any Event of Default or Potential Event of Default unless the
Agent has received notice from a Lender or the Co-Borrowers referring to this
Loan Agreement, describing such Event of Default or Potential Event of Default,
and stating that such notice is a "notice of default". If the Agent receives
such a notice, the Agent shall give prompt notice thereof to each Lender.
Section 10.06 Each Lender Not Relying on Agent or Other Lenders. Each
Lender acknowledges as follows: (i) neither the Agent nor any other Lender has
made any representation or warranties to it, and no act taken or hereafter by
the Agent or any other Lender shall be deemed to constitute any representation
or warranty by the Agent or such other Lender to it; (ii) it has, independently
and without reliance upon the Agent or any other Lender, and based upon such
documents and information as it has deemed appropriate, made its own credit and
legal analysis and decision to enter into this Loan Agreement and the other Loan
Documents; and (iii) it will, independently and without reliance upon the Agent
or any other Lender, and based upon such documents and information as it shall
deem appropriate at the time, make its own decisions to take or not take action
under or in connection with this Loan Agreement and the other Loan Documents.
Section 10.07 Indemnification. Each Lender agrees to reimburse and
indemnify the Agent and its directors, officers, employees, attorneys and agents
(to the extent not reimbursed by the Co-Borrowers and without limitation of the
obligations of the Co-Borrowers to do so), for such Lender's Pro Rata Share
(based on the Commitments), from and against any and all amounts, losses,
liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments, suits, costs or disbursements of any kind or nature (including,
without limitation, the fees and disbursements of counsel for the Agent for such
other Person in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not the Agent or such other
Person shall be designated a party thereto) that may at any time be imposed on,
incurred by or asserted against the Agent or such other Person as a result of,
or arising out of, or in any way related to or by reason of, this Loan
Agreement, any other Loan Document, any transaction from time to time
contemplated hereby or thereby, or any transaction financed in whole or in part
or directly or indirectly with the proceeds of any Loan; provided, however, no
Lender shall be liable for any portion of such amounts, losses, liabilities,
claims, damages, expenses, obligations, penalties, actions, judgments, suits,
costs or disbursements resulting solely from the gross negligence or willful
misconduct of the Agent or such other Person. Payment under this Section 10.07
shall be due and payable on demand, and to the extent that any Lender fails to
pay any such amount on demand, such amount shall bear interest for each day from
the date of demand until paid (before and after judgment) at a rate per annum
(calculated on the basis of a year of 360 days and actual days elapsed) which
for each day shall be equal to the Federal Funds Effective Rate.
Section 10.08 Agent in its Individual Capacity. With respect to its
Commitments and the Obligations owing to it, the Agent shall have the same
rights and powers under this Loan Agreement and each other Loan Document as any
other Lender and may exercise the same as though it were not the Agent, and the
terms "Lenders," "holders of Notes" and like terms shall include the Agent in
its individual capacity as such. The Agent and its Affiliates may, without
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liability to account, make loans to, accept deposits from, acquire debt or
equity interests in, act as trustee under indentures of, and engage in any other
business with the Co-Borrowers as though the Agent were not the Agent hereunder.
Section 10.09 Holders of Notes. The Agent may deem and treat the Lender
which is payee of a Note as the owner and holder of such Note for all purposes
hereof unless and until an Assignment and Acceptance with respect to the
assignment or transfer thereof shall have been filed with the Agent in
accordance with Section 11.02 hereof. Any authority direction or consent of any
person who at the time of giving such authority, direction or consent is shown
in the Loan Account as being a Lender shall be conclusive and binding on each
present and subsequent holder, transferee or assignee of any Note or Notes
payable to such Lender or of any Note or Notes issued in exchange therefor.
Section 10.10 Successor Agent. The Agent may resign at any time by ten (10)
days prior express written notice thereof to the Lenders and the Co-Borrowers.
The Agent may be removed by the Requisite Lenders at any time, for cause, by
giving ten (10) days prior express written notice thereof to the Agent, the
other Lenders and the Co-Borrowers. Upon any such resignation or removal, the
Requisite Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed and consented to, and shall have
accepted such appointment, within thirty (30) days after such notice of
resignation or removal, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent. Each successor Agent shall be a commercial bank or
trust company organized under the laws of the United States of America, or any
State thereof, or Canada, or any Province thereof, and having a combined capital
and surplus of at least US$1,000,000,000.00 and is otherwise in compliance with
all then applicable laws or regulations regarding regulatory capital
requirements after giving effect to any "phase-in" provisions thereof. Upon the
acceptance by a successor Agent of its appointment as Agent hereunder, such
successor Agent shall thereupon succeed to and become vested with all the
properties, rights, powers, privileges and duties of the former Agent, without
further act, deed or conveyance. Upon the effective date of resignation or
removal of a retiring Agent, such Agent shall be discharged from its duties
under this Loan Agreement and the other Loan Documents, but the provisions of
this Loan Agreement shall inure to its benefit as to any actions taken or
omitted by it while it was Agent under this Loan Agreement. If and so long as no
successor Agent shall have been appointed, then any notice or other
communication required or permitted to be given by the Agent shall be
sufficiently given if given by the Requisite Lenders, all notices or other
communications required or permitted to be given to the Agent shall be given to
each Lender, and all payments to be made to the Agent shall be made directly to
the Co-Borrowers or the Lender for whose account such payment is made.
Section 10.11 Additional Agents. If the Agent shall from time to time deem
it necessary or advisable, for its own protection in the performance of its
duties hereunder or in the interest of the Lenders, then the Agent and the
Co-Borrowers shall execute and deliver a supplemental agreement and all other
instruments and agreements necessary or advisable, in the opinion of the Agent,
to constitute another commercial bank or trust company, or one or more other
Persons approved by the Agent, to act as co-Agent or agent with respect to any
part of the Collateral with such powers of the Agent as may be provided in such
supplemental agreement, and to vest in
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such bank, trust company or Person as such co-Agent or separate agent, as the
case may be, any properties, rights, powers, privileges and duties of the Agent
under this Loan Agreement or any other Loan Document.
Section 10.12 Calculations. The Agent shall not be liable for any
calculation, apportionment or distribution of payments made by it in good faith.
If such calculation, apportionment or distribution is subsequently determined to
have been made in error, the sole recourse of any Lender to whom payment was due
but not made shall be to recover from the other Lenders any payment in excess of
the amount to which they are determined to be entitled or, if the amount due was
not paid by the Co-Borrowers, to recover such amount from the Co-Borrowers.
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Concerning the Collateral and the Collateral Documents. Each
Lender authorizes and directs the Agent for the benefit of the Lenders, to enter
into the Collateral Documents. Each Lender agrees that any action taken by the
Agent or the Requisite Lenders in accordance with the provisions of this Loan
Agreement or the Collateral Documents, and the exercise by the Agent or the
Requisite Lenders of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Lenders.
Section 11.02 Assignments and Participations.
(i) Each Lender (including, without limitation, each Canadian Lender) may
assign to any bank or financial institution, all or a portion of its rights and
obligations under this Loan Agreement (including, without limitation, all or a
portion of its Revolving Credit Commitments, its Term Loan #1 Commitments, its
Term Loan #2 Commitments, its Pro Rata Share of the Term Loan Facilities and its
Pro Rata Share of the Revolving Credit Loan Facility owing to it) subject to the
following conditions: (a) each such assignment may be, but is not required to
be, of a constant, and not a varying, percentage of the assigning Lender's
rights and obligations under this Loan Agreement and the assignments may cover
different percentages of such Lender's (including its Affiliate Canadian
Lender's) Revolving Credit Commitment, Term Loan #1 Commitment, Term Loan #2
Commitment, Letter of Credit Obligations, Term Loans #1, Term Loans #2 and
Revolving Credit Loans; (b) the aggregate amount of the Commitments of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance Agreement with respect to such
assignment) shall not cause or otherwise result in said assigning Lender's
remaining unassigned aggregate amount of Commitments, Letter of Credit
Obligations, Term Loans #1, Term Loans #2 and Revolving Credit Loans to be less
than US$5,000,000.00 (except the Agent, in its capacity as a Lender, shall
always retain at least US$5,000,000.00); (c) each such assignment shall be to an
Eligible Assignee; (d) the Eligible Assignee shall execute and deliver to the
Agent, for its approval, acceptance and recording in a register maintained by
the Agent, an Assignment and Acceptance Agreement, together with processing and
recordation fee of Three Thousand Five Hundred and 00/100 (US$3,500.00) Dollars
unless waived by the Agent; (e) the principal amount of an assigned Revolving
Credit Commitments, Letter of Credit Obligations and Revolving Credit Loans
shall be not less than US$5,000,000.00 or any integral multiple of
US$1,000,000.00 in excess thereof; (f) the Agent and, so long as no Event of
Default exists or is continuing, the Co-Borrowers have provided their respective
prior express written consents to such assignment, with consent shall not be
unreasonably withheld and which consent shall be indicated by their execution of
said Assignment and Acceptance Agreement (it being understood and agreed that
the Lenders may assign their rights and interests under the Loan Documents to
any Person or Persons following the occurrence of an Event of Default, without
the consent of any of the Co-Borrowers, the Corporate Guarantors or the
Partnership Guarantor); and (g) a Lender may not assign, or permit its Affiliate
Canadian Lender to assign, its Pro Rata Share of the Canadian
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Revolving Credit Sublimit (its "Canadian Revolving Credit Exposure") or the
Canadian Term Loan Sublimit to an Eligible Assignee that is a non-resident of
Canada for purposes of the Income Tax Act of Canada (with respect to which
payments to such non-resident of principal, interest, fees and other amounts by
the Canadian Borrower would be subject to Canadian withholding tax) at a rate
higher than that then applicable to the assignor, provided further that the
assignment by a Lender of its Affiliate Canadian Lender's Canadian Revolving
Credit Exposure, shall constitute the assignment of a like amount of such
Lender's Revolving Credit Loans and Revolving Credit Commitment. Upon such
execution, delivery, approval, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance Agreement, (1) the
Eligible Assignee thereunder shall be a party to this Loan Agreement and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance Agreement, have the rights and obligations of
a Lender hereunder and (2) the Lender assignor thereunder shall to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance Agreement, relinquish its rights and be released from
its obligations under this Loan Agreement.
(ii) By executing and delivering an Assignment and Acceptance Agreement,
the assignor Lender thereunder and the Eligible Assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (a) other
than as provided in such Assignment and Acceptance Agreement, 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 Loan Agreement or any other Loan Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Loan Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto; (b) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Co-Borrowers, their Subsidiaries or Affiliates or the performance or
observance by the Co-Borrowers, their Subsidiaries or Affiliates of any of their
obligations under any Loan Document or any other instrument or document
furnished pursuant hereto; (c) such Eligible Assignee confirms that it has
received all Loan Documents and other documents and information as such Eligible
Assignee has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance Agreement; (d) such Eligible 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 Loan Agreement; (e) such Eligible Assignee confirms
that it is an Eligible Assignee; (f) such Eligible Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto; and (g) such Eligible Assignee agrees that it
will perform in accordance with its terms all of the obligations which by the
terms of this Loan Agreement are required to be performed by it as a Lender.
(iii) The Agent shall maintain at its address referred to on the signature
pages hereof a copy of each Assignment and Acceptance Agreement delivered to and
accepted by it and shall record in the Loan Account the names and addresses of
each Lender and the Commitment
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of, and principal amount of the Loans owing to, such Lender from time to time.
The Co-Borrowers, their Subsidiaries and Affiliates, the Agent and the Lenders
may treat each Person whose name is recorded in the Loan Account as a Lender
hereunder for all purposes of this Loan Agreement.
(iv) Upon its receipt of an Assignment and Acceptance Agreement
executed by an assigning Lender and an Eligible Assignee representing that it is
an Eligible Assignee, the Agent shall, if such Assignment and Acceptance
Agreement has been properly completed and is in substantially the form of
Exhibit "A" attached hereto, (a) accept such Assignment and Acceptance
Agreement, (b) record the information contained therein in the Loan Account and
(c) give prompt notice thereof to the Co-Borrowers.
(v) Each Lender may sell to any bank or other financial institution one or
more participations, in any amounts, in and to a portion of its rights and
obligations under this Loan Agreement (including, without limitation, all or a
portion of its Revolving Credit Commitment, Term Loan #1 Commitment, Term Loan
#2 Commitment, Loans and Letter of Credit Obligations owing to it) subject to
the following conditions: (a) such Lender's obligations under this Loan
Agreement (including, without limitation, its Revolving Credit Commitment, Term
Loan #1 Commitment, Term Loan #2 Commitment, Loans and Letter of Credit
Obligations to the Co-Borrowers hereunder) shall remain unchanged; (b) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations; (c) 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 Loan Agreement, including voting
rights, and with regard to any and all payments to be made under this Loan
Agreement; (d) Mellon Bank, N.A. shall at all times prior to the occurrence of
an Event of Default retain a beneficial interest in the Loan Facilities of not
less than US$5,000,000.00; and (e) the holder of any such participation shall
not (1) be entitled to voting rights or the right to approve of any action under
this Loan Agreement or otherwise, except that such selling Lender may agree that
it will not vote, without the consent of Persons holding a majority of such
Lender's rights and interests under this Loan Agreement, solely with respect to
the amendment or modification of those provisions of this Loan Agreement for
which, pursuant to Section 11.06 hereof, the consent of all the Lenders would be
required and (2) be permitted to contact the Co-Borrowers without the prior
express written consent of the Selling Lender and the Agent (which consent may
be rescinded by the Co-Borrowers at any time).
The Co-Borrowers authorize the Agent and each Lender to disclose to any
prospective participant any and all financial and other information in such
Person's possession concerning the Co-Borrowers which have been or may have been
delivered to such Person by or on behalf of the Co-Borrowers in connection with
this Loan Agreement or any other Loan Document or such Person's credit
evaluation of the Co-Borrowers, their Subsidiaries and Affiliates provided,
however, said prospective participant shall enter into a confidentiality
agreement with the selling Person in form and substance satisfactory to the
Agent.
(vi) Any Lender may at any time assign and pledge to any Federal Reserve
Bank (or to an Affiliate of such Lender for the purpose of permitting such
Affiliate to assign and
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pledge to any Federal Reserve Bank), as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank all
or any portion of its Revolving Credit Commitment, Term Loan #1 Commitment, Term
Loan #2 Commitment, Letter of Credit Obligations and Loans. No such assignment
shall release the assigning Lender from its obligations hereunder.
(vii) In connection with the execution and delivery of each Assignment and
Acceptance Agreement as provided for in Section 11.02(iv) above, the assigning
Lender shall deliver to the Agent the superseded Note and the Agent shall
deliver to the Co-Borrowers for execution by the Co-Borrowers, new Notes in
order to reflect the Pro Rata Share of Commitments of the assigning Lender and
the applicable Eligible Assignee after giving effect to such Assignment and
Acceptance Agreement. The Co-Borrowers covenant and agree to promptly execute
said new Notes and to promptly return them to the Agent so that the Agent may
deliver said new Notes to the appropriate Lenders; provided, however, the Agent
shall not deliver said new Notes unless and until the assigning Lender shall
have delivered the superseded Note to the Agent. The assigning Lender hereby
appoints the Agent as its attorney-in-fact (coupled with an interest) for the
sole purpose of canceling the superseded Note and the assigning Lender hereby
covenants and agrees that the Agent shall not be liable for any action taken or
omitted to be taken by the Agent in connection therewith, unless caused by the
Agent's own gross negligence or willful misconduct. Upon the Co-Borrowers'
request, the Agent shall stamp the superseded Note "CANCELLED" and return said
superseded Note to the Co-Borrowers and shall deliver the new Notes to the
appropriate Lenders.
Section 11.03 Expenses
(i) Generally. The Co-Borrowers agree upon demand to pay or reimburse the
Agent for, all of the Agent's reasonable external legal costs and expenses (but
not internal legal costs and expenses) and all internal and external audit,
appraisal, valuation and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of Reed Smith Shaw &
McClay LLP and any other attorneys retained by the Agent, auditors, accountants,
appraisers, printers, insurance and environmental advisers, and other
consultants and agents) incurred by the Agent in connection with (a) the
protection of the Agent's Liens in the Collateral (including, without
limitation, any fees and expenses for title and lien searches, local counsel in
various jurisdictions, filing and recording fees and taxes, duplication costs
and corporate search fees), (b) administration of this Loan Agreement, the Loan
Documents, the Loans and the Collateral, including consultation with attorneys
in connection therewith and in connection with the amendment, waiver or consents
required or requested hereunder and (c) the protection, collection or
enforcement of any of the Obligations or the Collateral.
(ii) After Default. The Co-Borrowers further agree to pay, or reimburse the
Agent and the Lenders for all reasonable out-of-pocket costs and expenses,
including, without limitation, reasonable attorneys' fees and disbursements, and
costs of settlement incurred by the Agent after the occurrence of an Event of
Default (a) in enforcing any Obligation or in foreclosing against the Collateral
or exercising or enforcing any other right or remedy available
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by reason of such Event of Default, (b) in connection with any refinancing or
restructuring of the credit arrangements provided under this Loan Agreement in
the nature of a "work-out" or in any insolvency or bankruptcy proceeding, (c) in
commencing, defending or intervening in any litigation or in filing a petition,
complaint, answer, motion or other pleadings in any legal proceeding relating to
the Co-Borrowers and related to or arising out of the transactions contemplated
thereby or by any of the Loan Documents, (d) in taking any other action in or
with respect to any suit or proceeding (whether in bankruptcy or otherwise), (e)
in protecting, preserving, collecting, leasing, selling, taking possession of,
or liquidating any of the Collateral or (f) attempting to enforce or enforcing
any security interest in any of the Collateral or any other rights under the
Collateral Documents.
Section 11.04 Indemnity. The Co-Borrowers further agree to defend, protect,
indemnify, and hold harmless the Indemnified Parties from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for the Indemnified Parties in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified Parties
shall be designated a party thereto), imposed on, incurred by or asserted
against the Indemnified Parties (whether direct, indirect or consequential and
whether based on any Federal or state Laws or other statutory regulations,
including, without limitation, securities and commercial laws and regulations,
under common law or at equitable cause, or on contract or otherwise, including
any liability and costs under Federal, state or local environmental, health or
safety laws, regulations, or common law principles, arising from or in
connection with the past, present or future environmental condition of the
Property, the presence of asbestoscontaining materials at the Property, or the
Release or threatened Release of any Environmental Concern Material into the
Environment from the Property) in any manner relating to the conduct of the
business of the Co-Borrowers, their Subsidiaries and/or Affiliates or the use or
intended use of the proceeds of the Loans hereunder (hereinafter collectively
referred to as the "Indemnified Matters"); provided, however, that the
Co-Borrowers shall not have any obligation to an Indemnified Party hereunder
with respect to (a) matters for which such Indemnified Party has been
compensated pursuant to or for which an exemption is provided in Section 2.07
and Section 2.08 hereof or any other provision of this Loan Agreement and (b)
Indemnified Matters caused by or resulting from the willful misconduct or gross
negligence of that Indemnified Party, as determined by a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Co-Borrowers shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all Indemnified Matters incurred by the
Indemnified Parties.
Section 11.05 Ratable Sharing. Subject to Article II hereof, the Lenders
agree among themselves that (i) with respect to all amounts received by them
which are applicable to the payment of the Obligations (excluding the fees
described in Section 2.05) hereof, equitable adjustment will be made so that, in
effect, all such amounts will be shared among them ratably in proportion to the
respective principal amounts of the Loans then outstanding to each Lender (or if
no Loans are outstanding, ratably according to the respective amount of each
Lender's Revolving Credit Commitment to all Revolving Credit Commitments and
each Lender's Term Loan #1
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Commitment and Term Loan #2 Commitment to all of the Term Loan Commitments),
whether received by voluntary payment, by the exercise of the right of set-off
or banker's lien, by counterclaim or cross action or by the enforcement of any
or all of the Obligations (excluding the fees described in Section 2.05 hereof)
or the Collateral and (ii) if any of them shall by voluntary payment or by the
exercise of any right of counterclaim, set-off, banker's lien or otherwise,
receive payment of a proportion of the aggregate amount of the Obligations held
by it which is greater than its ratable share of the payments on account of
Obligations (excluding the fees described in Section 2.05 hereof), determined in
proportion to the respective principal amounts of the Loans then outstanding to
each Lender (or if no Loans are outstanding, ratably according to the respective
amount of each Lender's Revolving Credit Commitment to all Revolving Credit
Commitments and each Lender's Term Loan #1 Commitment and Term Loan #2
Commitment to all of the Term Loan Commitments), then the Lender receiving such
excess payment shall purchase, without recourse or warranty, an undivided
interest and participation (which it shall be deemed to have done simultaneously
upon the receipt of such payment) in such Obligations owed to the other Lenders
so that all such recoveries with respect to such Obligations shall result in the
remaining principal balance of the Loans then outstanding as to each Lender
being in such amounts so as to reflect each said Lender's Pro Rata Share as
determined immediately prior to each such recovery (or if no Loans are
outstanding, ratably according to the respective amount of each Lender's
Revolving Credit Commitment to all Revolving Credit Commitments and each
Lender's Term Loan #1 Commitment and Term Loan #2 Commitment to all of the Term
Loan Commitments, as determined immediately prior to each such recovery);
provided, however, that if all or part of such excess payment received by the
purchasing party is thereafter recovered from it, those purchases shall be
rescinded and the purchase prices paid for such participations shall be returned
to that party to the extent necessary to adjust for such recovery, but without
interest except to the extent the purchasing party is required to pay interest
in connection with such recovery. The Co-Borrowers agree that any Lender so
purchasing a participation from another Lender pursuant to this Section 11.05
may, to the fullest extent permitted by law, exercise all its rights of payment
with respect to such participation as fully as if such Lender were the direct
creditor of the Co-Borrowers in the amount of such participation. For purposes
of this Section 11.05, the Swap Agreement shall not be included as part of the
defined term "Obligations" in determining, as set forth above, all amounts that
shall be shared ratably amongst the Lenders.
Section 11.06 Amendments and Waivers. No amendment or modification of any
provision of this Loan Agreement shall be effective without the written
agreement of the Requisite Lenders and the Co-Borrowers, and no termination or
waiver of any provision of this Loan Agreement, or consent to any departure by
the Co-Borrowers therefrom, shall in any event be effective without the written
concurrence of the Requisite Lenders, which the Requisite Lenders shall have the
right to grant or withhold at their sole discretion; except that (i) with
respect to any amendment, modification or waiver of the definitions of "Advance
Limit", "Qualified Billed Accounts Receivable", "Qualified Billed Government
Accounts Receivable", "Accrued Unbilled Government Accounts Receivable" and/or
"Qualified Inventory", such amendment, modification and waiver shall be
effective only if evidenced by a writing signed by or on behalf of all Lenders
holding a Revolving Credit Commitment (or if the Revolving Credit Commitments
are not in effect but there are outstanding Revolving Credit Loans, then all
Lenders holding any portion of said Revolving Credit Loans) and (ii) any
amendment,
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modification or waiver of any of the following provisions shall be effective
only if evidenced by a writing signed by or on behalf of all Lenders holding any
Commitments (or if the Commitments are not in effect but there are Obligations
outstanding, then all Lenders holding any portion of said Obligations):
(a) Increase the Revolving Credit Commitment of any Lender over the
amount thereof then in effect, or extend the Revolving Credit Termination
Date or the maturity;
(b) Increase the Term Loan #1 Commitment of any Lender over the amount
thereof then in effect, or extend the Term Loan #1 Maturity Date;
(c) Increase the Term Loan #2 Commitment of any Lender over the amount
thereof then in effect, or extend the Term Loan #2 Maturity Date;
(d) Reduce the principal amount of or extend the time for any
scheduled payment of principal of any of the Loans or Reimbursement
Obligations, or reduce the rate of interest or extend the time for payment
of interest borne by any of the Loans or Reimbursement Obligations or
extend the time for payment or reduce the payment of any fees, or reduce or
postpone the payment of any other expenses, indemnities or amounts payable
under any of the Loan Documents;
(e) Change the definition of "Requisite Lenders" or amend this Section
11.06;
(f) Release any Collateral or any guarantees of the Loan Facilities;
and
(g) Change the definition of "Pro Rata Share".
No amendment, modification, termination, or waiver of any provision of Article X
hereof or any other provision referring to the Agent shall be effective without
the prior express written consent of the Agent. The Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of such Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on the Co-Borrowers in
any case shall entitle the Co-Borrowers to any other or further notice or demand
in similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 11.06 shall be
binding on each assignee, transferee or recipient of a Lender's Revolving Credit
Commitment or Loans at the time outstanding, each future assignee, transferee or
recipient of a Lender's Revolving Credit Commitment, Term Loan #1 Commitment,
Term Loan #2 Commitment, Letter of Credit Obligations or Loans, and, if signed
by the Co-Borrowers, on the Co-Borrowers. In the event that the Agent requests
the consent of a Lender and the Agent does not receive a written denial thereof
within ten (10) Business Days after such Lender's receipt of such request, then
such Lender shall be deemed not to have given its consent to the requested
amendment, modification or waiver.
Section 11.07 Independence of Covenants. All covenants hereunder shall
be given
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independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another covenant shall not avoid
the occurrence of an Event of Default or potential Event of Default if such
action is taken or condition exists.
Section 11.08 Notices. Unless otherwise specifically provided therein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served or sent by confirmed telecopy
transmission, nationally recognized overnight courier service or United States
mail and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of a confirmed telecopy transmission or four (4)
Business Days after deposit in the United States mail (registered or certified,
with postage prepaid and properly addressed). Notices to the Agent pursuant to
Article II hereof shall not be effective until received by the Agent. For the
purposes hereof, the addresses of the parties hereto (until notice of a. change
thereof is delivered as provided in this Section 11.08) shall be as set forth
below each party's name on the signature pages hereof, or, as to each party, at
such other address as may be designated by such party in a written notice to all
of the other parties.
Section 11.09 Survival of Warranties and Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Loan Agreement and the other Loan Documents and the making and
repayment of the Loans hereunder.
Section 11.10 Marshalling; Recourse to Security; Payments Set Aside. The
Agent and the Lenders shall not be under any obligation to marshall any assets
in favor of the Co-Borrowers or any other party or against or in payment of any
or all of the Obligations. Recourse to the Collateral shall not be required at
any time. To the extent that the Co-Borrowers make a payment or payments to the
Agent or a Lender, or the Agent or a Lender enforces their security interests or
exercise their rights of set-off, and such payment or payments or the proceeds
of such enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or set-off and not occurred.
Section 11.11 Severability. In case any provision in or obligation under
this Loan Agreement or the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 11.12 Governing Law. This Loan Agreement shall be governed by, and
shall be construed and enforced in accordance with, the laws of the Commonwealth
of Pennsylvania.
Section 11.13 Successors and Assigns. This Loan Agreement and the other
Loan Documents shall be binding upon the parties hereto and their respective
successors and assigns
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and shall inure to the benefit of the parties hereto and the successors and
permitted assigns of the Lenders. The terms and provisions of this Loan
Agreement shall inure to the benefit of any assignee or transferee of the Loans
and Commitments of any Lender, and in the event of such transfer or assignment,
the rights and privileges herein conferred upon Lenders shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions hereof. The Co-Borrowers' duties and Obligations hereunder, may
not be assigned without the prior express written consent of the Requisite
Lenders.
Section 11.14 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST THE CO-BORROWERS, THEIR SUBSIDIARIES AND/OR
AFFILIATES WITH RESPECT TO THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE CITY OF
PHILADELPHIA, PENNSYLVANIA, AND BY EXECUTION AND DELIVERY OF THIS LOAN
AGREEMENT, THE CO-BORROWERS ACCEPT, FOR THEMSELVES AND IN CONNECTION WITH THEIR
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY FINAL JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS LOAN AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE CO-BORROWERS
IRREVOCABLY CONSENT 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 TEN (10) DAYS
AFTER SUCH MAILING. THE CO-BORROWERS, THE SUBSIDIARIES AND AFFILIATES, THE AGENT
AND THE LENDERS IRREVOCABLY WAIVE ANY OBJECTION (INCLUDING WITHOUT LIMITATION,
ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS LOAN 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 CO-BORROWERS IN THE COURTS
OF ANY OTHER JURISDICTION.
Section 11.15 Counterparts; Effectiveness; Inconsistencies. This Loan
Agreement and any amendments, waivers, consents, or supplements may be executed
in counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Loan Agreement and each of the other Loan Documents shall
be construed to the extent reasonable to be consistent one with the other, but
to the extent that the terms and conditions of this Loan Agreement are actually
inconsistent with the terms and conditions of any other Loan Documents, this
Loan Agreement shall govern.
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Section 11.16 Construction The parties acknowledge that each party and
its counsel have reviewed and revised this Loan Agreement and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Loan Agreement or any amendments or exhibits hereto.
Section 11.17 Entire Agreement. This Loan Agreement, taken together with
all of the other Loan Documents and all certificates and other documents
delivered by the Co-Borrowers or any other Person to the Agent or the Lenders,
embody the entire agreement and supersede all prior agreements, written and
oral, relating to the subject matter hereof.
Section 11.18 Process Agent. The Canadian Borrower hereby irrevocably
appoints DRS Technologies, Inc., with an address on the date hereof at 5 Sylvan
Way, Parsippany, New Jersey 07054 (hereinafter referred to as the "Process
Agent"), as process agent in its name, place and stead to receive and forward
service of any and all writs, summonses and other legal process in any suit,
action or proceeding brought in the State of Pennsylvania, agrees that such
service in any such suit, action or proceeding may be made upon the Process
Agent and agrees to take all such action as may be necessary to continue said
appointment in full force and effect or to appoint another agent so that such
Canadian Borrower will at all times have an agent for service of process for the
above purposes.
Section 11.19 Judgment Currency. The payment obligation of the Canadian
Borrower shall not be discharged by an amount paid in another currency (other
than U.S. Dollars) or in another place, whether pursuant to a judgment or
otherwise, to the extent the amount so paid on prompt conversion to U.S. Dollars
and transferred to the Agent, under normal banking procedures does not yield the
amount of U.S. Dollars in the Agent's Office due hereunder. In the event that
any payment by or on behalf of the Canadian Borrower, whether pursuant to a
judgment or otherwise, upon conversion and transfer does not result in payment
of such amount of U.S. Dollars to the Agent at the Agent's Office, the Agent
shall have a separate cause of action against the Co-Borrowers for the
additional amount necessary to yield the amount due and owing to the Agent and
the Lenders hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be executed and delivered by their proper and duly authorized corporate
officers, and each of the Co-Borrowers has caused its corporate seal to be
hereunto affixed and attested pursuant to the resolution of its Board of
Directors, all as of the day and year first hereinabove written.
[SEAL] DRS TECHNOLOGIES, INC.,
ATTEST: a Delaware corporation, as a Co-Borrower
______________________ By:_______________________________
Nina L. Dunn Mark S. Newman
Secretary President
Notice Address:
5 Sylvan Way
Parsippany, New Jersey 07054
Attn.: Nancy R. Pitek
Vice President, Finance and Treasurer
Telecopy No.: (973) 898-4730
With a copy to:
Hannoch Weisman, A Professional Corporation
4 Becker Farm Road
Roseland, New Jersey 07068
Attn.: Jonathan M. Gross, Esq.
Telecopy No.: (973) 994-7198
[SEAL] DRS TECHNOLOGIES CANADA COMPANY
ATTEST: a Nova Scotia company, as a Co-Borrower
______________________ By:_______________________________
Nina L. Dunn Mark S. Newman
Secretary Vice President
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Notice Address:
5 Sylvan Way
Parsippany, New Jersey 07054
Attn.: Nancy R. Pitek
Vice President, Finance and Treasurer
Telecopy No.: (973) 898-4730
With a copy to:
Hannoch Weisman, A Professional Corporation
4 Becker Farm Road
Roseland, New Jersey 07068
Attn.: Jonathan M. Gross, Esq.
Telecopy No.: (973) 994-7198
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[SEAL] DRS TECHNOLOGIES CANADA, INC.,
ATTEST: a Delaware corporation, as a Co-Borrower
______________________ By:_______________________________
Nina L. Dunn Mark S. Newman
Secretary President
Notice Address:
5 Sylvan Way
Parsippany, New Jersey 07054
Attn.: Nancy R. Pitek
Vice President, Finance and Treasurer
Telecopy No.: (973) 898-4730
With a copy to:
Hannoch Weisman, A Professional Corporation
4 Becker Farm Road
Roseland, New Jersey 07068
Attn.: Jonathan M. Gross, Esq.
Telecopy No.: (973) 994-7198
[SEAL] DRS EO, INC.,
ATTEST: a Delaware corporation, as a Co-Borrower
______________________ By:_______________________________
Nina L. Dunn Mark S. Newman
Secretary President
Notice Address:
5 Sylvan Way
Parsippany, New Jersey 07054
Attn.: Nancy R. Pitek
Vice President, Finance and Treasurer
Telecopy No.: (973) 898-4730
With a copy to:
Hannoch Weisman, A Professional Corporation
4 Becker Farm Road
Roseland, New Jersey 07068
Attn.: Jonathan M. Gross, Esq.
Telecopy No.: (973) 994-7198
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DRS FPA, L.P.,
a Delaware limited partnership, as a Co-Borrower
ATTEST: By: DRS FPA, Inc., a Delaware corporation, as the
[SEAL] general partner
______________________ By:_______________________________
Nina L. Dunn Mark S. Newman
Secretary President
Notice Address:
5 Sylvan Way
Parsippany, New Jersey 07054
Attn.: Nancy R. Pitek
Vice President, Finance and Treasurer
Telecopy No.: (973) 898-4730
With a copy to:
Hannoch Weisman, A Professional Corporation
4 Becker Farm Road
Roseland, New Jersey 07068
Attn.: Jonathan M. Gross, Esq.
Telecopy No.: (973) 994-7198
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MELLON BANK, N.A.,
as a Lender
By:___________________________
Peter A. Dontas
Vice President
Notice Address:
Mellon Financial Services
Raritan Plaza One
Raritan Center
Edison, New Jersey 08837
Attn.: Peter A. Dontas
Vice President
Telecopy No.: (732) 225-4820
With a copy to:
Reed Smith Shaw & McClay LLP
136 Main Street
Princeton Forrestal Village
Princeton, New Jersey 08540
Attn.: Daniel F. Peck, Jr., Esq.
Telecopy No.: (609) 951-0824
(1) Commitment Percentage of
Revolving Credit Loan Facility: 100%
(2) Pro Rata Share of
Revolving Credit Commitments:
US$70,000,000.00
(3) Commitment Percentage of
Term Loan Facility #1:41.667%
(4) Pro Rata Share of
Term Loan #1 Commitments:
US$12,500,000.00
(5) Commitment Percentage of
Term Loan Facility #2:100%
(6) Pro Rata Share of
Term Loan #2 Commitments:
US$50,000,000.00
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MELLON BANK CANADA,
as a Lender
By:___________________________
Name:
Title:
Notice Address:
Mellon Bank Canada
Royal Trust Tower
P.O. Box 320, Suite 3200
Toronto Dominion Centre, 32nd Floor
Toronto, Ontario M5K 1K2
Attn.:Vice President and Manager,
Corporate Banking
Telecopy No.:(416) 860-2409
With a copy to:
Reed Smith Shaw & McClay LLP
136 Main Street
Princeton Forrestal Village
Princeton, New Jersey 08540
Attn.: Daniel F. Peck, Jr., Esq.
Telecopy No.: (609) 951-0824
and
Mellon Financial Services
Raritan Plaza One
Raritan Center
Edison, New Jersey 08837
Attn.: Peter A. Dontas
Vice President
Telecopy No.: (732) 225-4820
and
Fraser Milner, Barristers & Solicitors
P.O. Box 100
1 First Canadian Place
100 King Street, West
Toronto, Ontario M5X 1B2
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Canada
Attn.: Peter E. Murphy
Telecopy No.: (416) 863-4592
(1) Commitment Percentage of
Revolving Credit Loan Facility:14.2857 %*
(2) Pro Rata Share of
Revolving Credit Commitments:
US$10,000,000.00*
(3) Commitment Percentage of
Term Loan Facility #1:58.333%**
(4) Pro Rata Share of
Term Loan #1 Commitments:
US$17,500,000.00**
* This percentage and dollar amount
represents a sublimit of the Revolving
Credit Loan Facility.
** This percentage and dollar amount
represents a sublimit of the Term Loan
Facility #1.
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MELLON BANK, N.A.,
as the Agent
By:___________________________
Peter A. Dontas
Vice President
Notice Address:
Mellon Financial Services
Raritan Plaza One
Raritan Center
Edison, New Jersey 08837
Attn.: Peter A. Dontas
Vice President
Telecopy No.: (732) 225-4820
With a copy to:
Reed Smith Shaw & McClay LLP
136 Main Street
Princeton Forrestal Village
Princeton, New Jersey 08540
Attn.: Daniel F. Peck, Jr., Esq.
Telecopy No.: (609) 951-0824
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EXHIBIT "A"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Assignment and Acceptance Agreement
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT, dated as of ___________________
(hereinafter referred to as the "Assignment Agreement"), executed by and between
_____________, a [national banking association organized and existing under the
laws of the United States of America] [state banking institution organized and
existing under the laws of the State of __________ ] (hereinafter referred to as
the "Assignor") and _______________, a [national banking association organized
and existing under the laws of the United States of America] [state banking
institution organized and existing under the laws of the State of __________ ]
(hereinafter referred to as the "Assignee").
PRELIMINARY STATEMENTS
WHEREAS, the Assignor in its capacity as a Lender is a party to that
certain Amended and Restated Revolving Credit Loan and Term Loan Agreement dated
October 20, 1998, executed by and among DRS Technologies, Inc., DRS Technologies
Canada Company, DRS Technologies Canada, Inc., DRS EO, Inc. and DRS FPA, L.P.
(hereinafter collectively referred to as the "Co-Borrowers"), Mellon Bank, N.A.,
as the Agent for all of the Lenders (hereinafter referred to as the "Agent"),
and the Lenders identified therein (hereinafter each individually referred to as
a "Lender" and hereinafter said Amended and Restated Revolving Credit Loan and
Term Loan Agreement as it may be from time to time amended, supplemented or
otherwise modified in accordance with its terms shall be referred to as the
"Loan Agreement" and all capitalized terms used herein but not expressly defined
herein shall have the meanings assigned to such terms in the Loan Agreement);
and
WHEREAS, in accordance with Section 11.02 of the Loan Agreement, the
Assignor wishes to sell, assign and transfer to the Assignee, and the Assignee
wishes to purchase, accept and acquire from the Assignor, a portion, specified
herein, of the Assignor's outstanding [Revolving Credit Loans], [Term Loans #1],
[Term Loans #2], [Letter of Credit Obligations], [Revolving Credit Commitment],
[Term Loan #1 Commitment] and [Term Loan #2 Commitment] (CHOOSE AS APROPRIATE),
subject to and in accordance with all of the terms and
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conditions of this Assignment Agreement; and
NOW THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
Section 1. Assignment; Payments; The Notes.
(a) Subject to the terms and conditions hereof, the Assignor hereby
irrevocably sells, assigns and transfers to the Assignee, without recourse,
and the Assignee hereby purchases, takes and assumes from the Assignor all
of the Assignor's rights, title and interests in and to, together with all
of the Assignor's duties, liabilities and obligations in connection with:
(i) that percentage (hereinafter referred to as the "Percentage")
identified on Exhibit "A" attached hereto, of the Assignor's [Revolving
Credit Commitment], [Term Loan #1 Commitment] and [Term Loan #2 Commitment]
(CHOOSE AS APPLICABLE), under the Loan Agreement and other Loan Documents;
and (ii) an identical Percentage of all [Revolving Credit Loans], [Term
Loans #1], [Term Loans #2] and [Letter of Credit Obligations] (CHOOSE AS
APPLICABLE) owned by the Assignor outstanding and other amounts under the
Loan Agreement and the [Revolving Credit Loan Note][Term Loan #1 Note][Term
Loan #2 Note] (CHOOSE AS APPLICABLE) owned by the Assignor as of the date
hereof; and (iii) all guarantees thereof and collateral security therefore
and all rights, duties, instruments and documents pertaining thereto and
arising under or in connection with the Loan Agreement or the Loan
Documents (hereinafter the foregoing Sections (i), (ii) and (iii) shall be
collectively referred to as the "Assigned Obligations"). From and after the
date hereof: (1) principal due on or after the date hereof that would
otherwise be payable to the Assignor pursuant to its [Revolving Credit Loan
Note][Term Loan #1 Note][Term Loan #2 Note] (CHOOSE AS APPLICABLE) shall be
payable to the Assignee to the extent of the Assignee's Percentage (as now
reflected in the Assignor's and the Assignee's respective new [Revolving
Credit Loan Note][Term Loan #1 Note][Term Loan #2 Note] (CHOOSE AS
APPLICABLE); (2) the Assignor and Assignee shall make all appropriate
adjustments in payments for periods prior to the date hereof or with
respect to the making of this Assignment Agreement, directly between
themselves, it being understood that interest and fees with respect to the
assigned obligations and accruing prior to the date hereof shall be the
property of the Assignor, and interest and fees with respect to the
assigned obligations and accruing on or after the date hereof shall be the
property of the Assignee, and (3) with respect to the Assigned Obligations,
the Assignee shall assume and perform all of the Assignor's duties and
liabilities under or in connection with the Loan Agreement, [Revolving
Credit Loan Note][Term Loan #1 Note][Term Loan #2 Note] (CHOOSE AS
APPLICABLE) and the Loan Documents.
(b) In consideration of the transfer of the Assigned Obligations, the
Assignee shall pay to the Assignor, concurrently with the execution of this
Assignment Agreement, the purchase price (hereinafter referred to as the
"Purchase Price") listed on Exhibit "A" attached hereto representing the
Assignee's Percentage of the outstanding principal amount of the Assignor's
[Revolving Credit Loans], [Term Loans #1], [Term Loans #2] and [Letter of
Credit Obligations] (CHOOSE AS APPLICABLE). The Assignor and this Assignee
shall make appropriate adjustments in payments of interest or fees for
periods prior to the date hereof, it being understood that regardless of
how or where received, interest and fees with respect to the Assigned
Obligations
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<PAGE>
accruing prior to the date hereof shall be the property of the Assignor, and
interest and fees with respect to the Assigned Obligations accruing on or after
the date hereof shall be the property of the Assignee.
Section 2. Mutual Representations and Warranties; Mutual Covenant.
(a) Each of the Assignor and the Assignee represents and warrants to
theother as follows: (i) it is duly organized and validly existing and has
full power, authority and legal right to execute and deliver this
Assignment Agreement and to perform the provisions of this Assignment
Agreement on its part to be performed; (ii) the execution, delivery and
performance of this Assignment Agreement have been duly authorized by all
necessary corporate action; (iii) this Assignment Agreement is its legal,
valid and binding obligation, enforceable against it in accordance with the
terms hereof, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting the creditor's rights generally, and
subject, as to enforceability, to general principles of equity or at law;
and (iv) no governmental or regulatory consents, or other official
authorizations and approvals are required for the due execution, delivery
and performance of this Assignment Agreement, and no action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for such execution, delivery or performance.
(b) Each of the Assignor and the Assignee agree that at any time and
from time to time upon the request of the other party, it will execute and
deliver such further documents and do such further acts and things as such
other party may reasonably request in order to effect the purposes of this
Assignment Agreement.
Section 3. Disclaimer.
Except as set forth below, the Assignor makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representation made in or in connection with the Loan Agreement,
the Loan Documents or any document or any instrument related thereto or the
execution, legality, validity, enforceability, genuineness or sufficiency of any
such document and assumes no responsibility for the financial condition of the
Co-Borrowers or any other party obligated with respect to the Loan Agreement or
the Loan Documents or the Notes or the sufficiency or adequacy of any security
therefor. The Assignor represents and warrants to the Assignee that the Assignor
has good and valid title to the Assigned Obligations, free and clear of any
liens, security interests and encumbrances.
Section 4. Acknowledgments and Agreements of the Assignee.
(a) The Assignee acknowledges receipt of a conformed copy of the Loan
Agreement and all the other Loan Documents and any other documents and
instruments incorporated into any of the foregoing. The Assignee agrees to
be bound by all of the terms and provisions of the Loan Agreement and the
other Loan Documents (including without limitation the provisions of the
Section 11.02 of the Loan Agreement with respect to subsequent sale,
assignment or participation of all or a portion of the Loans) as if an
original Lender signatory or party thereto.
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<PAGE>
(b) The Assignee expressly accepts this Assignment Agreement without
recourse to the Assignor. The Assignee hereby confirms that it has made an
independent credit investigation and appraisal of the Co-Borrowers, the
Corporate Guarantors, the Partnership Guarantor, [the Revolving Credit Loan
Facility], [the Term Loan Facility #1], [the Term Loan Facility #2] (choose
as applicable) and the sufficiency of any Collateral for the Assigned
Obligations on the basis of such information as the Assignee has deemed
appropriate, has entered into this Assignment Agreement on the basis of
such independent investigation and appraisal and has made and shall
continue to make its own credit decisions with respect to the Assigned
Obligations and the Loan Agreement and actions taken or not taken
thereunder. The Assignee expressly acknowledges that it is not relying upon
any representation or warranty of the Assignor, express or implied relating
to the validity, genuineness, enforceability, collectibility or other
status of the Assigned Obligations or the credit worthiness of the
Co-Borrowers or any other Person obligated with respect to the Assigned
Obligations under or in connection with the Loan Agreement, [the Assignor's
Term Loan #1 Note], [the Assignor's Term Loan #2 Note] and [the Assignor's
Revolving Credit Note] (choose as applicable) and the Loan Documents or the
value of any security therefor. The Assignee further acknowledges that the
Assignor has made no assurances that the Assignor will not transfer all or
any part of its remaining outstanding [Revolving Credit Loans], [Term Loans
#1], [Term Loans #2], [Letter of Credit Obligations], [Term Loan #1
Commitment], [the Term Loan #2 Commitment] or [Revolving Credit Commitment]
(choose as applicable) under the Loan Agreement, except that the Assignor
shall be required to comply with the provisions of Section 11.02 of the
Loan Agreement.
Section 5. Assignment.
Neither the Assignee nor the Assignor may assign any of its rights or
obligations under this Assignment Agreement without the prior express written
consent of the other party, such consent not to be unreasonably withheld or
delayed.
Section 6. Notices; Authorized Communications.
(a) All notices and other communications provided for in this
Assignment Agreement shall be in writing, which may be by confirmed
telecopier transmission and addressed as set forth below or to such other
address or telecopier number as may from time to time be designated by the
intended recipient thereof by notice to the other party. All such notices
and other communications shall be handdelivered, or mailed by airmail,
postage prepaid, or telecopied, addressed as aforesaid, and shall be
effective if handdelivered, upon delivery, or if mailed, when received, or
if telecopied, when transmitted.
(b) Each party hereto shall be authorized and entitled to rely upon
any communication reasonably believed by such party to be signed, sent or
made by a proper and duly authorized person.
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<PAGE>
Section 7. Amendment.
This Assignment Agreement may not be amended, supplemented or modified
except in writing, signed by both the Assignee and the Assignor.
Section 8. Waiver.
No failure or delay on the part of either party in exercising any right
hereunder shall operate as a waiver of, or impair such right. No single or
partial exercise of any such right shall preclude any other further exercise
thereof or the exercise of any other rights. No waiver of any such right shall
be effective unless given in writing. No waiver of any such right shall be
deemed a waiver of any other right hereunder.
Section 9. Entire Agreement.
This Assignment Agreement contains the entire agreement between the parties
relating to the subject matter herein and supersedes all previous oral
statements and other writings with respect thereto. The section headings used
herein are intended for convenience only and shall not be deemed to control or
effect any interpretation of any of the provisions hereof.
Section 10. Governing Law.
This Assignment Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
Section 11 Counterparts.
This Assignment Agreement and any amendments, waivers, consents, or
supplements may be executed in counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by an authorized signatory and delivered as of the day and year first
written above.
ASSIGNOR:
_______________________________
By:_____________________________
ASSIGNEE:
_______________________________
_______________________________
By:____________________________
CONSENTED TO AND AGREED UPON THIS ____
DAY OF __________, 19___
MELLON BANK, N.A.,
as the Agent
By:__________________________
Name:
Title:
CONSENTED TO AND AGREED UPON THIS ____
DAY OF __________, 19___
DRS TECHNOLOGIES, INC.
as a Co-Borrower
By:__________________________
Name:
Title:
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<PAGE>
DRS TECHNOLOGIES CANADA COMPANY,
as a Co-Borrower
By:__________________________
Name:
Title:
DRS TECHNOLOGIES CANADA, INC.
as a Co-Borrower
By:__________________________
Name:
Title:
DRS EO, INC.
as a Co-Borrower
By:__________________________
Name:
Title:
DRS FPA, L.P.
as a Co-Borrower
By: DRS FPA, Inc., as the general partner
By: __________________________
Name:
Title:
160
<PAGE>
EXHIBIT "A"
ASSIGNED OBLIGATIONS - _________________FORM
DATE:_______________
1. ASSIGNOR'S REVOLVING CREDIT COMMITMENT (PRIOR TO ASSIGNMENT):
US$_________; (__% Pro Rata Share)*
ASSIGNEE'S REVOLVING CREDIT COMMITMENT (AFTER ASSIGNMENT):
US$_________; (__% Pro Rata Share)*
ASSIGNOR'S REVOLVING CREDIT COMMITMENT (AFTER ASSIGNMENT):
US$_________; (__% Pro Rata Share)*
2. AGGREGATE REVOLVING CREDIT LOANS OWNED BY THE ASSIGNOR AND OUTSTANDING
(PRIOR TO ASSIGNMENT):
US$_________ Revolving Credit Loans
AGGREGATE REVOLVING CREDIT LOANS OWNED BY THE ASSIGNEE AND OUTSTANDING
(AFTER ASSIGNMENT):
US$_________ Revolving Credit Loans
AGGREGATE REVOLVING CREDIT LOANS OWNED BY THE ASSIGNOR AND OUTSTANDING
(AFTER ASSIGNMENT):
US$_________ Revolving Credit Loans
3. AGGREGATE LETTERS OF CREDIT OWNED BY THE ASSIGNOR AND OUTSTANDING (PRIOR TO
ASSIGNMENT):
US$_________Letters of Credit
AGGREGATE LETTERS OF CREDIT OWNED BY THE ASSIGNEE AND OUTSTANDING (AFTER
ASSIGNMENT):
US$_________Letters of Credit
AGGREGATE LETTERS OF CREDIT OWNED BY THE ASSIGNOR AND OUTSTANDING (AFTER
ASSIGNMENT):
US$_________Letters of Credit
4. AGGREGATE TERM LOAN #1 COMMITMENT OWNED BY THE ASSIGNOR (PRIOR TO
ASSIGNMENT):
US$_________; Term Loan #1 (__% Pro Rata Share)
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<PAGE>
AGGREGATE TERM LOAN #1 COMMITMENT OWNED BY THE ASSIGNEE (AFTER ASSIGNMENT):
US$_________; Term Loan #1 (__% Pro Rata Share)
AGGREGATE TERM LOAN #1 COMMITMENT OWNED BY THE ASSIGNOR (AFTER ASSIGNMENT):
US$_________; Term Loan #1 (__% Pro Rata Share)
5. AGGREGATE TERM LOAN #2 COMMITMENT OWNED BY THE ASSIGNOR (PRIOR TO
ASSIGNMENT):
US$_________; Term Loan #2 (__% Pro Rata Share)
AGGREGATE TERM LOAN #2 COMMITMENT OWNED BY THE ASSIGNEE (AFTER ASSIGNMENT):
US$_________; Term Loan #2 (__% Pro Rata Share)
AGGREGATE TERM LOAN #2 COMMITMENT OWNED BY THE ASSIGNOR (AFTER ASSIGNMENT):
US$_________; Term Loan #2 (__% Pro Rata Share)
* sublimit under U.S. Revolver, if Canadian Assignor and Assignee.
162
<PAGE>
EXHIBIT "B"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Letter of Credit Reimbursement Agreement
See Attached.
163
<PAGE>
EXHIBIT "C"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Borrowing Base Certificate
- --------------------------------------------------------------------------------
DRS Technologies, Inc.,
DRS Technologies Canada Company,
DRS Technologies Canada, Inc., DRS EO, Inc. and DRS FPA, L.P.
Borrowing Base/Non-Default Certificate
US$70,000,000.00 Revolving Credit Loan
To: Mellon Bank, N.A.
From: DRS Technologies, Inc., DRS Technologies Canada Company,
DRS Technologies Canada, Inc., DRS EO, Inc. and DRS FPA, L.P.
Date: ______________, 19__
- --------------------------------------------------------------------------------
QUALIFIED BILLED ACCOUNTS RECEIVABLE
1. Total Qualified Billed Accounts Receivable US$________
1.a: Qualified Billed Government Accounts Receivable US$________
2. Less: 90 Days from the Invoice Date US$________
3. Other (explanation attached) US$________
4. Total Ineligible Accounts Receivable US$________
5. Eligible Billed Accounts Receivable (Line 1- Line 4) US$________
6. Available from Billed Accounts Receivable (80% of Line 5) US$________
ACCRUED UNBILLED GOVERNMENT ACCOUNTS RECEIVABLE
7. Total Unbilled Accounts Receivable US$________
8. Less (explanation attached) US$________
9. Total Ineligible Accounts Receivable US$________
10. Eligible Unbilled Accounts Receivable (Line 7- Line 9) US$________
11. Available from Unbilled Accounts Receivable (50% of Line 10) US$________
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<PAGE>
INVENTORY
12. Inventory (gross) US$__________
12a: Unbilled Government WIP US$__________
13. Less: Progress Billings and customer advances US$__________
14. Eligible Inventory US$__________
15. Margined Inventory (50% of line 14; capped at 30% US$__________
of Revolving Credit Facility outstanding Balance or
$17,500,000)
AGENT'S DISCRETIONARY ADVANCE AMOUNT IN
CONNECTION WITH NOVATION OR ADMINISTRATIVE ISSUES
16. Amount agreed upon by Agent (not to exceed
US$5,000,000.00) in the aggregate at any one time) US$__________
BORROWING BASE AVAILABILITY
17. Borrowing Base (Ln 6 + Ln 15 + Ln 11 + Ln 16,
not >$70,000,000) US$__________
18. Current Loan Balance US$__________
19. Borrowing Base Availability (Line 17 - Line 18) US$__________
The undersigned certifies to the Agent, on behalf of each of the Co-borrowers
(a) the foregoing Borrowing Base Certificate is true and correct in all
respects, is in accordance with the books and records of the undersigned and is
prepared in accordance with the terms of the Agreement; (b) all of the
representations and warranties of the Co-borrowers contained in the Loan
Agreement are true and correct in all respects (if unable to recertify certain
representation and/or warranties, please describe the circumstances thereof on
Attachment A); and (c) no default or Event of Default or any act, event or
condition which, with the giving of notice or the passage of time or both, would
constitute a default or Event of Default under the Loan Agreement exists.
In Witness Thereof, the undersigned has duly executed this Borrowing
Base/Non-Default Certificate this ___day of ______, 199_.
DRS Technologies, Inc., DRS Technologies
Canada Company, DRS Technologies Canada,
Inc., DRS EO, Inc. and DRS FPA, L.P..
By:__________________________
Name:
Title:
165
<PAGE>
EXHIBIT "D"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Notice of Borrowing
To: Mellon Bank, N.A. (hereinafter referred to as "Mellon") in its capacity as
agent (hereinafter referred to as "Agent") under that certain Amended and
Restated Revolving Credit Loan and Term Loan Agreement dated October 20, 1998
(hereinafter referred to as the "Loan Agreement") by and among DRS Technologies,
Inc., DRS Technologies Canada Company, DRS Technologies Canada, Inc., DRS EO,
Inc. and DRS FPA, L.P. (hereinafter collectively referred to as the
"Co-Borrowers") and Mellon Bank, N.A. as Agent and a Lender and certain other
financial institutions as Lenders. Terms defined in the Loan Agreement and not
otherwise expressly defined herein are used herein as therein defined.
CC: Mellon Bank Canada (for Canadian transactions only)
Pursuant to Section 2.01(ii), Section 2.02(i) and Section 2.03(i) of the
Loan Agreement, this Notice of Borrowing in respect of [Revolving Credit Loans]
[Term Loans #1][Term Loans #2] (hereinafter referred to as the "Notice")
represents the request of the [Co-Borrowers][Canadian Borrower] to borrow on
_______________, 19 (hereinafter referred to as the "Borrowing Date") from the
Lenders an aggregate principal amount of [US$][C$]_________________ in
[Revolving Credit Loans][Term Loans #1][Term Loans #2] as a [Prime Rate Loan]
[Eurodollar Rate Loan] [Canadian Bankers Acceptance]. In connection with a
Eurodollar Rate Loan, the Co-Borrowers hereby elect an Eurodollar Interest
Period of [fourteen (14) days] [one (1) month] [two (2) months] [three (3)
months] [six (6) months]. The maturity date of the Canadian Bankers Acceptance
to be issued is _____ days after the date of purchase thereof. Proceeds of such
[Revolving Credit Loans][Term Loans #1] [Term Loans #2] are to be deposited on
the Borrowing Date in the account maintained by the Co-Borrowers with [Mellon
Bank, N.A.][Mellon Bank Canada], Account No. ______, in immediately available
funds [and immediately thereafter such proceeds shall be wiretransferred to an
account maintained with _________, Account Number: ________].
The Co-Borrowers hereby certify that (i) the representations and warranties
of the Co-Borrowers as set forth in Sections 4.01 and Section 4.02 of the Loan
Agreement and in any other Loan Document (except (a) representations and
warranties which expressly speak only as of a different date, and (b) changes
permitted or contemplated by the Loan Agreement) are true and correct in all
material respects as of the Borrowing Date; (ii) no Event of Default or
Potential Event of Default has occurred and is continuing under the Loan
Agreement or any other Loan Document or will result from this proposed
Borrowing; and (iii) the Co-Borrowers shall have
166
<PAGE>
performed in all material respects all agreements contained in and satisfied all
conditions under Section 3.02 of the Loan Agreement and the other Loan Documents
required to be performed by it on or prior to the Borrowing Date.
The Co-Borrowers hereby represent and warrant and agree that the proceeds
of the [Revolving Credit Loans][Term Loans #1] [Term Loans #2] requested by this
Notice shall be used for a purpose which is permitted under Section 2.01,
Section 2.02 and/or Section 2.03 of the Loan Agreement.
Dated:______________, 19__
DRS TECHNOLOGIES, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA COMPANY,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS EO, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
167
<PAGE>
DRS FPA, L.P.
as a Co-Borrower
By: DRS FPA, Inc., as the general partner
By: __________________________
Name:
Title:
168
<PAGE>
EXHIBIT "E"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Notice of Conversion/Continuation
To: Mellon Bank, N.A. (hereinafter referred to as "Mellon") in its capacity as
agent (hereinafter referred to as "Agent") under that certain Amended and
Restated Revolving Credit Loan and Term Loan dated October 20, 1998 (hereinafter
referred to as the "Loan Agreement") by and between DRS Technologies, Inc., DRS
Technologies Canada Company, DRS Technologies Canada, Inc., DRS EO, Inc. and DRS
FPA, L.P. (hereinafter collectively referred to as the "Co-Borrowers") and
Mellon Bank, N.A. as Agent and a Lender and certain other financial institutions
as Lenders. Terms defined in the Loan Agreement and not otherwise expressly
defined herein are used herein as therein defined.
CC: Mellon Bank Canada (for Canadian transactions only)
Pursuant to Section 2.04(iii) of the Loan Agreement, this Notice of
Conversion/Continuation (hereinafter referred to as the "Notice") represents the
Co-Borrowers' election to [insert one of the following"]:
*convert an aggregate principal amount of [US$][C$]___________ of [Revolving
Credit Loans][Term Loans #1] [Term Loans #2] which are [Prime Rate
Loans][Canadian Bankers Acceptances] to [US$][C$] Eurodollar Rate Loans on
_________ 19 . The initial Eurodollar Interest Period for such Eurodollar Rate
Loans is required to be a [fourteen (14) day] [one (1) month] [two (2) month]
[three (3) month] [six (6) months] period.
**convert an aggregate principal amount of [US$][C$]_________ of [Revolving
Credit Loans][Term Loans #1] [Term Loans #2] which are [Eurodollar Rate Loans
with a current Eurodollar Interest Period ending , l9 ][Canadian Bankers
Acceptances with a term ending ___________, 19__], to [US$][C$] Prime Rate Loans
on ____________, 19 [.]***
[***, and continue as Eurodollar Rate Loans in an aggregate principal of
[US$][C$]__________ of Eurodollar Rate Loans with a current Eurodollar Interest
Period ending __________, 19 . The succeeding Eurodollar Interest Period is
requested to be a [fourteen (14) day][one (1) month][two (2) month] [three (3)
month] [six (6) months] period.]
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<PAGE>
[****, and continue as a Canadian Bankers Acceptance in an aggregate principal
of [US$][C$]__________ to be issued __ days after the date of purchase thereof.
- ----------
* Use if converting Prime Rate Loans or Canadian Bankers Acceptances to
Eurodollar Rate Loans.
** Use if converting Eurodollar Rate Loans or Canadian Bankers Acceptances to
Prime Rate Loans.
*** Use if continuing as a portion of Eurodollar Rate Loan.
**** Use if continuing a Canadian Bankers Acceptance.
170
<PAGE>
The Co-Borrowers hereby certify that no Event of Default or Potential Event
of Default has occurred and is continuing under the Loan Agreement.
Dated: ______________, 19__
DRS TECHNOLOGIES, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA COMPANY,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS EO, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS FPA, L.P.
as a Co-Borrower
By: DRS FPA, Inc., as the general partner
By: __________________________
Name:
Title:
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<PAGE>
EXHIBIT "F"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Officer's Certificate
This Officer's Certificate of DRS TECHNOLOGIES, INC., DRS TECHNOLOGIES
CANADA COMPANY, DRS TECHNOLOGIES CANADA, INC., DRS EO, INC. AND DRS FPA, L.P.
(hereinafter referred to as the "Certificate") is delivered to you pursuant to
Section 5.02(v) of the Amended and Restated Revolving Credit Loan and Term Loan
Agreement dated October 20, 1998 (hereinafter said Amended and Restated
Revolving Credit Loan and Term Loan Agreement as it may be amended from time to
time shall hereinafter be referred to as the "Loan Agreement") by and among DRS
TECHNOLOGIES, INC., DRS TECHNOLOGIES CANADA COMPANY, DRS TECHNOLOGIES CANADA,
INC., DRS EO, INC. AND DRS FPA, L.P. (hereinafter referred to as the
"Co-Borrowers") and Mellon Bank, N.A., as Agent and as a Lender and certain
other financial institutions as Lenders. Terms defined in the Loan Agreement and
not otherwise defined herein are used herein as therein defined.
1. I am the duly elected, qualified and acting [Chief Financial Officer],
[President] or [Chief Accounting Officer], of Co-Borrowers.
2. I have reviewed and am familiar with the contents of this Certificate. I
am providing this certificate solely in my capacity as an Authorized Officer of
the Co-Borrowers. The matters set forth herein are true to the best of my
knowledge, after diligent inquiry, but I express no personal opinion as to any
conclusions of law or other legal matters.
3. I have reviewed the terms of the Loan Agreement and the principal Loan
Documents and have made, or caused to be made, under my supervision, a review in
reasonable detail of the transactions and condition of the Co-Borrowers, their
Subsidiaries and Affiliates during the accounting period covered by the attached
financial statements and computations attached hereto as Exhibit "F-1"
(hereinafter referred to as 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 I have no knowledge of the existence as
of the date of this Certificate, of any condition or event which constitutes an
Event of Default or Potential Event of Default, except as set forth below:*
* set forth additional factual information if applicable
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<PAGE>
4. I hereby certify in my capacity as [President] [Chief Financial Officer]
or [Chief Accounting Officer] in my capacity as an Authorized Officer the
Financial Statements, as to my knowledge, present fairly the financial position
of the Co-Borrowers, their Subsidiaries and Affiliates as of the end of such
fiscal period and the results of their operations and the changes in their
financial position and cash flows for such fiscal periods, in conformity with
Generally Accepted Accounting Principles applied in a manner consistent with
that of the most recent audited financial statements furnished to the Agent,
subject to normal and recurring yearend audit adjustments.
IN WITNESS WHEREOF we execute this Certificate this _______ day of
_____________, 19__.
DRS TECHNOLOGIES, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA COMPANY,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS EO, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
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<PAGE>
DRS FPA, L.P.
as a Co-Borrower
By: DRS FPA, Inc., as the general partner
By: __________________________
Name:
Title:
* Describe here (or in a separate attachment to this Certificate) the
exceptions, if any, to paragraph 3 by listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
the Co-Borrowers have taken, are taking and propose to take with respect to each
such condition or event.
174
<PAGE>
EXHIBIT "F-1"
FORM OF COMPLIANCE CERTIFICATE
DRS TECHNOLOGIES, INC., ET AL.
This Officer's Certificate of DRS TECHNOLOGIES, INC., ET AL.
("Certificate") is delivered to you pursuant to Section 5.01(v) of the Amended
and Restated Revolving Credit Loan and Term Loan Agreement dated October 20,
1998 (hereinafter said Amended and Restated Revolving Credit Loan and Term Loan
Agreement as it may be from time to time further amended, modified and/or
supplemented shall be referred to as the "Loan Agreement") by and among DRS
Technologies, Inc., DRS Technologies Canada Company, DRS Technologies Canada,
Inc., DRS EO, Inc. and DRS FPA, L.P. (hereinafter referred to as the
"Co-Borrowers") and Mellon Bank, N.A., as Agent and as a Lender and certain
other financial institutions as Lenders. Terms defined in the Loan Agreement and
not otherwise defined herein are used herein as therein defined. The
Co-Borrowers hereby deliver to each Lender, together with the financial
statements being delivered to the Lenders pursuant to Section 5.01(i) and (vi)
of the Loan Agreement, this Compliance Certificate (hereinafter referred to as
the "Certificate") for the accounting period from ____________, 19 to
__________, * 19 . For purposes hereof, section and subsection references herein
relate to sections and subsections, respectively, of the Loan Agreement, and
amounts or ratios refer to the maximum or minimum amounts or ratios required
under the relevant sections of the Loan Agreement.
I. AFFIRMATIVE COVENANTS
A. Minimum Asset Coverage (Section 6.13)
1. Aggregate Consolidated Senior Debt US$___________
2. Aggregate sum of (i) Accounts Receivable,
(ii) Inventory and (iii) Cash and Cash
Equivalents US$___________
3. Required Minimum Amount: the
amount described in #1 above must
not exceed the amount described in #2
above.
II. NEGATIVE COVENANTS
A. Consolidated Debt (Section 7.01)
1. Actual aggregate amount of
additional new Consolidated Debt: US$____________
175
<PAGE>
2. Permitted amount of additional
Consolidated Debt:
(a) purchase money debt US$1,250,000.00
(b) permitted additional term loans US$5,000,000.00
B. Loans, Advances and Investments (Section 7.03)
1. Aggregate demand advances to officers and employees outstanding
at any time during the period covered by this Certificate:
(a) Outstanding US$____________
(b) Maximum permitted per
officer/employee US$ 500,000.00
2. Aggregate loans in connection with the acquisition of
another Person
(a) Outstanding US$[__________]
(b) Maximum
permitted US$2,000,000.00
III. FINANCIAL COVENANTS
A. Minimum Consolidated Net Worth (Section 8.01)
1. Consolidated Net Worth:
(a) Actual Amount US$____________
(b) Minimum Amount US$____________
B. Maximum Consolidated Senior Debt Leverage Ratio (Section 8.02)
1. Total Consolidated Senior Debt -to- Consolidated EBITDA, as
determined at the end of the period covered by this Certificate:
(a) Actual Ratio_____________ - to -1.0
(b) Maximum Ratio __________ - to -1.0
176
<PAGE>
C. Maximum Consolidated Funded Debt Leverage Ratio (Section 8.03)
1. Total Consolidated Funded Debt -to- Consolidated EBITDA, as
determined at the end of the period covered by this Certificate:
(a) Actual Ratio_____________ - to -1.0
(b) Maximum Ratio __________ - to -1.0
D. Minimum Consolidated Fixed Charge Coverage Ratio (Section 8.04)
1. Total Consolidated EBITDA minus Capital Expenditures -to- the sum of
(i) Principal payments on Consolidated Debt, (ii) Interest payments on
Consolidated Debt, (iii) dividends and (iv) foreign, federal, state and
local taxes, all as determined at the end of the period covered by this
Certificate:
(a) Actual Ratio_____________ - to -1.0
(b) Minimum Ratio __________ - to -1.0
We hereby certify, in our capacity as officers of the Company, that the
information set forth above is accurate as of __________,19__, to the best of
our knowledge after diligent inquiry.
Dated: __________, 19__
DRS TECHNOLOGIES, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA COMPANY,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS EO, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
177
<PAGE>
DRS FPA, L.P.
as a Co-Borrower
By: DRS FPA, Inc., as the general partner
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
178
<PAGE>
EXHIBIT "G"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Amended and Restated Revolving Credit Loan Note
US$_________________ ____________ , ______________
______________, 19__
FOR VALUE RECEIVED, the undersigned, DRS TECHNOLOGIES, INC., DRS
TECHNOLOGIES CANADA COMPANY, DRS TECHNOLOGIES CANADA, INC., DRS EO, INC. AND DRS
FPA, L.P. (hereinafter collectively referred to as the "Co-Borrowers"), promise
to pay on a joint and several basis to the order of [MELLON BANK, N.A.] [MELLON
BANK CANADA] (hereinafter referred to as the "Lender") on or before the
Revolving Credit Termination Date, the lesser of (i) the principal sum of AND
00/100 (US$_____________) DOLLARS or (ii) the aggregate unpaid principal amount
of all Revolving Credit Loans made by the Lender to the Co-Borrowers pursuant to
the "Loan Agreement" (as such term is hereinafter defined). The Co-Borrowers
further promise to pay to the order of the Lender interest on the unpaid
principal amount of the Revolving Credit Loans from the date outstanding at the
interest rate or interest rates per annum determined pursuant to Section
2.04(i)(a) of, or as otherwise provided in, the Loan Agreement payable on the
dates set forth in Section 2.04(ii) of, or as otherwise provided in, the Loan
Agreement.
All payments of principal and interest hereunder shall be due and payable
to the Lender, on or before 10:00 A.M. (Philadelphia, Pennsylvania time), on the
day when due, all as more fully and accurately set forth in Section 2.07 of the
Loan Agreement. Such payments shall be made in U.S. Dollars in immediately
available funds without set-off, counterclaim or other deduction of any nature.
Except as otherwise provided in the Loan Agreement, if any payment of
principal or interest hereunder shall become due on a day which is not a
Business Day, such payment shall be made on the next following Business Day and
such extension of time shall be included in computing interest in connection
with such payment.
This Amended and Restated Revolving Credit Loan Note is one of the
"Revolving Credit Loan Notes" referred to in, and is entitled to the benefits of
the Amended and Restated Revolving
179
<PAGE>
Credit Loan and Term Loan Agreement dated October 20, 1998 by and among the
Co-Borrowers, the Lender and the other lenders named therein, as Lenders and
Mellon Bank N.A., as Agent (hereinafter as said Amended and Restated Revolving
Credit Loan and Term Loan Agreement may be amended, modified or supplemented
from time to time shall hereinafter be referred to as the "Loan Agreement"),
which among other things provides for the acceleration of the maturity hereof
upon the occurrence of certain events and for prepayments in certain
circumstances and upon certain terms and conditions. This Amended and Restated
Revolving Credit Loan Note is secured by and is entitled to the benefits of the
Collateral Documents. Terms defined in the Loan Agreement have the same meanings
herein.
The holder of this Amended and Restated Revolving Credit Loan Note is
authorized to endorse on the Schedule 1 attached hereto and made a part hereof
or on a continuation thereof which shall be attached hereto and made a part
hereof (hereinafter referred to as the "Grid") the date and amount of each
Revolving Credit Loan made pursuant to Section 2.01 of the Loan Agreement, and
the date and amount of each payment or prepayment of principal thereof, which
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed; provided, however, that the failure to make any such
endorsement shall not affect the obligations of the Co-Borrowers in respect of
such Revolving Credit Loan.
The Co-Borrowers hereby expressly waive presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Amended and Restated
Revolving Credit Loan Note and the Loan Agreement, and an action for amounts due
hereunder or thereunder shall immediately accrue.
Notwithstanding the aggregate stated principal amounts of this Amended and
Restated Revolving Credit Loan Note and all other Amended and Restated Revolving
Credit Loan Notes to the contrary, the aggregate outstanding principal balance
with respect to the Revolving Credit Loan Facility shall not exceed
US$70,000,000.00.
This Amended and Restated Revolving Credit Loan Note is given in
substitution for and replacement of a certain Revolving Credit Loan Note dated
___________, 199__ executed by DRS Technologies, Inc., DRS Technologies Canada
Company and DRS Technologies Canada, Inc., as the co-makers, and delivered to
the Lender, as the payee, in the principal amount of [Forty Million and 00/100
(US$40,000,000.00)] [Twenty Million and 00/100 (US$20,000,000.00] Dollars
(hereinafter referred to as the "Original Revolving Credit Loan Note"). The
execution and delivery of this Amended, Modified and Restated Revolving Credit
Loan Note does not evidence a refinancing, repayment, accord and satisfaction or
novation of the indebtedness evidenced by the Original Revolving Credit Loan
Note.
This Amended and Restated Revolving Credit Loan Note shall be governed by,
construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania.
180
<PAGE>
IN WITNESS WHEREOF, the Co-Borrowers have caused this Amended and Restated
Revolving Credit Loan Note to be executed and delivered by its proper and duly
Authorized Officers and has caused its corporate seal to be hereunto affixed and
attested, pursuant to the resolution of its Board of Directors, all on the day
and year first hereinabove written.
DRS TECHNOLOGIES, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA COMPANY,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS EO, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS FPA, L.P.
as a Co-Borrower
By: DRS FPA, Inc., as the general partner
By: __________________________
Name:
Title:
181
<PAGE>
Schedule A to Amended and Restated Revolving Credit Loan Note
LOANS AND PAYMENTS OF REVOLVING CREDIT LOANS
========= ============== ================== ================= ==================
Date Amount of Amount of Unpaid Notation Made
Loans Principal Repaid Principal By
Balance of
Loans
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
========= ============== ================== ================= ==================
182
<PAGE>
EXHIBIT "H"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Swap Agreement
See Attached.
183
<PAGE>
EXHIBIT "I"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Amended and Restated Term Loan #1 Note
US$___________ ___________________
__________, 19__
FOR VALUE RECEIVED, the undersigned, DRS TECHNOLOGIES, INC., DRS
TECHNOLOGIES CANADA COMPANY, DRS TECHNOLOGIES CANADA, INC., DRS EO, INC. AND DRS
FPA, L.P. (hereinafter collectively referred to as the "Co-Borrowers"), promise
to pay on a joint and several basis to the order of [MELLON BANK, N.A.] [MELLON
BANK CANADA] (hereinafter referred to as the "Lender") on or before the Term
Loan #1 Maturity Date, or such other date as may be determined pursuant to the
"Loan Agreement" (as such term is hereinafter defined) the principal sum of
________________________________________ AND 00/100 (US$____________) DOLLARS.
The Undersigned further promise to pay to the order of the Lender interest on
the unpaid principal amount hereof from time to time at the interest rate or
interest rates per annum determined pursuant to Section 2.04(i)(b) of, or as
otherwise provided in, the Loan Agreement. Such principal and interest shall be
payable on the dates set forth in Section 2.04(ii) of, or as otherwise provided
in, the Loan Agreement.
All payments of principal and interest hereunder shall be due and payable
to the Lender not later than 10:00 A.M.. (Philadelphia, Pennsylvania time), on
the day when due, all as more fully set forth in Section 2.07 of the Loan
Agreement. Such payments shall be made in U.S. Dollars in immediately available
funds without set-off, counterclaim (other than a compulsory counterclaim) or
other deduction of any nature.
Except as otherwise provided in the Loan Agreement, if any payment of
principal or interest hereunder shall become due on a day which is not a
Business Day, such payment shall be made on the next following Business Day and
such extension of time shall be included in computing interest in connection
with such payment.
This Amended and Restated Term Loan Note is one of the "Term Loan #1 Notes"
referred to in, and is entitled to the benefits of the Amended and Restated
Revolving Credit Loan and Term Loan Agreement dated October 20, 1998, executed
by and among, amongst others, the Undersigned and the Lender (as the same may be
amended, modified or supplemented from time to time, hereinafter referred to as
the "Loan Agreement"), which among other things provides for the acceleration of
the maturity hereof upon the occurrence of certain events and for prepayments in
184
<PAGE>
certain circumstances and upon certain terms and conditions. Terms defined in
the Loan Agreement shall have the same meanings herein.
The Undersigned hereby expressly waives presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Amended and Restated
Term Loan #1 Note and the Loan Agreement.
Notwithstanding the aggregate stated principal amounts of this Amended and
Restated Term Loan #1 Note and all other Amended and Restated Term Loan #1 Notes
to the contrary, the aggregate outstanding principal balance with respect to the
Term Loan Facility #1 shall not exceed US$30,000,000.00.
This Amended and Restated Term Loan #1 Note is given in substitution for
and replacement of a certain Term Loan Note dated ___________, 199__ executed by
DRS Technologies, Inc., DRS Technologies Canada Company and DRS Technologies
Canada, Inc., as the co-makers, and delivered to the Lender, as the payee, in
the principal amount of Twenty Million and 00/100 (US$20,000,000.00 Dollars
(hereinafter referred to as the "Original Term Loan Note"). The execution and
delivery of this Amended, Modified and Restated Term Loan #1 Note does not
evidence a refinancing, repayment, accord and satisfaction or novation of the
indebtedness evidenced by the Original Term Loan Note.
This Amended and Restated Term Loan #1 Note shall be governed by, construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the Undersigned have caused this Term Loan #1 Note to
be executed and delivered by their proper and duly Authorized Officers and have
caused their respective corporate seals to be hereunto affixed and attested,
pursuant to the resolution of their respective Boards of Directors, all on the
day and year first hereinabove written.
DRS TECHNOLOGIES, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA COMPANY,
as a Co-Borrower
By: __________________________
Name:
Title:
185
<PAGE>
DRS TECHNOLOGIES CANADA, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS EO, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS FPA, L.P.
as a Co-Borrower
By: DRS FPA, Inc., as the general partner
By: __________________________
Name:
Title:
186
<PAGE>
EXHIBIT "J"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Term Loan #2 Note
US$___________ ___________________
__________, 19__
FOR VALUE RECEIVED, the undersigned, DRS TECHNOLOGIES, INC., DRS
TECHNOLOGIES CANADA COMPANY, DRS TECHNOLOGIES CANADA, INC., DRS EO, INC. AND DRS
FPA, L.P. (hereinafter collectively referred to as the "Co-Borrowers"), promise
to pay on a joint and several basis to the order of [MELLON BANK, N.A.]
(hereinafter referred to as the "Lender") on or before the Term Loan #2 Maturity
Date, or such other date as may be determined pursuant to the "Loan Agreement"
(as such term is hereinafter defined) the principal sum of [FIFTY MILLION AND
00/100 (US$50,000,000.00)] DOLLARS. The Undersigned further promise to pay to
the order of the Lender interest on the unpaid principal amount hereof from time
to time at the interest rate or interest rates per annum determined pursuant to
Section 2.04(i)(c) of, or as otherwise provided in, the Loan Agreement. Such
principal and interest shall be payable on the dates set forth in Section
2.04(ii) of, or as otherwise provided in, the Loan Agreement.
All payments of principal and interest hereunder shall be due and payable
to the Lender not later than 10:00 A.M. (Philadelphia, Pennsylvania time), on
the day when due, all as more fully set forth in Section 2.07 of the Loan
Agreement. Such payments shall be made in U.S. Dollars in immediately available
funds without set-off, counterclaim (other than a compulsory counterclaim) or
other deduction of any nature.
Except as otherwise provided in the Loan Agreement, if any payment of
principal or interest hereunder shall become due on a day which is not a
Business Day, such payment shall be made on the next following Business Day and
such extension of time shall be included in computing interest in connection
with such payment.
This Term Loan #2 Note is one of the "Term Loan #2 Notes" referred to in,
and is entitled to the benefits of the Amended and Restated Revolving Credit
Loan and Term Loan Agreement dated October 20, 1998, executed by and among,
amongst others, the Undersigned and the Lender (as the same may be amended,
modified or supplemented from time to time, hereinafter referred to as the "Loan
Agreement"), which among other things provides for the acceleration of the
maturity hereof upon the occurrence of certain events and for prepayments in
certain circumstances
187
<PAGE>
and upon certain terms and conditions. Terms defined in the Loan Agreement shall
have the same meanings herein.
The Undersigned hereby expressly waives presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Term Loan #2 Note and
the Loan Agreement.
This Term Loan #2 Note shall be governed by, construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the Undersigned have caused this Term Loan #2 Note to
be executed and delivered by their proper and duly Authorized Officers and have
caused their respective corporate seals to be hereunto affixed and attested,
pursuant to the resolution of their respective Boards of Directors, all on the
day and year first hereinabove written.
DRS TECHNOLOGIES, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA COMPANY,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS TECHNOLOGIES CANADA, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
188
<PAGE>
DRS EO, INC.,
as a Co-Borrower
By: __________________________
Name:
Title:
DRS FPA, L.P.
as a Co-Borrower
By: DRS FPA, Inc., as the general partner
By: __________________________
Name:
Title:
189
<PAGE>
EXHIBIT "K"
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Form of Opinion Letter
See Attached Form.
190
<PAGE>
SCHEDULE 1.01-A
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
List of Leased Properties
See Attached.
191
<PAGE>
<TABLE>
<CAPTION>
Date of Expiration of
Location/Address Landlord Lease Lease
- ---------------- -------- ----- --------------
<S> <C> <C> <C> <C>
1. DRS Technologies
5 Sylvan Way Mack - Cali Realty Corporation 03/31/95 09/27/00
Parsippany, New Jersey 07054
1215 Jefferson Davis Highway Charles E. Smith 08/01/97 07/31/99
Arlington, Virginia 22202
2. DRS Electronic Systems, Inc.
200 Professional Drive Montgomery County Teachers 02/22/94 03/01/00
Gaithersburg, Maryland 20879 Federal Credit Union
DRS Technical Services, Inc. K-B Opportunity Fund LP 12/01/96 01/31/00
2535 Camino Del Rio South / Parkstone Companies
South 300
San Diego, California 92108
737 Volvo Parkway Progressive Land Partners LP 01/03/97 04/30/04
Suite 150
Chesapeake, VA 23320
3. DRS Systems Management Corp
c/o DRS Laurel Technologies
423 Walters Avenue Skateland Roller Rink, Inc. 11/10/93 11/30/98
Johnstown, Pennsylvania 15904
15 Route 403 The Picking Company 05/15/96 09/25/99
Davidsville, Pennsylvania 15928
4. DRS Precision Echo, Inc.
3105 Patrick Henry Drive Bay 511 Corporation 07/13/97 10/31/00
Santa Clara, California 95054
5. DRS Ahead Technology, Inc.
Plymouth Business Center St. Paul/United Properties, Inc. 08/01/97 07/31/02
3550 Annapolis Lane, Suite 60
Plymouth, Minnesota 55447
</TABLE>
192
<PAGE>
<TABLE>
<CAPTION>
Date of Expiration of
Location/Address Landlord Lease Lease
- ---------------- -------- ----- --------------
<S> <C> <C> <C> <C>
520/530 Blanding Woods Road S. North Land Aluminum 06/17/97 06/17/99
St. Croix Falls, Wisconsin 54024 Products
6410 Via Del Oro, N. E. South San Jose Interests 8/17/95 08/31/00
San Jose, Ca. 95119
145 South Third Street Applied Magnetics Corporation 11/06/92 11/06/01
Dassel, Minnesota 55325
6. DRS Optronics, Inc.
2330 Commerce Park Drive, Fred E. Sutton and 08/14/95 8/14/05
N.E., Suite 2 Harold S Sutton
Palm Bay, Florida 32905 d/b/a Sutton Properties
7. DRS Photronics, Inc.
138 Bauer Drive LDR Realty Co. 06/01/98 06/30/02
Oakland, New Jersey 07436
133 Bauer Drive North Holding Partnership 08/9/97 08/08/02
Oakland, New Jersey 07436
8. DRS Technologies Canada Company
40 Concourse Gate Colliers Macaulay Nichols 07/01/98 06/30/03
Nepean, Ontario, Canada (Ontario) Inc.
K2K 2C9
9. Spar UK
Springfield Road SKM EUROPE LIMITED 02/18/98 02/17/01
Hayes Registration No. 2627854
Middlesex, England UB4 OTY
10. DRS Hadland, Inc.
20480 Pacifica Drive, Suite D George G. Somps 01/01/97 12/31/98
Cupertino, California
11. DRS Hadland Photonics GmbH
Implerstrasse 89 AREA L 02/15/98 Indefinite
D 81371 Immobilien GmbH
Munchen, Germany
</TABLE>
193
<PAGE>
<TABLE>
<CAPTION>
Date of Expiration of
Location/Address Landlord Lease Lease
- ---------------- -------- ----- --------------
<S> <C> <C> <C> <C>
12. DRS EO, Inc.
2000 East El Segundo Blvd. Raytheon Company
El Segundo, California 90245
2006 East El Segundo Blvd. Raytheon Company
El Segundo, California 90245
1302 Orchard Hill Road Raytheon Systems Georgia, Inc.
LaGrange, Georgia 30240
13. DRS FPA, L.P.
13532 N. Central Expressway Raytheon TI Systems, Inc.
Dallas, Texas 75243
13588 N. Central Expressway Raytheon TI Systems, Inc.
Dallas, Texas 75243
</TABLE>
194
<PAGE>
SCHEDULE 1.01-B
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Customary Permitted Liens
None.
195
<PAGE>
SCHEDULE 1.01-C
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Eurodollar Affiliates
None.
196
<PAGE>
SCHEDULE 1.01-D
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Permitted Encumbrances
1. DRS Technologies Canada Company/DRS Flight Safety and Communications
Personal Property Security Act filings by Newcount Financial Ltd. and GE
Capital Technology Management Services, Inc. With respect to leased equipment.
2. Laurel Technologies Partnership/DRS Laurel Technologies
a. Security interest in certain equipment held by Southern Allegheny
Planning and Development Commission (1st priority) and Technology
Development and Education Corporation (2nd priority).
b. Purchase money security interests held by Hyster Credit Company in a
forklift and lift truck.
c. Purchase money security interests held by Johnstown Area Regional
Industries in certain computer equipment.
d. UCC-1 filings by Sanwa Leasing Corporation with respect to leased copy
machines.
3. DRS Technologies (UK) Ltd.
a. Security interest in bank account held by Barclays Bank plc
b. Security interest in security deposit held by SKM Europe Limited.
4. DRS Hadland, Ltd.
a. Security interest in all property held by Midland Bank plc to secure
revolving line of credit.
b. Mortgage on real property held by Midland Bank plc to secure mortgage loan
197
<PAGE>
5. DRS Hadland, Inc.
UCC-1 filing by First United Leasing with respect to leased computer
equipment.
198
<PAGE>
SCHEDULE 2.01
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
List of Subsidiaries and/or Affiliates
that may borrow and/or have Letters of Credit
issued for their Account
All Corporate Guarantors and the Partnership Guarantor
199
<PAGE>
SCHEDULE 2.01 (vi)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Schedule of Existing Letters of Credit
See Attached.
200
<PAGE>
SCHEDULE 2.04 (ii)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Letter of Credit Fees
Issuance: US$150.00
Amendment: US$ 75.00
Standby Commission: US$250.00 minimum per year
Transfer: US$ one quarter of one percent flat fee / US$200.00
minimum
Assignment of Proceeds: US$100.00
Telecommunications:
Full Text: US$ 40.00
Brief Text: US$ 20.00
Fax Copy: US$ 5.00 per page (domestic) / US$15.00 maximum
US$ 15.00 per page (international) / US$ 45.00 maximum
201
<PAGE>
SCHEDULE 4.01 (iii)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Ownership of Capital Stock
None.
202
<PAGE>
SCHEDULE 4.01 (vii)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Pending or Threatened Litigation
1. Amplicon, Inc. d/b/a Amplicon Financial v. Photronics Corp., et. al., U.S.
District Court, C.D. Cal., Case No. SACV 96-0151 (AHS)(EEx)
This case is going to trial and has a potential claim amount of less than
$300,000.00. The District Court entered judgment in favor of defendants, but
Amplicon, Inc. Is appealing.
2. The disclosure in Item 3 - Legal Proceedings in DRS's Annual Report on Form
10K for the fiscal year ended March 31, 1998 (concerning subpoenas issued to DRS
by the United States Attorney for the Eastern District of New York in connection
with United States v. Tress, a case involving an employee at DRS Photronics,
Inc.) is incorporated herein by reference. The case against Walter Tress was
dismissed without prejudice; however, DRS understands that the government's
investigation of the matter has not been closed. Although DRS believes that the
matter will ultimately be resolved favorably to DRS, an adverse resolution of
the matter could have a Material Adverse Effect on DRS and its operations,
including the business to be acquired from the Sellers.
203
<PAGE>
SCHEDULE 4.01 (xv)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Environmental Matters
General Disclosure
Reference is made to the following documents:
(a) Due Diligence Assessment dated 21 September, 1990, prepared by
Environmental Resources Management, Inc.;
(b) Condition Survey of Leigh Instrument Building dated October 4, 1990,
prepared by Trow Inc.;
(c) Ventilation at Spar Applied Systems dated July 4, 1994, prepared by Trow
Consulting Engineers Ltd.;
(d) Workwell Health & Safety Evaluation dated March 12, 1997;
(e) Report of Findings, Subsurface Investigation at SPAR Aerospace Ltd., 115
Emily Street, Carleton Place, Ontario, dated October 10, 1997, prepared by
ERM-Ontario Inc.;
(f) Subsurface analysis with respect to Borehole No. 3, from a geotechnical
report dated October, 1997, prepared by Morey Houle Chevrier Engineering
Ltd.; and
(g) Report of Findings, Subsurface Investigation at SPAR Applied Systems, 365
March Road, Kanata, Ontario dated October 10, 1997, prepared by ERM-Ontario
Inc.
The documents described in subparagraphs (a) to (g) inclusive (the
"Environmental Reports") have been provided to the Co-Borrowers and disclose
information in relation to the purchased assets.
Compliance with Environmental Laws
The Co-Borrowers disclose to the Agent the existence of PAH compounds and metals
in soil and groundwater samples investigated at the property located at 115
Emily Street, Carleton Place, and described in the Environmental Reports, items
(e) and (f) above.
204
<PAGE>
The Co-Borrowers disclose to the Agent the existence of a disused underground
fuel oil tank and hydrocarbon contamination at the property located at 365 March
Road, Kanata, described in the Environmental Reports, item (g), above.
The Co-Borrowers' records indicate some MSDS have expired and are being renewed.
The Co-Borrowers have not conducted a further assessment of exposure or
likelihood of exposure as a result of a change intended to improve ventilation
for the process involving isocyanates in the airfoil lay-up room, at the
Carleton Place property. Previous assessment of exposures to isocyanates were
within regulated limits.
Notices
Since December 31, 1991, the following notices of non-compliance with
Environmental Laws have been received:
(a) Order dated April 29, 1996 re: hand truck
(b) Order dated April 29, 1996 re: lift truck
(c) Inspection report dated May 19, 1994
Location of Hazardous Substances
Annex I hereto contains an inventory of Hazardous Substances used in whole or in
part by the Co-Borrowers in connection with the purchased business, and the
location of such Hazardous Substances.
Reports to Regulatory Authorities
The Co-Borrowers disclose to the Agent that on October 20, 1997, the Ministry of
Environment and Energy was notified concerning the findings of PAH compounds and
metals in soil and groundwater samples at 115 Emily Street, Carleton Place,
Ontario.
Kanata Underground Fuel Oil Tank
Spar Aerospace Limited ("Spar") shall be responsible for the removal of the
underground fuel oil tank (the "UST") located on its premises at 365 March Road,
Kanata (the "Kanata Premises") and the remediation of the surrounding soil if
and to the extent that such removal and/or remediation is a liability of Spar
either under applicable Environmental Laws and/or Environmental Permits or under
Spar's lease in respect of the Kanata Premises (such removal and/or remediation
obligation, if any, of Spar is herein called the "UST Remediation"). For the
purposes solely of determining Spar's liability to the Co-Borrowers hereunder in
respect of Environmental Laws, provided the UST is not used by the Co-Borrowers,
the UST shall be
205
<PAGE>
deemed not to have been used for the three years preceding the date hereof. If
it is determined that as between Spar and the landlord, Spar is legally
responsible for the UST Remediation, such UST Remediation shall constitute
Remediation Work for the purposes of section 8.14 of the Asset Purchase
Agreement.
Spar has notified the landlord of the Kanata premises that removal of the UST is
required, and provided the landlord with a copy of the report prepared by ERM -
Ontario Inc. in respect of the UST (item (g), above). The parties acknowledge
that the landlord of the Kanata Premises may be legally responsible for the
removal of the UST and remediation of the surrounding soil. Nothing contained
herein shall in any way relieve the landlord of such liability or require either
Spar or the Co-Borrowers to perform or satisfy the landlord's liabilities or
obligations in respect thereof. Neither Spar nor the Co-Borrowers shall take any
actions or execute any documents which would relieve the landlord of its
liability and/or impose such liability on the other party hereto.
The parties further acknowledge that the ability of Spar to effect and complete
the UST Remediation shall be subject to the consent and approval of the landlord
of the Kanata premises to the extent such consent or approval is required.
The Co-Borrowers make no representation or warranty with respect to the
environmental condition of the Property in Bulgaria occupied by DRS Ahead
Technology, Inc. (Bulgaria) JSC or the property in Germany occupied by DRS
Hadland Photonics GmbH or the compliance of such Properties with applicable
Environmental Laws, including whether any Releases or threatened Releases of
Environmental Concern Material have occurred at such Properties.
Reference is made to a Preliminary Assessment of Environmental Liabilities dated
February, 1998 prepared by Wardell Armstrong with respect to the Property of DRS
Hadland, Ltd. located at Harrow Yard, Akeman Street, Tring, England which
discloses the possibility of minor contamination at such Property.
206
<PAGE>
SCHEDULE 4.01 (xvi)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
ERISA
Plans Requiring Filing of 5500's
DRS Group Health & Life Plans
DRS Optronics Group Health Plan
DRS Optronics Long-Term Disability Plan
DRS Optronics Short-Term Disability Plan
DRS Electronic Systems Group Health & Welfare Plans
DRS Electronic Systems Flex Benefit Plan
DRS Laurel Technologies Group Life Plan
DRS Laurel Technologies Group Health Plan
DRS Retirement/Savings Plan
TAS Employee Savings Plan (frozen, pending termination)
DRS FPA Medical Plan
207
<PAGE>
SCHEDULE 4.01 (xx)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Joint Venture/Partnership
1. Laurel Technologies Partnership t/a DRS Laurel Technologies
2. DRS Medical Systems (sold all assets in September, 1997 and has ceased all
operations).
3. DRS FPA, L.P.
4. DRS Ahead Technology, Inc. (Bulgaria) JSC - 20% owned by Bulgaria.
5. DRS Hadland Ltd. Collaborates with MS Instruments PLC, Seed Capital
Investments BV, Epigem Limited and buys goods in Russia in a manner which could
be construed as a quasi-partnership arrangement.
208
<PAGE>
SCHEDULE 4.01 (xxi)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Insurance Policies, Programs and Claims
See Attached.
209
<PAGE>
SCHEDULE 4.01 (xxv)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
List of Undisclosed Liabilities
1. Contingent liability under Panavia agreement.
210
<PAGE>
SCHEDULE 4.01 (xxvii)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Labor Matters
None.
211
<PAGE>
SCHEDULE 4.01 (xxix)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Locations of Books and Records
1. DRS Technologies (UK) Ltd.
Springfield Road
Hayes, England UB4 OTY
2. DRS Hadland Ltd.
Harrow Yard
Akeman Street
Tring, England HP23 6AA
3. DRS Hadland Photonics GmbH
Implerstrasse 89
D 81371 Munchen, Germany
4. DRS Hadland, Inc.
20480 Pacifica Drive
Suite D
Cupertino, California 95014
5. Diagnostic/Retrieval Systems (DRS) Technologies Parsippany B.V.
5 Sylvan Way
Parsippany, New Jersey 07054
6. DRS Technologies (Europe) Ltd.
212
<PAGE>
SCHEDULE 4.01 (xxx)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Business Names
1. DRS Technologies Canada Company also conducts business under the name of
"DRS Flight Safety and Communications".
2. DRS Technologies, Inc. also conducts business under the name of "DRS
Electronic Systems".
3. Laurel Technologies Partnership also conducts business under the name of
"DRS Laurel Technologies".
4. The official names of each of the Co-Borrowers and the Corporate Guarantors
indicated in this Loan Agreement and the Guaranty.
5. DRS Ahead Technology, Inc. (Bulgaria) conducts business under the names of
"DRS Ahead Technology, Inc. (Bulgaria) AD" and "DRS Ahead Technology, Inc.
(Bulgaria) JSC".
6. DRS FPA, L.P. will also conduct business under the name of "DRS FPA
(Texas), L.P."
213
<PAGE>
SCHEDULE 4.01 (xxxi)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Location of Collateral
1. DRS Ahead Technology, Inc.
Plymouth Business Center
3550 Annapolis Lane, Suite 60
Plymouth, Minnesota 55447
520/530 Blanding Woods Road South
St Croix Falls, Wisconsin 54024
145 South Third Street
Dassel, Minnesota 55325
6410 Via Del Oro, N.E.
San Jose, California, California 95119
2760 Razlog
1 Stara Planiana Strp.
Bulgaria
2. DRS Electronic Systems, Inc.
200 Professional Drive
Gaithersburg, Maryland 20879
3. DRS EO, Inc.
5 Sylvan Way
Parsippany, New Jersey 07054
2000 East El Segundo Boulevard
El Segundo, California 90245
2006 East El Segundo Boulevard
El Segundo, California 90245
214
<PAGE>
1302 Orchard Hill Road
LaGrange, Georgia 30240
4. DRS FPA, Inc.
5 Sylvan Way
Parsippany, New Jersey 07054
5. DRS FPA, L.P. d/b/a DRS FPA (Texas), L.P.
5 Sylvan Way
Parsippany, New Jersey 07054
13532 N. Central Expressway
Dallas, Texas 75243
13588 N. Central Expressway
Dallas, Texas 75243
6. DRS Hadland, Inc.
20480 Pacifica Drive, Suite D
Cupertino, California 95014
7. DRS Laurel Technologies
423 Walters Avenue
Johnstown, Pennsylvania 15904
15 Route 403
Davidsville, Pennsylvania 15928
8. DRS Merger Sub, Inc.
5 Sylvan Way
Parsippany, New Jersey 07054
9. DRS Optronics, Inc.
2330 Commerce Park Drive, N.E., Suite 2
Palm Bay, Florida 32905
10. DRS Photronics, Inc.
138 Bauer Drive
Oakland, New Jersey 07436
215
<PAGE>
133 Bauer Drive
Oakland, New Jersey 07436
11. DRS Technical Services, Inc.
2535 Camino Del Rio South
Suite 300
San Diego, California 92108
737 Volvo Parkway, Suite 150
Chesapeake, Virginia 23320
12. DRS Precision Echo, Inc.
3105 Patrick Henry Drive
Santa Clara, California 95054
13. DRS Technologies Canada Company
115 Emily Street
Carleton Place, Ontario, Canada K7C 4J5
40 Concourse Gate
Nepean, Ontario, Canada
K2K 2C9
14. DRS Technologies, Inc.
5 Sylvan Way
Parsippany, New Jersey 07054
1215 South Jefferson David Highway, Suite 1004
Arlington, Virginia 22202
216
<PAGE>
SCHEDULE 6.05
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Schedule of Insurance Policies and Programs
See Attached.
217
<PAGE>
SCHEDULE 7.01 (iii)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Permitted Existing Debt
1. 9% Senior Subordinated Convertible Debentures due October 1, 2003
Principal amount outstanding: $19,134,000.00
2. Covenant and Agreement Not to Compete Dated October 28, 1994 Between Ahead
Technology, Inc. and Robert F. Van Houtten
Amount outstanding: $117,000.00 ($9,000.00 per month)
3. Term Note to Southern Alleghenies Planning and Development Commission
Principal amount outstanding: $24,262.00 (monthly installments through
March 1, 2000)
4. Term Note to SPIRC
Principal amount outstanding: $33,011.00 (monthly installments through
March 1, 2000)
5. Term Note to Imperial Premium Finance, Inc.
Principal amount outstanding: $27,179.00 (monthly installments through
December, 1998)
6. Mortgage Loan from Midland Bank PLC to DRS Hadland Ltd. Principal amount
outstanding: [$349,000.00][POUNDS OR DOLLARS?]
7. Revolving Loan from Midland Bank PLC to DRS Hadland Ltd. Principal amount
outstanding: [$206,000.00][POUNDS OR DOLLARS?]
NOTE: All principal amounts are as of October 15, 1998.
218
<PAGE>
SCHEDULE 7.03
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Existing Loans, Advances, Investments
I. Loans:
1. Amended and Restated Promissory Note from Mark S. Newman (Chairman of
the Board, President and Chief Executive Officer) to the Company,
dated as of May 26, 1995; $104,100. principal amount; 8% per annum
interest rate.
II. Investments:
1. Excess corporate cash balances are currently invested in the
following:
(a) Merrill Lynch Institutional Fund
(b) Dreyfus Treasury Fund
219
<PAGE>
SCHEDULE 7.11(i)
ATTACHED TO AND MADE A PART OF THAT
CERTAIN AMENDED AND RESTATED REVOLVING CREDIT LOAN AND TERM
LOAN AGREEMENT
BY AND AMONG DRS TECHNOLOGIES, INC., ET AL.,
AS THE CO-BORROWERS,
AND MELLON BANK, N.A., AS THE AGENT,
DATED OCTOBER 20, 1998
Existing Guaranties
None other than as described in Sections 7.11(ii) and 7.11(iii).
220
